Forex - Pre-Open - USDCHF

Hi,
please find below USDCHF 1h chart. I have decided to start with that because of possible setup right after the open. The second scenario needs patient from your side.

Please note that we are approaching supply based on daily chart and few more opportunities may come to play. Will update if necessary:

  

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NFP - Charts - Tech overview

Hi,

Non Farm Payrolls as a key point today. Be extremely careful as market can react differently than before. Dont forget we are in summer holiday mood :)

EURUSD 1h chart:

USDJPY 1h chart:

SP 500 FUTURES 1h chart:

XAUUSD ( Gold ) 1h chart:

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Story of the Week: Gold Platinum Spread

The increased spread (difference in the price) between two instruments often creates interesting opportunities. Currently gold seems to be overvalued compared to platinum, in the terms of historical average. Recently the difference in the price of these two precious metals reached historic levels around $350/oz. While usually the price of platinum was higher in the past, currently it seems that gold is outperforming his cousin big time while this happened only once the last 25 years. This anomaly will very likely attract many traders and this may offer us an interesting investment or trade opportunity if we play smart. We can bet on the tightening of the spread between these two metals by a kind of Inter Market Spread Strategy. Here are some Pro`s and Con`s:

Pro`s:

•       Platinum is 15 times rarer than gold 
•       Historically unprecedented spread between Gold and Platinum will probably attract spread traders betting on the tightening of this gap. 
•       Platinum`s main substitute is Palladium, which can cause a shift demand from automobile industry for Platinum (Platinum is used mostly in Automobile  industry - especially in diesel vehicles. Eventual Palladium supply disruption from Russia could give boost demand for Platinum and push up the price
•      Comparative advantage of Platinum vs. Gold, more in the technical view (see below)

Con`s:

•         Risk of slowing global economic growth may cause further widening of the spread
•       Eventual supply disruption in South Africa may cause the car industry will not shift  back to platinum
•       Eventual crisis in diesel car markets (for example spreading of the Volkswagen case),  where Platinum is used the most in catalytic converters
•       Any geopolitical risk which could cause Gold will maintain momentum over Platinum

The Spread

By now you should have the a quick picture about the background. For more fundamental information about the two metals please roll lower. From the chart below you can see how the spread between them looked like over the last 25 years. As you can see, it was most of the time in favor of Platinum. However, the recent uncertainty created by the Brexit vote and the slowing global economy caused a strong Gold rally and Platinum is not really catching up with it yet. Last week we closed with tighter spread than the record week before. Even the pace of closing up the gap slowed down this week, there is a got chance will close the week with even smaller difference.

You can follow the gold platinum spread at this website: 

http://www.denvergold.org/precious-metal-prices-charts/platinum-gold-spread/

Now let´s take a deeper look at the fundamentals behind the two precious metals.

Platinum

Currently we estimate that Platinum is app. 15 times rarer than Gold. There are only 4 big mines in the world providing 90% of the production of Platinum.

Nowadays, it is as precious as industrial metal, and it’s used in many industries as a chemical substance, as a catalyst and apart from many other uses also in dental and jewellery alloys.

Most of industrial use of Platinum however come from the automobile industry where it`s used in catalytic converters.  There is also a substitute to Platinum, it`s Palladium (and rhodium), but in diesel cars only Platinum could be used. Looking at the current economic slowdown in Europe, where most of the diesel engines are used, you can get a hint why are the Platinum prices so depressed.

The most important factor for car industry to choose between them, is their relative price. In 2001 the Palladium prices were after a huge bull market at historic heights while Platinum was just about to pick up momentum. Given the huge difference in prices the car industry changed the technology toward Platinum which kick started the Platinum bull market at the same time. Similar reverse shift could have been seen during the last financial crises when Platinum prices reached historic records. At the same time the Palladium bull market started...

Geopolitically you need to take into consideration that the most of worlds Platinum is produced in South Africa and most of Palladium is mined in Russia. Problems with the Russian Palladium supply will lead to an increase in demand for it`s substitutes, among them demand for Platinum and vice versa. If there is a Platinum supply disruption in South Africa, the biggest Platinum producer of the world, Palladium will rally due to the increased demand from car manufacturers.

Gold

The qualities of the yellow metal makes it probably the most popular and best known precious metals in the world. The usage of Gold is diverse, starting from jewelries to different range of industries. As a dental supplement for example the Gold has been used for more than 3000 years.
 
Gold is heavily used in manufacturing of electric devices as it acts as a reliable and fast conductor of electricity. However silver and copper are better conductors so why to use gold...? The advantage of gold compared to its much cheaper peers is that it is not corroding hence offering better durability and stability.

For some interesting figures let`s look at the mobile phone industry. According to the World Gold Council, a single mobile device contains up to 50 milligrams of Gold. That’s a tiny amount but nearly 1 billion cell phones are produced each year... 

For Gold is also typical seasonality when the physical demand for the yellow metal increases especially in Asia. The two most followed periods of the year are the Indian Wedding Season in the fall and the Chinese New Year around January and February. In Asia, Gold is still a well trusted asset representing social status. Therefore, in times of falling Gold prices many families are also trying to get the yellow metal at bargain price, which may provide certain cushion to the decline.

From technical perspective

Gold 

Gold has confirmed a few weeks ago the higher low by breaking above 1300. The yellow metal has recently broken another significant resistance at 1350 and if it can close the week above, the break will be confirmed. The next level with a potential 40 dollar gain is around 1400 (more accurately (zone 1392-1433) which could be a significant hurdle for the bulls.

Platinum

There is a slightly different (or delayed) situation at the Platinum market. As Gold had already confirmed its higher low, Platinum`s resistance zone of $1090-1100 is just tested and the bulls seem to struggle to break out. Until this resistance is not broken (weekly close above) the higher low cannot be considered as confirmed. However, if this will happen the next significant resistance zone starts app 100 dollars higher (resistance zone $1190-1290). This gives Platinum a comparative advantage vs. Gold.

Summary:

You can play this situation with two simple strategies:

1   

      1. Long Platinum at breakout with a stop below former resistance expecting the white metal will catch up with the momentum of gold. Targets $1200-$1300-$1500 per ounce by moving the stop higher each time.

2    2. Inter market spread trade: Long Platinum and Short gold, same notional at current levels. This allows you to play on the spread tightening hedging partially the risk of an eventual sell off in the precious metals market by shorting gold. Getting out of the strategy when spread reaching -$361 (you need to monitor this daily, link to spread chart). Targets spreads are $0 and $180 (just below average spread). With a small part of your position you can try to wait as long as the spread goes up to $500 per ounce, but to reach this it will require fundamental change in the background of the Platinum market.

       I hope this helps. If you have any question regarding the above, please do not hesitate to     contact us

       Watch your risk and be consistent !

       Mr. TechMan

       DISCLAIMER: This material was created for informational purposes only and represents the Land of Trading       teams view on past and current economic and capital market environment. It is not and shouldn´t been viewed   as an investment advice and the creator of this material shouldn´t been hold liable for any loss resulting from       action where despite this disclaimer someone would consider this  material  as an investment advice. 

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Forex - Live European Session 05.07.2016 ( UPDATE )

Hi,
that's short update to our Live Market Coverage:

13:09 GMT - XAUUSD ( Gold )  closing half short from 1371 here around 1359, for remaining 50% stop has been moved lower to entry level...

12:20 GMT - We are taking profit on SP500 Futures as per our plan from last meeting.

SP500 FUTURES we are taking profit here around 2090, +0,75%

13:46 GMT - Ok, let's try to summarize what we have:

1. USDJPY looking to buy dips around 101,50/40

2. XAUUSD ( GOLD ) looking to sell around 1371...

3. GBPUSD not for me for now

4. EURGBP missed buy, looking to buy dips to 0,8470 ... if seen

5. EURUSD will try to trade intraday extremes but be carefull as main focus is EURGBP ( at least for now )

6. USDCAD missed by few pips or so.... I know some of you took it on a break to the upside ( if you don't know what I mean check our USDCAD chart )

7. AUDUSD missed sell, they did not even try to look for stops above Tokio high

8. SP500 Futures as per chart below, looking to trade both sides

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Trade Idea: EURGBP intraday long ( UPDATED )

EURGBP - intraday long...

10:25 GMT - we were stopped out...

The main point here is channel breakout on weekly ( for more info please check our EURGBP overview here ). After strong rally on Tuesday and early Wednesday we saw profit taking. Currently we are testing the bottom of the intraday channel. Please check chart below for entry, stop and target levels:
Long 0,8535, stop offer 0,8510, risk: 0,25%

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NFP: Upcoming Friday US job data preview

Friday’s NFPs have become a highly watched event, as after May +38k figure, Brexit referendum impact and uncertainty in global economy they will definitely provide some hints whether Fed is really off with rate hikes until late-2017. Overall, market is expecting the number between +175k and 183k while the 3 month average is at +116k. 

You should bear in mind that the release of strong number may not be enough for Fed to act, due to above mentioned risks and the fact that Fed is in a wait-and-see mode. Actually, even Minutes from last FOMC meeting confirmed that as Fed officials opted for prudent approach while stayed divided about the pace of rate hikes. Strong number supported by pretty good June ISM Non-manufacturing, better Final Service PMI, and eventually very solid Q2 GDP (to be out end of July) may form a good base for Fed thinking again about rate hike this year. 

The uncertainty and at certain moments risk off attitude are still present in the market what is well proved by very low yields in US Treasuries. They didn’t even recover during after-Brexit risk-on rally, in other words the low yields erased completely the effect of Dec 2015 Fed rate hike.

As Dudley (Fed) mentioned on Tuesday, we need to be patient on rates because of low inflation and uncertain global economic outlook. According to him US economy is doing well on average and US political process may represent certain risks. Overall, they need to see more data as they do not know more as all of us do.

To get ready for a strong number, check our DXY ( dollar index ) weekly technical overview at: 

http://landoftrading.blogspot.dk/2016/07/weekly-tech-overview-week-27.html.

Data will be released Firday at 12:30 GMT:
NFPs: +175k-183k exp, +38k previous
Unempl. rate: 4.8% exp, 4.7% previous
Hourly earnings: 0.2% exp, 0.2% previous M/M
Hourly earnings: 2.7% exp, 2.5% previous Y/Y

Participation rate: N.A. exp. 62.6% previous 


Mr Hawk

DISCLAIMER: This material was created for informational purposes only and represents the Land of Trading teams view on past and current economic and capital market environment. It is not and shouldn´t been viewed as an investment advice and the creator of this material shouldn´t been hold liable for any loss resulting from action where despite this disclaimer someone would consider this  material  as an investment advice. 

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Theresa May the winner of 1st round of vote to replace Cameron

Theresa May the winner of 1st round of vote to replace Cameron as a Conservative Party leader,
and ...looks like a neutral candidate who doesn't want to trigger Article 50 until next year will be in.

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Forex - Live European Session 05.07.2016

Hi all,

that's beta test of our Forex Live Market Coverage - Market Makers Method / Price Action / Supply & Demand. ( Page does not refresh automatically ! )

15:15 GMT - USDJPY order cancelled, That's it for today, will update the date of our next Live Session. Stay Tuned ! Please don't hesitate to contact us should you have additional questions. Have a good evening !

14:23 GMT - USDJPY buy limit @ 101,37, stop offer 101,17, target 101,94, risk 0,25% GL

13:46 GMT - Ok, let's try to summarize what we have:

1. USDJPY looking to buy dips around 101,50/40

2. XAUUSD ( GOLD ) looking to sell around 1371...

3. GBPUSD not for me for now

4. EURGBP missed buy, looking to buy dips to 0,8470 ... if seen

5. EURUSD will try to trade intraday extremes but be carefull as main focus is EURGBP ( at least for now )

6. USDCAD missed by few pips or so.... I know some of you took it on a break to the upside ( if you don't know what I mean check our USDCAD chart )

7. AUDUSD missed sell, they did not even try to look for stops above Tokio high

8. SP500 Futures as per chart below, looking to trade both sides

13:09 GMT - USDJPY like it around 101,50/40... will update

12:26 GMT - US Open - USD in demand again and probably it will stay here till NFP

11:01 GMT - ... and its lunchtime :)  will be back around 12:15 GMT...

10:50 GMT - XAUUSD ( Gold ) looking for Market Maker manipulation b4 selling. Price Action should tell us the truth around US open:

10:08 GMT - SP 500 Futures: my intraday demand and supply zones, please chceck chart below:

9:31 GMT - JPY: watching crosses here, bulls trying to step in but SP500 will tell the truth...

9:17 GMT - EURUSD intraday watching 1,1125, if hold ( test is needed ) then small / quick long possible...

8:57 GMT - USDCAD intraday on the move, looks like I may have to modify my entry... watching

8:32 GMT - AUDUSD: intraday looking for sell rallies... again :)

7:56 GMT - EURUSD: Im not a seller ( yet ), especially with strong EURGBP rally...

7:30 GMT - EURUSD:  Market Makers are doing the job :)  - stop hunting round....

7:25 GMT - USDCAD still looking to buy, hopefully ydy dip was not our miss ;)  ( below our USDCAD chart from last week updated ):

7:02 GMT - EURGBP: we are done b4 Europe open :) 

Looking to buy on pullback twds 0,84

6:50 GMT - short Tokio summary: Strong JPY, also USD doing well. AUD, CAD, GBP on a weak side. Charts coming soon...

6:35 GMT - Good Morning...

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Weekly Tech Overview - USD - Week 27

DXY ( dollar index ) weekly technical overview:

we do believe weekly close above 90,90/92,20 ( very late of 2014 / very early of 2015 ) confirmed that low just above 70 is in place with consolidation within 92/100 range through 2015 till now.
We are very bullish over medium/long term with 107/108 as first target and 110/112 as second target.
Please find our explanation and chart below:

The first target is simple measure of the consolidation from 2015 till now ( from 92 to 100 - 8 figures in average, so break above 100 should help with 800 pips rally twds 107/108 ).

The second target is a little bit more complex :)  but no worries: 90,90/92,20 ( in average ) that is the zone where market showed weakness last time ( down to 70+, so around 20 to 22 figures ). Close above that zone put possible breakout in place, so we got the chance to see ..... 20 to 22 figures rally as simple as that.

Please bear in mind that this analysis is based on WEEKLY chart, so it will take some time to hit our targets ( in other words IT'S NOT GOING TO HAPPEN TOMORROW ! ).

NOTE: the above is valid as long as we are above 90,90 ( close on weekly basis ).

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Weekly Macro Overview - Week 27

Previous Week Summary

The whole week was about trying to figure out what will be next after Brexit referendum. Investors reassessing the impact and fleeing to safe assets, GBP hitting the low of 1.3149 (1985 levels), the 10yr/30yr yield on Gilts at 1%/1.88% respectively, gold trading above USD 1300 level. Question mark about offshore RMB trading in Europe raised in case of UK leaving EU (China picked London for RMB offshore operations).

Monday – US Lew – strong USD is in the interest of US.

Tuesday – ECB: monetary policy created destabilizing spillovers, divergent policies creating uncertainty about future direction, higher exchange rate volatility and risk premiums. Merkel – EU strong enough to handle UK exit, no informal talks before Article 50 is activated. Farage (strong Leave) - Reiterates desire to be good friends, neighbors and trading partners with the EU. What an irony…

Wednesday – Japan is likely to implement a large (2% of GDP) fiscal stimulus after July elections; verbal interventions heavy the whole week. German monthly Preliminary June CPI slightly lower; Atlanta Fed US Q2 GDP forecast raised to +2.7% from +2.6% and real Consumer spending to +4.3% from +4.1% and lowered the next exports forecast; May Core PCE was in line with forecast +0.2%/+1.6% (monthly/yearly); Consumer spending for May was up 0.4% mainly due to strong demand for autos what can make a positive footprint on Q2 GDP number; Personal income grew but slightly below expectations and Pending home sales fell on monthly basis. According to Powel Brexit has increased global risks and Fed likely not hiking rates this year.

Thursday – interesting formula for UK: Sum of FDI + portfolio investments + current account = 12.8% of GDP. Portfolio investments and FDI inflows more than offset the Current account deficit of 5.1% GDP, but what if the inflows reverse? UK is still able to finance its current account with foreign money, but likely would need to decrease the consumption at certain point as the inflows reverse also on lower yields. EZ June Advanced CPI Est. at +0.1% vs 0.0% exp. Y/Y, CPI Core +0.9% vs 0.8% exp. Y/Y, the better number was due to higher core and slower decline in energy prices. Draghi - EZ GDP will be lower by 0.5% in 2017/18 due to Brexit. Carney (BOE) – further easing in July post Brexit likely, Chicago PMI higher on production and new orders, US Initial claims higher but in line with healthy job market (below 300k).

 

Friday – ECB loosening QE buying rules helped peripheral issues and other HY bonds should benefit as well. EU PMIs better, EZ May Unemployment rate at 10.1% in line with exp, lowest since Sep 2011. Bullard (Fed) – sees US GDP still at +2% rate, no further contagion from Brexit, Fed still tools to use, productivity needs to increase, low bond yields to continue. Fisher (Fed) – wait & see data/tightening, US economy pretty doing pretty well, no plans to move into negative rates.

Stocks rallied towards the end of month (Q2 & H1), as we saw lots of short-covering, window dressing but not sure how long will it last.

  

Upcoming Week Outlook

Monday – we can expect a refocusing of markets from assessing Brexit impact/uncertainty to incoming data. The Brexit even was a huge thing, despite being expected well in advance, but now it is a time to go back to work.

Tuesday – RBA will be in focus, followed by Carney and BOE Financial Stability Report. Will Mr Carney bring up more hints on a pre-announced July easing? Isn’t having GBP down 13% a perfect stimulus tool? Dudley and Tarullo (both Fed) will be out (Tuesday/Wednesday) and in spite of their planned agenda, we may learn more about the impact of Brexit on US jobs creation. Recent economic data were solid, except for May NFPs hiccup, employers are hiring but productivity growth is missing. Actually, all of that in the light of “upcoming” rate (non) hikes from Fed (market pricing them in 2017), will be watched and thought through.

​

Wednesday – US Trade Balance (going more negative) and ISM Non-Manufacturing PMI (better than previous). The highlight will be FOMC Minutes from the last before Brexit meeting. They will not be that relevant in the light of new situation after the vote, but may provide some guidance on job creation, macro data vs Fed hike likelihood.

Thursday – BoJ Kuroda speaking, well Japanese officials were pretty busy with verbal interventions last week and it would be nice to see Kuroda shedding some light on potential new QE. ECB’s even non-monetary meeting can bring some surprise comments/ideas in Brexit, aftermath as Italian banks are getting fragile. ADP Non-Farm Employment Change, Challenger Job Cuts and Initial Jobless Claims will be definitely watched ahead of Friday for some hints on US NFPs after May debacle with +38k only.

Friday – US Non-Farm payrolls will be highly watched event as market is trying (again) to solve the Fed rate hike puzzle. Market is expecting the number between 175k-181k for June and unemployment rate rising to 4.8% from 4.7% previously.

Earnings – Samsung (Wednesday), PepsiCo Inc (Thursday), other companies are not that relevant. Samsung – EPS expected to be down, revenue up but sales of S7 Galaxy seem to be strong. Ready for a positive surprise here when we are getting more to price than features game? PepsiCo – sales should be above analysts’ estimates giving us a good insight in EM and overall consumer demand, but investors will also listen to any comments on potential impact of Brexit on product lines. The changes in health trends affecting Coca-Cola are also the same for PepsiCo. Well, think twice…

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Forex - Intraday - EURUSD and USDCAD ideas

EURUSD -  I'm still looking to sell intraday rallies but would like to have an edge :)
In that case I have to be patient FX trader, so I'm waiting for Market Makers to clean some stops to the upside first...

USDCAD - I like the idea of buying USDCAD on intraday dips ( at the same time watching developments on oil market, will try not to be trapped :) ).

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Theresa May ?

A candidate for new UK Prime Minister post Michael Gove announced that UK will not use the Article 50 this year. Actually, Gove was asked today to give up his candidacy to replace David Cameron, thus leaving Theresa May alone.

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