I’m watching the Nikkei ( The Japanese Equities Index ) for “any” sign of reversal considering that it “has” pushed through the overhead downsloping trend line that has been so well-respected in the past.
In fact…..this is more like a “20 year” down trend so….you can understand my current skepticism.
Considering the current “headwinds” I find it very hard to believe that “now is the time” for a massive breakout / reversal in an area of resistance / trend going back some 20 years.
Otherwise, Im looking to see the correlation and movements underway in the precious metals and USD, as well keeping my eye on those longer term U.S Treasury Bonds.
We’re pretty much at a point where a number of these longer term correlations need to either “stay the course” or “make their move” – with “tapering or no tapering” the primary driver.
With Japan pretty much in the driver’s seat “liquidity wise” a keen eye on the Nikkei and its inverse relationship with the Yen will provide the first signs of reversal in risk.
I’ve taken profits on all “short USD” pairs, but will likely set up orders “above or below” current action in several pairs and look to catch further movement with momentum. I’m also still holding a couple small trades ( in the weeds ) long JPY – but have little concern as these will only be added to / kept.
written by F Kong
What’s your best guess on direction of NIkkei?
Thanks for the great blog.
I’m of the camp that the Nikkei will head south, and even moreso / hard if and when we finally get some kind of “risk event”.
It seems like a new reason to ” get bearish ” pops up nearly every day – then fades off into the bullish sun. The world is a wash in liquidity and clinging to a strictly “bear camp” would be dangerous. Forex does what it does, and nothin ever goes in a straight line for “too too long” so…we’ll keep an eye on Nikkei first and foremost for the first signs of change.
Thanks Kong. I agree on the liquidity , I keep watching stocks go up, up, up for no reason other than liquidity
I hear you there. It CAN’T last forever but man…….damn stubborn for sure.
Could it be that after the recent speech & ” HOLD OF WAR” that the DXY will be allowed to continue it’s move lower? Perhaps delayed by a week or 2 but now set free to complete it’s intended direction…. So moving from middle of Sept to the last week of Sept as a bottom & then bounce?
Dr. Kong ….. am I out to lunch? Fire away…. I have my vest on… LOL
You’re right on the money as “most everything” has been taking longer than expected in my view.
The recent “stick save” again around the 200 MA in several currency pairs (like NZD/JPY for example these last 10 days STRAIGHT UP)looks suspicious to me, and is again a likely product of all this “money printing”!!!
Fundamentals struggle to show themselves, then get smacked again by the printing presses. I’m seeing “megaphone” type formation in NAZDAQ as well 1680 in /ES as “reasonable” area for this to make it’s turn lower, but do “question” if USD will also bounce here at 200 and trade inversely for an extra week er so.
I’m out of USD pairs…and relatively frustrated in not getting more than a couple days in a row before having to “re assess our entire existance”.
Schmed – today’s USD action “should” confirm further downside as we’ve broken a key level / trendline etc….
USD/CAD moves like a dog regardless, and considering AUD and NZD weakness these pairs “could” go bearish in the face of lower USD.
This thing is a complete and total gong show at present as with so many pairs still just “hanging”.
You’ve gotta be “in it to win it” – but these days up , down , up , down sure can sure get on yer nerves.
Thanks Dr. for the feedback….. would like the Vol to return back to normal sooner rather than later….. perhaps now we will see a spike getting the fence sitters back into the pools of sharks!! LOL
We will see what tomorrow brings – & Thursday!!
Spoken in my best cowboy/gangsta affectation:
It’s time for my boot heels to be wanderin’.
The sound of crickets chirpin’ done gimme a headache. Word to yo Mutha.
Spoken in my best rasta/gangsta affectation:
Mon, u correlation comments make my hoppy. I use dem all de time.
But hear dis:
1. Macro fundies don’t make no never-mind to short term trader like me. I prove it bra.
Abuse leverage and you be OK too. Better than “overnight risk” for me. Rum come and D gone.
2. Dis how I use Correlation (a.k.a Pearson Correlation Co-Efficient with Dynamic Look Back):
Dey don’t tell me direction. Dey tell me when to pay attention. I prove it bra.
3. If time get hard, reptile taste like chicken…jerk chicken. Ganga help dat too. Life in the tropics ez, yeah K?
I’m tropics too.
4. News feeds and gurus no good. Dey like Five-O. Get dere just in time to make da chalk outline.
5. You can see what dey smart money do. I prove it bra.
6. Da white man keepin’ us down. Kill da white people. Not you K.
D gone. No lurkin’ for certain. Word to yo Mutha bra.
PC & ?: I’m tokin’, not jokin’. So you got da punch line fo free.
Absolutely the best post (possibly ever) Dev!
Keeping things light is alllllways great, as these trade conditions certainly can “bring da man down”!
Doin our best to keep up with that “smart money”.
Fantastic thanks for a good laugh!
Interesting times indeed. BOJ printing mountains of yen and mandated amongst other things to buy assets directly in the market. FED on the verge of tapering. Gun to my head this is the beginning of a multi year Japanese equity bull run. Swing target of 17000. USDJPY swing target of 108. Cable is tricky but year end i see it visiting mid 140’s. Euro to low 120s. The theme im following is a firm dollar against all majors/minors. Im not married to this thesis though.
Kong do you read Marc Chandlers work on marctomarket.com? Hes head of currency at Brown Brothers Harriman. Anyway check him out if he isnt on your radar. Hes also written a book called called Dollar: Exposing dangerous myths about trading and foreign exchange.
Interesting times indeed.
I want to say “Nikkei down before up”, and have trouble imagining the multi year bull run, but we take these things as they come these days.
Looking out a ways – I see the wheeels coming off this thing, but can’t put a finger on the “when”.
I want to grab USD/JPY for a long term hold too – but want to see it considerably lower first.
I know of Marc yes Sup, and I do feel his analysis is generally quite good. The future of USD is always up for debate, with each argument (for and against) equally compelling. I ultimately see it turning to dust, and blowing away in the wind – but again……time lines on these kind of ideas are tough to pin down, having no idea ” when ” the never ending slew of external factors will make their mark.
As well “relative to what” right? – as we’ve seen massive printing of USD yet currencies like AUD, NZD, are both “much lower”!
Round n round it goes.
Boom goes AUD, picked up short aud/jpy and added to long Eur/and.
Target on aud/jpy 90.50, Eur/aud 1.4430. Entry aud/jpy 92.90, Eur/aud 1.4250.
It’s the “insanity trade” for F#/%Ks sake! Get that target up there ma man!
EUR/AUD – I’m lookin for new all time highs ma man -153 ish??!
That’s how I roll.
These are my measured move targets, not going to be greedy. Plus the levels lineup nicely with former support/resistance.