Mystery chart leads to FX mystery

Author Cam Hui

Posted: 11 June 2013

Further to my post Friday night (Would you short this?) From reading the comments, I can see that a lot of my readers got it. The chart is the AUDCAD currency cross. While this currency pair shows the Australian Dollar to be vulnerable to its Canadian cousin, the loonie, it brings up another mystery.

First of all, the pair may not be as technically vulnerable as it initially appeared because it hit a 50% retracement level on Friday despite breaking down from major multi-year support.

I understand how the hedge fund community seems to have piled into the AUDUSD short as the Aussie Dollar has gone into freefall for the last few weeks. The short position has been highly profitable in a very short time.

Here’s the head scratcher. Why isn’t its Canadian cousin similarly weak against the USD? The structure of the Australian and Canadian economies are very similar as they are both resource based and both about the same size.

Admittedly, Canada did see some surprisingly positive economic releases last Thursday (Ivey PMI) and Friday (employment). On the other hand, how long will it be before all the Aussie shorts pile into a loonie short position as an alternative, especially when the CADUSD remains in a long-term downtrend and it hit a Fibonacci retracement level Friday and backed off? For reference, see these bearish posts on the Canadian Dollar from Sober Look (Canada’s latest job report is a mixed blessing) and FT Alphaville (Canada’s grizzly outlook).

Just asking.

Cam Hui is a portfolio manager at Qwest Investment Fund Management Ltd. (“Qwest”). This article is prepared by Mr. Hui as an outside business activity. As such, Qwest does not review or approve materials presented herein. The opinions and any recommendations expressed in this blog are those of the author and do not reflect the opinions or recommendations of Qwest. 

None of the information or opinions expressed in this blog constitutes a solicitation for the purchase or sale of any security or other instrument. Nothing in this article constitutes investment advice and any recommendations that may be contained herein have not been based upon a consideration of the investment objectives, financial situation or particular needs of any specific recipient. Any purchase or sale activity in any securities or other instrument should be based upon your own analysis and conclusions. Past performance is not indicative of future results. Either Qwest or Mr. Hui may hold or control long or short positions in the securities or instruments mentioned. 


Dollar-Euro Breaks a Key Technical Point

Author Larry Berman

Posted: June 2 2012 re-posted from etfcm

The market shrugged off a few tape bombs yesterday in a break of a key technical point on dollar-euro (1.25) and the very weak consumer sentiment number. The strong close on a 90% upside breadth day looks promising, but weak volume in most sectors and financials specifically suggests there is not much conviction behind the buying.

There is little doubt the US looks mountains (of debt) better than Europe right now and it is bound to catch some money flow out of the euro as it leaves the region, but by no means is the economy healthy if we back out the artificial stimulus of the engineered yield curve. One example would be that bank profitability with a normalized yield curve would be 20-30% less at a minimum. And if corporate yields were not as low as they are, margins would be a good 10% lower in many companies as well. So take 20% off the $100+ in S&P earnings and the market is no longer cheap at 18x un-stimulated and un-sustainable normalized trailing earnings.

Electronic Wisdom Cycles and Global Futures Presents a LIVE Webinar – Part 1

Author Patrick MontesDeOca, Director of CMT Group

Posted: 19 Feb 2012

Thank you for spending this time with me and I hope that I can live up to your expectations in sharing this incredible tool I discovered for the application of trading in the financial markets.

I also wanted to thank Global Futures for sponsoring this event and hopefully we can capture some informative quality time. I hope you had a chance to read how the Vedic Code Price Momentum Indicator came about.  It was through meeting, a chance meeting with Swami Ram Charran, a physicist, mathematician and experienced consultant in Vedic mathematics.

In sharing this information I was able to take this mathematical formula – that is basically an ancient formula that uses Vedic mathematics, and applies the basic Hindu Arabic mathematical system of 1 to 9. This form of mathematics is the basis of western mathematics, enabling me to integrate it with Elliot Wave principles and Fibonacci sequences, thus creating a proprietary algorithm for trading in the financial markets.

In using this formula I was able to essentially make an incredible discovery.  The application of this formula for the financial markets increased the standard deviation ratio from 50% to anywhere from 85 to 90%, which is phenomenal.

Let’s move on to taking a look at the beginning of the long-term cycle which started back in the 2008.  Basically what we’re looking at is a nine year cycle. The basis of this mathematical formula uses the nine year cycle you see on the chart below.


At the bottom of 2008, we experienced this massive financial meltdown, causing all class assets to collapse in value during the month of September of 2008.

I remember clearly… I’ve never had a gut feeling such as the one that I experienced in 2008, and that told me as a trader that we were beginning to experience something really unusual.   Since then, basically the market has followed through with the bullish energy pattern into 2009, as expected and as we look at the acceleration pattern in 2010, it exceeded the objective of 1,800 in 2011.

Now, what you need to understand is that this information is produced twelve months in advance on the yearly charts.  On the long-term charts it is produced nine years in advance.  And on the thirty day chart it is produced thirty days in advance. So, this information is prospective information that you would have been able to have access to before 2008, recommending you hold onto your position all the way till you met your objective and target of 1,800 in 2011.

This is where we are right now.  If we take a look at the long-term chart pattern in 2011, this is a second wave corrective pattern by integrating Elliot Wave formulas.  We have gone into a second wave ABC correction which according to this chart appears to be completed by the end of 2014.  We are in this first leg down from the 2011 highs above 1,800 made on September 6, and within this corrective pattern ever since.

Obviously in following this pattern, what I can say to you is that I have really some serious doubts, based on the recent resolution of the energy of this leg whether we will be able to get down to 1,300 level as opposed to what it appears to be developing, is possibly one of the strongest moves for this particular wave cycle year.

We will take a look at the yearly chart in a minute, but in completing this nine wave cycle gives us an idea in terms of the wave pattern that this code is following and it’s indicating that the completion of this corrective wave pattern should take place sometime in 2014, from which we are going to experience probably the biggest and the longest rally in this market prior to the culmination of what could be the completion of this long term wave cycle top in 2020 above 3,200.  We are looking at prices in 2016 to reach minimum levels of more than 2,500 dollars an ounce.

As you can see, the chart pattern in 2016 completes wave number IV, which is essentially setting the market up for what I believe to be a massive correction to the downside, very similar like the one we saw in 2008.

Let’s move on to basically a comparison of the Gold Vedic Code Price Momentum indicator for 2011, with the real-time chart comparison below and you can see that the actual energy of the real time chart is very accurate or similar to the Vedic Code energy chart that was anticipated twelve months in advance.

Here you can take a look at the top in April… the end of April, and in fact silver got up to about fifty dollars an ounce.  Look at the double top formation that gold made as of September 6, at 1,923.70, before the major downturn unfolded the rest of September.  What we see here basically is that the correction that we saw in April, 2011, was not as deep for gold as it was for silver. Silver came down about 8% while gold was down about 30%, then we saw this massive rally from around late June, early July lasting all the way to September.

I hope that most of you were able to capture this up move and were also able to capture the top of the market that was made on September 6, at 1,923.70.

In fact we documented this trade on our first YouTube tape posted on September 7.  You can follow the recommendations, confirmations that documented what this phenomenal code has produced since.

I want to move on to the next chart above and compare the chart to the real thirty days cycles that we use to capture tops or bottoms in the market as well as the acceleration patterns daily.

If we use the index which is the 1 to 9 axis on the left of chart, anything above 9 is completely overbought.  As the momentum indicator shows anything at 1 is oversold.
So, if you’re taking a look at the 9 year cycle and you are buying long term you would be buying into the corrections.  If you see the previous chart again, the long-term chart for a second, and the yearly chart, I want to point out to you that from this correction that ended December 15, it is the ABC completion of the 5 wave pattern in 2011, and essentially picks the bottom or the beginning of the wave currently unfolding as the first wave pattern for 2012.


Okay.   So let’s go back to the 30 day daily action chart above and I want to point out to you how accurate this was in today’s action.  If everybody was watching we saw a massive move to the upside today.  In fact we are looking at the 25th of January and the code is saying to cover short and reverse to long.  So if you are trading the long side of the market, use the low entry points or the lows of these cycles to buy into your positions.  If you are selling to take some profits use the high points in the chart to shave some profits.  Or if you want to add to your position based on the trend use the acceleration mode patterns.

I want to the move on to the real-time chart above, the weekly Gold Fibonacci Retracement that we published in Seeking Alpha Jan 22, which essentially reflects the Vedic Code Price Momentum chart using a line chart.  And you can see here just on the surface the first impression is very similar to the Vedic Code Chart produced twelve months in advance for the yearly charts.

So, it is pointing to us that here on this chart for example, using Fibonacci Retracements and breaking out of this pattern which seems to be a descending wedge, is a very bullish formation on the bigger picture.  Here from the high made in September to the low made on December 29, we have a bearish flag formation which is a highly technical indicator anticipating the market is about to break out to the upside with the 2011 high as a short term target.

Ladies and Gentlemen, this is indicating to us that we’re about to experience the most historical part of the gold market.  This is a historical buying opportunity and we are beginning to see the price and charts aligning themselves to the energy that has been prospectively forecasted months in advance.

Let’s take a look at the silver market in comparison to the gold Vedic chart above.  Now here let me show you how I am personally using the Vedic Code gold price momentum indicator to trade in the silver market.

To be continued…


Author Patrick MontesDeOca, Director of CMT Group

Posted: 18 Feb 2012


William D. Gann was a trader of the early 20th century. His abilities for profiting from the stock and commodity markets remain unchallenged. Gann’s methods of technical analysis for projecting both price and time targets are unique. Even today, his methods have yet to be fully duplicated.
Known as “The Master Trader”, W.D. Gann was born in 1878, in Lufkin, Texas. Gann netted over 50 million $ from the markets during his trading career, averaging a success rate for trades of more than 90%. It has been said that Gann could very well have been right ALL the time. Any losses incurred by him were only there by his own design and not because of any faults with his methods.
His successes are legendary. Gann literally converted small accounts into fortunes, increasing their net balances by several hundred percent. There are numerous examples of his trading successes, among which are these:
1908 – a $130 account increased to $12.000 in 30 days.
1923 – a $973 account increased to $30.000 in 60 days.
1933 – 479 trades were made with 422 being profitable. This is an accuracy of 88% and 4000% profit.
1946 – A 3-month net profit of $13.000 from starting capital of $4500 – a 400% profit.
The following paragraph appeared in the December 1909 issue of “Ticket” Magazine. It was written by R.D. Wyckoff, the former owner and editor of the “Ticket”, and describes Gann’s proficiency for projecting price targets forward in time:

“One of the most astonishing calculations made by Mr. Gann was during last summer (1909) when he predicted that September Wheat would sell at $1.20. This meant that it must touch that figure before the end of the month of September. At twelve o’clock, Chicago time, on September 30th (the last day) the option was selling bellow $1.08 and it looked as though his prediction would not be fulfilled. Mr. Gann said, ‘If it does not touch $1.20 by the close of the market, it will prove that there is something wrong with my whole method of calculations. I do not care what the price is now, it must go there’. It is common history that September Wheat surprised the whole country but selling at $1.20 and no high in the very last hour of trading, closing at that figure”.  Gann’s trading methods are based on personal beliefs of a natural order existing for everything in the universe.

Gann was part of a family with strong religious beliefs. As a result, Gann would often use Biblical passages as a basis for not only his life, but his trading methods. A passage often quoted by Gann was this from Ecclesiastes 1:9 – 10: “What has been, that will be; what has been done, that will be done. Nothing is new under the sun. Even the thing of which we say, ‘See, this is new!’ has already existed in the ages that preceded us.”
This universal order of nature also existed, Gann determined, and we have the same opinion now, in the stock and commodity markets. Price movements occurred, not in a random manner, but in a manner that can be pre-determined. The predictable movements of prices result from the influence of mathematical points of forces found in nature… And what is the cause for all this points of forces? Right… cosmos…universe… all planets around us. This Gann could say at that time.
These points of force were felt to cause prices to not only move, but move in a manner that can be anticipated. Future targets for both price and time can be confidently projected by reducing these mathematical points of forces to terms of mathematical equations and relationships.
The mathematical equations of Gann are not complex. They result in lines of support and resistance which prices invariably will follow.  Gann held that time is the most important element of trading. Time is the factor that determines the length of a commodity’s price trend. When time dictates that trending prices should react, prices may stabilize for a short period, or they may fluctuate within a tight range, but eventually they will react by reversing direction.

The Week Ahead–Week of February 5, 2012

Author Brian Dolan, Chief Currency Strategist

Posted: 3 Feb 2012 4:00 PM PST

  • Better data drives risk on, Fed QE3 off
  • Still waiting on a Greek debt deal
  • Central banks’ decisions on tap

Better data drives risk on, Fed QE3 off

The past week ended with a string of better-than-expected data releases from key major economies, suggesting the global recovery may avoid a more worrisome downturn. Mostly better than expected PMI’s from Europe, UK, China and the US were supplemented on Friday by a much stronger US employment report than was expected. We’re cautiously optimistic that the better US jobs report is a valid signal that the US recovery is improving, but we’re also aware that January employment numbers are especially volatile due to seasonal factors, and subject to major revision. The decline in the unemployment rate in the January report, in particular, is also suspect due to the inclusion of new population data from the 2010 census. The best way to interpret the data is as though the unemployment rate was already at 8.3% in December as opposed to having declined in January.

The series of more upbeat data allowed the current ‘risk on’ rally to extend further, but with a few notable twists. Of special note is that markets continue to differentiate between currencies based on the prospects for respective central banks to expand their balance sheets further (quantitative easing or QE). We saw this last week following the Fed’s lower-for-longer rate pledge and Bernanke’s mention that QE3 remains an option, which sent the greenback lower across the board. Following Friday’s jobs report, which we think delays (at the minimum) potential Fed QE3, the USD rebounded against EUR and GBP, but lost ground to other major currencies like AUD, CAD, and NZD. The key there is that EUR and GBP, whose central banks are expected to continue asset purchases/balance sheet expansion, also lost ground to AUD, CAD and NZD, whose central banks are not expected to initiate QE. Gold prices also declined sharply on Friday, revealing the yellow metal’s strong relationship with the likelihood of Fed QE3.

We expect this dynamic to continue to influence near-term trading conditions and incoming data will remain an important driver. Next week doesn’t see too much in the way of top-tier data for the majors, but what does come out could have a larger impact than normal (e.g. Australian retail sales, German factory orders/industrial production, Canadian Ivey PMI, and UK industrial production).

Still waiting on a Greek debt deal

Another week comes and goes with no final deal in place to secure Greece’s next round of bailout funds. EU officials’ comments continue to suggest that a deal is nearly complete, with the final sticking point being the amount of public sector participation in debt losses, meaning how much of a loss national governments and the ECB will have to swallow. Assuming a satisfactory deal is reached on the Greek debt swap, what then?

We would expect a final flurry of risk-positive movement as fears of an imminent Greek default are quashed, but we think such a moment may also represent a near-term peak in the current risk rally. For if a deal is reached, we think it will likely be the highpoint in terms of good news in the Eurozone debt crisis. Markets are likely to conclude that even with a Greek debt deal, Greek debt levels are still unsustainable in the long-run. And this also assumes there is no messy rebellion by some Greek debt holders and CDS are not triggered. Moreover, despite better than expected Jan. Eurozone PMI’s, the outlook is still for further weakness in Eurozone growth in the months ahead, which will likely come back to undermine European debt markets yet again.

While there has been some marked improvement in Italian, Spanish and Portuguese bonds in the last week, we’ll be looking to how much of the decline in yields was due to ECB purchases. The ECB will announce the total amount of bond buys made in the last week on Monday at 0930ET/1430GMT. If they were forced to step up purchases significantly over recent weeks, the nascent calm in European debt markets may not last.

In EUR/USD, we continue to watch the recent 1.3000/1.3250 area as a consolidation range, with a break signaling the next directional move.

Central banks’ decisions on tap

Next week sees interest rate and policy decisions from the RBA, BOE and ECB. The RBA is first up on Tuesday afternoon local-Sydney time and markets are expecting a 25 bp rate cut from 4.25% to 4.00%. There is some minor risk of a larger 50 bp cut, as the RBA does not expect banks to pass on to customers the full 25 bps if it only cuts by that much. There is also a small risk that the RBA stays on hold, potentially in light of recently more upbeat global data and calming in the Eurozone debt crisis. Regardless, AUD is not trading on interest rate dynamics at the moment, so we would look to the overall risk environment to gauge AUD’s outlook.

The BOE is first up on Thursday morning and they are expected to hold the benchmark rate steady at 0.50%, but also to initiate a third round of asset purchases. Markets are mostly expecting a smaller round of GBP 50 bio, with a minority expecting another round of GBP 75 bio. In light of some surprising strength in recent UK data, we think the risk is that the BOE does nothing at this meeting, which could see GBP strengthen briefly. Sterling also appears to be defying QE speculation in recent days and GBP/USD is nearer to its recent highs. However, we would note cable is having difficulty extending gains beyond 1.5900, and we are watching for a daily close below the 1.5765 daily cloud top to suggest a potential failure and the start of a reversal lower.

The ECB is also up on Thursday, but are expected to keep policy on hold. ECB Pres. Draghi is likely to point to slightly better PMI’s as a further sign that 4Q was potentially the nadir for the Eurozone, but will also certainly note that downside risks remain. Overall, we don’t think the ECB meeting/press briefing will drive EUR, but that the Greek outcome and risk sentiment will be more important.

Disclaimer: The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

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