Flows and Orders/FXWW News

Market sentiment turning very USD-bullish

The market is always right and it’s bullish at the moment. USD/JPY is above 97.00 and eyeing technical resistance at 97.60 whilst the AUD/USD is getting too comfortable below .9250 for my liking. Still think I’m right though! Doesn’t every trader?

  1. Hi Sean! Thought you were a USD bull not so long ago, remember USDCHF 1.10? 🙂 Now here’s USDCHF at 0.93, do you see signs of bottoming? If so, might be a good time to go long?

  2. Hi Sean,

    This is the model of my trading strategy:

    GLOBAL MACRO-TREND OUTLOOK : FOUNDATION FOR TRADING
    Johanes L. Sitanggang
    June 17, 2013

    The global macro trend analysis is indicating and confirming that Asian currencies (JPY, AUD, NZD) will continue to be weakened and the European currencies (EUR, GBP, CHF) will continue to be strengthened. The American currencies (USD, CAD) will continue to be strengthened against the Asian currencies and stable to European currencies.

    Accordingly, AUD/USD and NZD/USD will continue to move to downward direction and USD/JPY will continue to move to upward direction (Asian economic block currencies to be weakened against American economic block currencies). And, both EUR/USD and GBP/USD will continue to move to upward direction and USD/CHF to downward direction (European economic block currencies to be strengthened against American economic block currencies).

    And further, the EUR/AUD, EUR/NZD, EUR/JPY and the GBP/AUD, GBP/NZD, GBP/JPY will continue to move to upward direction but AUD/CHF and NZD/CHF will continue to move to downward direction. These European and Asian derivative currency pairs and will have the largest movements and volatility in the FX market during this year.

    The Asian economic block currencies’ derivative (AUD/NZD, AUD/JPY, NZD/JPY) will move at lower volatility to form sideways interior their annual currency band levels without any alignment and re-alignment. The same conditions will be faced by the European economic block currencies’ derivative (EUR/GBP, EUR/CHF, GBP/CHF).

    Global Macro Trend Movement Model:

    Global macro trend is several years (5 years and more). Although the global macro trend directional analysis has confirmed that the currency pairs will move to upward or downward directions, they are under pressure (pullback/reversal) against their global macro trend direction. The pullback/reversal is measured by using annual, semi-annual and quarterly band (time series currency band).

    Therefore, an upward direction of global macro trend may under pressure against the macro trend down to the levels of annually lowest, semi-annual lowest or quarterly lowest before they are resumed to move to upward direction to follow the macro trend. To whether the currency pairs will be under pressure down to the annually lowest, semi-annual lowest or to quarterly lowest to be measured by using annual, semi-annual and quarterly currency bands. These are the bands that are managed by the central banks with their “exchange rate target and currency band policy”. These are also the primary indicators for “long market entry” and for “long market re-entry”.

    On the opposite direction, a downward direction of global macro trend may under pressure against the macro trend up to the level of annually highest, semi-annual highest or quarterly highest before they are resumed to move to downward direction to follow the macro trend. To whether the currency pairs will be under pressure up to the levels of the annually highest, semi-annually highest or quarterly highest to be measured by using annual, semi-annual and quarterly currency bands. These are the bands that are managed by the central banks with their “exchange rate target and currency band policy”. These are also the primary indicators for “short market entry” and for “short market re-entry”.

    Relationship of Global Capital Flow and Global Macro Trend:

    The three economic blocks (Asian, European and American, also known as “triad”) are competing from time to time to boost their economic performance and to attract more capital to flow into their economies at manageable level of inflow.

    The free global fund as part of the global networth is the fund that is invested into the three economic blocks. When the American economic block have strongest economic performance when compared to European and Asian then the global free fund to be flowed into the American economic block. Therefore, the flow of free global fund into American economic block will strengthen the American economic block’s currencies (USD, CAD) as the result of demand and over-demand. The over-flowing the global free fund into American economic block to cause the capital outflow from both European and Asian economic blocks and in turn to weaken the currencies of the European (EUR, GBP, CHF) and the Asian (JPY, AUD, NZD) economic blocks. The global free fund is limited and much lower than the global networth. The global free fund is the fund that freely to flow into and out from an economic block and to establish global macro trend.

    For example, if the sum of the global free fund is $ 1000 trillion of which $ 500 trillion owned and controlled by American, $ 300 trillion owned and controlled by European and $ 200 trillion owned and controlled by the Asian then when the Asian send their $ 200 trillion free fund into American or European economic blocks will cause capital outflow from Asian and to weaken the Asian economic block. Similarly, when the $ 300 trillion European free fund to be sent into American and Asian economic blocks will cause the capital outflow from European and to weaken European economic block’s currencies.

    Thus, the inflow direction and outflow direction of the global free fund is the most accurate information to gauge to which direction the performance of each economic blocks will be in the future. These directions are assessable by using multi-years currency band.

    Global Macro Trend Trading Model:

    In global macro trend, the trading always entered at the lowest of the multi-years currency band for long position and at the highest of the multi-years currency band for short position.

    However, the exchange rates may be already floated in the middle of the multi-years currency band and therefore the only way to enter the market is from the lowest for long position and from the highest for short position of the measured annual, semi-annual or quarterly currency band. If and when the market to be entered by the time the currency pairs at the middle of the annual, semi-annual or quarterly bands then they are exposed to high risk.

    The tool to decide to whether the currency pairs already at market entry levels is by using the the combination of annual, semi-annual and quarterly currency bands. Selected currency pairs could be defended at their quarterly currency band and to establish their turning points, another defended at their semi-annual currency band and to establish their turning points and other to be defended at their annual currency band and to establish their turning points.

    The different of their turning points (annual, semi-annual and quarterly) represent the differential of their economic performance measured by the market players. Therefore, both central banks and market players have to match the actual turning points based on quarterly, semi-annually or annually to avoid possible competition between central banks and market players to eliminate market intervention. When large volume of transactions to be made against the central banks’ expectation and measurement then the central banks will be the looser.

    High Frequency Trading:

    The high frequency trading generally to target monthly, weekly, daily and hourly direction of the currency pairs. This is known to be the highest risk and the highest return as they are highly influenced by news and rumors (sell the rumors and buy the fact).

    The growing of brokerage industry in FX trading have forced the brokers to motivate and to push the traders to trade by using high frequency trading for larger volume of transaction for their vested of interest on their volume-based brokerage fees. The traders may not have profit and could be the winner or the looser however the volume of trading they generated is large to yield large fees for the broker.

    Technical strategies to be introduced to motivate traders for high frequency trading. Some of them to make profit but average to be the looser. To whether the traders to be the looser or the winner but the brokerage firms already to print fees on their accounts.

    Indeed, the monthly, weekly, daily and hourly high frequency trading is the extension of the global macro trend. However, the monthly, weekly, daily and hourly time series carry the high and the highest risks. Therefore, the global macro trend trading is limited to multi-years, annually, semi-annually and quarterly based.

    Both Soros and Buffet already disclosed their strategies. They generally hold their trading positions for 3 months, 4 months, 6 months, 1 year and more. Therefore, they are actually practicing the global macro trend. Carry trading, momentum trading/trend following, currency bands (equilibrium and disequilibrium) are integral parts of the global macro trend. They are divided into quarterly, semi-annual and annually by using currency band models.

  3. i am with you Sean in USD/JPY bear club. 🙂 risk is deteriorating quickly & it seems that major dislocation still happening especially on EUR versus EM

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