Greetings Everyone!

“That’s right Boys and Girls!…it’s time for that new and compelling T.V. Show”…

“Market Monday Reflections with CVJ”!

(OK…you can stop laughing now!…) …  

As most of you know…I tend to take a few steps back over the weekends and reflect on the current climate, what I have done, and what I am thinking about doing.

This weekend, I watched Football, ate 13 million turkey sandwiches, and I still cannot figure out how the Thanksgiving Turkey seems to produce more and more leftovers year after year!

I was really On-Task, wasn’t I!

Oops! I forgot!

I have to point out I watched AMERICAN Football…and have nothing against  “REAL” Football as the rest of the world tells me.

(So…all of you in Europe can stop planning to “Stone me in the Town Square” with useless Deutschmarks, Lira, and Francs!  

They include the usual Broker/Dealer questions, Platforms, etc…but the majority have to do with something I call “Analysis of Execution after the Fact”.

This is where an individual is inquiring for a “solution” to their particular trade dilemma.

Examples include an inappropriate entry that was early or late…too many Lots on the position, being over-leveraged, allowing losing positions to run in the hope they will turn…. you know…all of the common experiences newer traders run into.

If you have not…you will.

I do not know when you will have these issues.

I do not know how you will have these issues.

I only guarantee that YOU WILL.

Every Trader at one point or another has made every mistake and ill-advised decision that YOU are making right now…. two times over…. at least!

Now…by a margin of about 1000 to 1…the most prolific questions I receive are “Signal”-type questions that specifically ask me where the person should get into their trade, out of their trade, and WHY.

Oh…the famous “Why” questions…and here is the analogy for the title of today’s Post.

“The Problem between You and Me” is just that…IT’S YOU AND ME…not You and You or Me and Me.

If it was You and You…then You will be able to answer these questions for Yourself!

(But…since you are asking Me…shouldn’t you be able to answer and justify why you took the Trades in the first place?)

AH HA!…I got you!

We cannot even begin a dialogue on the questions without knowing why you made the choices you did in a position.

I certainly cannot go into your head and trade for you…nor can I go into your Platform and “magically” fix it for you…whatever the issue is.

“But CVJ!…What do all of your crazy alliterations have to do with me?”

The ”Built-in” Lesson for today is crucial, so I decided to emphasize these points!

All of this comes down to the impatience of developing your own Learning Curve.

Many are simply not willing to do the due diligence and the work that it takes to arrive at some “Consistency” in Trading in the first place!

Winning or Losing is irrelevant at this stage of the process!

Besides…without consistency and knowledge in your Tool Box…which one of those two truly has the higher probability?  

P.S. - Tomorrow…we take a look at the USD/JPY…the Dollar Yen…and see where we are in current Price action.

Here is a Daily view, so be sure to click once for the Capture.

We have some interesting factors in the wind from Japan, so let’s see where our technical analysis take us!

Greetings and Happy Thanksgiving to everyone!

I will be returning to the Blog Sunday evening for the new week.

In the meantime, watch Price action across the board tomorrow…the “Skeletons” we spoke of on Monday may surely be appearing with Low Volume equaling High Volatility….or Low Volatility equaling greater probabilities of breaking out of the quiet directionality we are seeing.

For the past few years…”Black Friday”, as we call it in the States for shopping…is really meant for all of us in the Currency Markets!

We have seen some intense noisy action take place in the past, and with today’s muted Sessions across the board…we may see breakouts revealing themselves.

Watch your Leverage and Lot size, and move ahead cautiously.

Or…do what I’m doing…have a turkey sandwich and watch a little College Football tomorrow! 

Hi All !

Well…our battle has been fierce between our tumultuous FXstreet Live Sessions Manager, Maud Gilson’s Belgian “Euro” Chocolatiers, and my Swiss “Francs” Chocolatiers!

Who will emerge from the “Battle of Flanders” victorious?…and have the finest Chocolate in the World?

Let’s get right in there for current price action…and be sure to bring your Strawberries to mop up some Chocolate with!…It has been messy on the Battlefield so far!…

(click once for captures)

As the Supreme Swiss Guard in command, I am directing my Chefs to hold the line here.

We are in process on the Daily of losing a bit of ground…and I am “allowing” the Euro chocolate makers to prevail within this macro Bear Flag here.

My simple strategy?… General Maud’s Chefs do not KNOW it is a Bear Flag!…and a reversal off of the Fibonacci areas @ 1.55 is very probable!

The “Cluster” areas where the 23.6/38.2% @ 1.5218/39…and the 38.2/61.8% @ 1.5059/25 from these two Lows on the October 22 and November 12 are possible points of Test.

I will re-evaluate my tactical stance if these areas are seen.

Now…General Maud’s Belgians are advancing to the next set of trenches here, and Her Euro Chefs are really producing chocolate in consistent quantities on this uptrend from the November 12th Low.

Now…what happens when your Troops have such strong consistent production?

The Chefs get tired!…and Maud’s Chocolatiers showing signs of fatigue are certainly probable here!

We have given them a good “run for their Confectioner’s Sugar” here…with the intense Hourly battle of the last few days.

Her strategy may be the exact strategy I am doing with my Chefs now!…except in “Reverse”!

She may simply have them “pullback” to the Fibonacci clusters…regroup…gather more supplies of Sugar, Butter, etc….and resume their uptrend ascent!

Two staunch Tacticians here..both having strengths and weaknesses of their own…

General Maud of the Belgian Chocolate Command…a native to the area and master Chocolate Taster…

Supreme Swiss Guard Tim…who lacks in native experience with his Swiss Chocolate Chefs…but has Objectivity that lacks Emotion in his favor!

Time will only tell who prevails in the “Battle of Flanders”, and who really does have the “Best Chocolate in the World”…

“Do not worry…we will keep you updated on FXstreet TV News…live at 11p.m. all over Europe!”

P.S. - Thanks to all for the kind comments about my animated perspectives and “stories” in the Blog!

I try and make the Posts light-hearted and enjoyable, while expressing crucial concepts and ideas about the Markets and Currency Pairs as a whole.

Please keep your comments and questions coming, and let me know what you are interested in as Topics. Again…I would like to “steer” the Blog in directions everyone is interested in!

An update, everyone!

Our Turkey seems to be insatiable before the Thanksgiving Holiday…I guess Durable Goods was not enough for his appetite!

Running away with New Home Sales at the worst levels since 1991…he has plenty of new construction to gobble up, doesn’t he!

New Home Sales off a good 20K since last month, down to 433K units sold.

Our macro Indexes…Chicago PMI and Michigan Consumer Sentiment clock in at 33.8 and 55.3 respectively…indicating the overall economic “contraction” continues on its’ destructive path.

Clearly today’s Data Points are simply more verification of what we already know…that the United States economy as a whole is still in dire straits…hence Global economic health is moving right along with it.

Our Turkey may go to table tomorrow…but with these Numbers today…He may continue to eat in the “afterlife”…  

Hi everyone!

An intraday update on the slew of Data Points coming our way today…starting with Durable Goods clocking in at a -6.2%,  and ex-Autos at -4.4% !

“Somebody call the Paramedics!”…

We have the largest decline here in two years….better get the Cardiologists to come along, too….

Of course…no real shock here as Americans surely are not in the BMW or Viking Appliance purchasing mood lately, now are they!

The Majors see a small spike in appreciation due to Dollar weakness, and Gold and Crude also appreciating nicely on the “overall news package” as well.

Initial Jobless Claims and Personal Consumption Expenditures looking relatively in line with Consensus..but weak nonetheless.

The true “key” here in my view is the continuing lack of consumer confidence with the Personal Income and Personal Spending numbers.

Relatively in line as well…but could this simply be a “outlier” of the coming Holidays and the time of year?

Month-over-Month Personal Spending up from a -0.9 consensus to a -0.3. A positive sign?…of course not!

We are still negative here…that’s what the little “-” is for!…    :-)

Personal Income in line, but in the longer-term view…I personally cannot see this continuing.

The continual shift in declining Employment is not going away anytime soon.

 Let’s see what the Managing Indices bring us with Chicago PMI and the Michigan Index due in under an hour…..and then New Home Sales @ 15:00 GMT.

Hmmm…want the New Home Sales now?…I can probably give you a rather accurate idea….hee hee…

,

Well…the “Battle of the Chocolatiers” is about to commence!

You have the Belgian “Euros” on one side fortifying the garrisons, and the “Francs” of Switzerland preparing their strategy for attacking the trenches in Flanders.

What do we really have here?

Like the Euro Dollar and Swissy Dollar…we have two Armies both fighting for Supremacy of the Chocolate ( Foreign Exchange) Landscape!

As we covered yesterday…both are very similar, but are on opposite sides of the “Price Direction” battlefield.

Let’s take a look briefly at General Maud’s Belgian Euro battlefield, and Supreme Swiss Guard Tim’s Swissy battlefield and see where we are…

(click once for captures)

See how “vertical” the Flagpoles of the Swissy are?…not quite as “choppy” in Price action as the Bull Flagpoles on the Euro.

Volume here is a defining Factor in the differences between these two Units.

As we already know, the “Inverse” correlation between these two is high but not EXACT.

If they were, we would have true retrograde inversion in their Directionality.

So what elements make up these two Economies to make them different?

In the most basic view and for simplicity’s sake…Switzerland is a massive Importer of Minerals and Energy, since the majority of the country is beautiful landscape. The Swiss economy is almost “uni-lateral”…in that what it imports, it will process and resell on the Open markets. The primary Product Complex here being Chemicals.

Obviously, Banking and Insurance are vital to their economy and their heritage.

The EU, on the other hand,  is much more of a complex and “multi-lateral” Economy…in that it imports and exports and produces literally all criteria of Goods, Products, and Services.

With the 27-member “Nations” feeding their individual economies into the Euro, it is not surprising that the EU is the largest Exporting “Entity” in the world, and the 2nd largest Importer.

We see these elementary fundamental differences by observing the characterstics of Price action within the individual Units.

Tomorrow…we take a look at the where the ”Battle for Flanders” is progressing by watching the Chocolatiers “cross” their Spatulas and raise their Double-Boilers for battle in the Euro Swissy ”Cross” pair!  

Here’s a current view of the action…

P.S. - By the way…if you stop into the Webinars today… tell Maud her Euro Chocolatiers are winning!…

P.S.S. - Just don’t tell her my Swissy Chocolatiers have been winning for the previous few months in that lovely downtrend!…hee hee…

Greetings!

Today’s title comes with a story for you!

“CVJ!…What does Switzerland, Belgium, and Chocolate have to do with trading?”

(Yes..I heard the “CC”s” too…I have named them…the critics I refer to all the time who “talk” to me in the Blog…they are the “Crazy CVJ’ers”…hee hee…  

I have a rather simple answer for them.

Our FXstreet Live Sessions Moderator/Manager and my dear friend, Maud Gilson, is from Belgium.

We have learned a great deal about each other’s countries in the Webinar Rooms and FXstreet Premium sessions in the past few years, and lately we were talking of the massive debate on who has the Finest Chocolate in the World.

Of course, Maud says Belgium hands down, and refers to specific practices and Confectioner’s Shops that make the Belgians superior at the practice.

Maud buys her Chocolate with Euros.

I choose Swiss Chocolate…and since I have never been to Switzerland, I can be objective, and say my view is full of ”Neutrality”…just like Switzerland.

If I visit Switzerland one day, I will be buying my chocolate in Swiss Francs.

( OK, “CC’s” in the audience…jump in now and tell everyone where I am going with this! )

My back story here is focusing on how Maud and I are both buying chocolate, so our “Correlation” is very high.

The Correlation is not EXACT, as we are buying different KINDS of chocolate.

Maud=Euro and Tim=Swissy…

Highly correlated…but different!

My “built-in” Lesson today is very similar to our Commodities/Currencies correlations from last week…but even more direct.

The Euro is by far the most popular currency pair for Retail traders to work with…especially newer traders.

It encompasses the most volume, and garnishes the most “weight” of Price activity.

In my experience with the learning curve of most new traders, the”inverse” correlation of Euro/Swissy is by far the first example they will learn.

This also becomes the most overused and misunderstood correlation as well…more on this tomorrow.

Let’s look at Monday’s Price action with both Units on a couple of different time frames.

Let’s see how  Price action looks in context to each other….

(click once for captures)

The “catalyst” here arrives following Price action continuations extending from Friday, bolstered by the Citi Corp news, and Obama’s little Press Conference.

(My Caveat again…like I said Friday…these are irrelevant to me, as Technicals told the story.)

You will immediately notice the Inverse correlations between the Euro and the Swissy, but again…the correlation is not 100%.

It seems many take this for granted and always assume that if the Euro is rising, the Swissy is falling.

Let’s keep a mindful eye on Price as we move from the Asian Session into London and beyond.

Tomorrow, we will consider what specifically makes the Euro and the Swissy inversely correlate…by looking “inside” the Currency Pairs and their Economies.

It may not have anything to do with the “Battle of the Chocolatiers” in the trenches of Europe…but it is interesting!

It may even be more interesting than the “Chocolate Battle”… just don’t tell Maud!  

Welcome to a new week everyone!

A new week…and the beginning of the “End of Year/Holiday Volatility” season that we work with each year.

The analogy with today’s title refers to the “Skeletal” view that we have during this time.

We begin to see the major Institutions, Hedge Funds, Entities, and Banks begin to “Thin the Herd” for the run up through the new year.

Senior Management and Traders begin their holiday and vacation plans to take time off, junior traders and customer service personnel are left at the dealing desks, and what is left is the “Skeletons” of the Firm…and the transparent “lower trading volume” that comes with along with it.

This year may just be entirely different…the World’s trading entities have already begun “Thinning the Herd” to the point of having overgrown pasture with the 5-6 Cows left to graze the planet’s financial landscape!

So what does this mean for us?

Under previous ”normal” conditions during November and December, we usually see light volume of the Major Market participants bringing along plenty of volatility, noisy whipsawing, and large intraday swings.

Yes…I do hear you.

“But CVJ!…We are seeing that RIGHT NOW…and have seen that scenario for months!”

I am shedding a few tears for all of you…I am so proud!

You guys are sharp!  

With the President-Elect beginning to assemble his incoming Cabinet here, we heard on Friday and “saw” a major catalyst for Dow strength, Gold strength, and Dollar weakness in the probable choice of New York Federal Reserve President Tim Geithner as the Secretary of the Treasury.

This is what the world Media would have us believe.

But…as Traders…we know better.

In my personal view…we were simply reaching key technical levels in the Dow below 8000, a touch under 800 in the S&P, as well as most Major currency pairs where a paradigm shift was literally imminent.

As we always say, we cannot continue in a uni-directional path forever.

This scenario is a good analogy for our “Skeletons” emerging view with Market activity in the next 6 weeks.

We will see unexpected impulsive volatility that will be based on seemingly mundane Data, sentiment, rumor, or fact.

It is as if the final Quarter of the year is always under increased magnification.

Remember…Entities that have billions of dollars to try and square in the Books by December 31st will go to the Markets of “least Resistance”…just as the flow of Water.

They find these “Portals of Opportunity” right here in the Foreign Exchange markets.

A quick recap of Gold from our visit on Friday.

Our thoughts about pushing towards $760 surely came through, and we blew past this level onto the key area of $800-808 per ounce.

It appears we may simply have a “false break” here, as the previous consolidating in the larger Triangle gives us a “market memory” to visit again and say “Hello”.

Additionally, the macro-Consolidative Price actions of the entire month provides additional sentiment to visit $770 a clear Support here.

 It turns our that our “physical” Gold buying friends we spoke of on Friday are still on task, indeed!

The World Gold Council stated the purchase of Coins and Bars to be at a 10-plus year high in the 3rd quarter.

Hmmm…maybe “CVJ’s crazy thoughts” on Gold during Friday’s Post aren’t too off the Mark after all…

OK…now all of you owe me a Drink! …hee hee…  

I would like to encourage those who subscribe by email, and those who do not directly subscribe to the Blog, and all of the superb Blogs here on FXStreet, to have a look at this Link for the solutions to using the RSS Feeds.

It is deeply expedient…and much more convenient than email.

I mean…C’Mon…how many more emails do you really need in your Inbox each day?  

http://www.google.com/support/feedburner/bin/answer.py?answer=79408

Welcome to Friday, Everyone!

OK…a quick update on the “Pretty Metal Lady” from Wednesday’s deeply volatile day!

While Gold was slightly bullish and relatively stable….the World around Her certainly was not!

(But hey…what does She care, right?…According to our “story”…She’s in Australia grilling Shrimp with new boyfriend, I.M.A. Hedge Fund! …hee hee…  

 Volatility and Risk Aversion still rule the Day…so how did Gold handle it?

 ( click once for capture)

Our Symmetrical Triangle we identified yesterday continued its’ coiling throughout the Asian Session, and broke north a good 20 Bucks to form a “mini”-Bull Flag, as I call them.

We can see the Fractals here, with our “building blocks-within-building blocks” idea, and if the current directionality continues… a push to our Resistance area of the $760’s is highly probable.

( Remember…Support and Resistance are “relative” in my personal view, so I consider them as active ”areas” or “ranges” that function as Key Levels. Price is not stagnant…so why should areas that define it be? )

Remember our Monthly View?

The Technicals of the Fibonacci retracement itself confirm my Bullish view…Plain and Simple.

 But I know all of you want the big singular Argument!

“CVJ!…Tell us more of your crazy thoughts!”

In which I cordially reply, “It will be my pleasure, and thank you for inquiring!” 

   With global assets continuing to deflate, what have the Central Banks of the world economy been doing?

You’ve got it…cutting Interest Rates!

Our Fed, and our friends in the EuroZone and the U.K. will more than likely continue to do so, and how do we “counter” moves such as these?

We “offset” and liquidate Asset Classes to meet Margin Calls. Gold is one of the Tools to do just this. But in a “counter-intuitive” fashion in our current climate.

I say this because Gold certainly has not functioned the past few months as the traditional “Safe-Haven” security blanket like you had as a child.

(This is where our friend, I.M.A. Hedge Fund, comes in! While he’s off in Australia with Gold…what are all of his Hedgie Friends doing around the globe?)

 They are de-leveraging by meeting massive margin Calls using Gold, as well as other “Hedging” instruments, to cover other poorly performing Asset Classes they may have.

This is translating to an impressive increase in “Physical” Gold buying, as the Supply continues to strain.

Supply constrains…Price expands…Economics 101.

Now here comes my token DISCLAIMER!

All of you know by now I tend to hold longer-term views on most things…including Trading itself….meaning “A Scalper I am Not”.

I enjoy the Macro-View, and also realize any of the “actions” that take place will take months to digest and reach their fruition. 

My Bullish Gold view is no different.

We are not seeing Gold as a “hedging” against Inflation in this current climate just yet…but our “Physical” Gold purchasers I mentioned above would respectfully disagree.

 Our own Fed Minutes stated that “More agressive easing (by Central Banks) should reduce the odds of a deflationary outcome”.

As soon as the easing ceases, and our Hedgie Friends around the globe stop liquidating everything but their Summer Estates…Gold should rise and appreciate in value, as well as the AUD/USD…the Aussie Dollar.

When?

“I have no idea….and I do not NEED to know because I REACT to…”

Well…if you have followed the Blog daily…you know the rest.  

Hello Everyone!

Today…we move on to my nemesis…my ex-girlfriend…Gold!

I’m doing OK with it…ever since she ran off with I.M.A. Hedge Fund…you can only cry for so long, right! 

So what is the reason for the fallout with the “Other Woman I Love”?

It was her evil twin brother…his name is Flight to Quality.

( OK OK…I’ll stop with my big soap opera! All of you need to tell me when my animated writing just gets to be too much! )

In all seriousness, Gold is arguably the First Currency of human civilization.

It’s Role in the annals of time are well documented, and will not be considered here. So down to business for our needs here in the Foreign Exchange world.

The correlation between Gold and the Australian Dollar is one of the highest historical correlations that we have in all of Finance.

The correlation has hovered up to a massive 96%…usually averaging around 86% more or less.

We find this correlation primarily as the Aussie Dollar really can be seen as a “Proxy” for Gold, as these first two Captures below illustrate.

(Remember…just as with Oil and the Loonie…consider Gold and the Aussie as two separate Instruments with their own individual characteristics. The Gold/Aussie correlation is even higher, so we really need to be mindful of seeing them on their own merits!)

The great vast land of Australia is the worlds’ third largest producer of Gold, as well as a leading economy for the production of all Metals in this Commodities Complex.

South Africa is the world’s second largest Gold producer…and who is #1?

CHINA! …something my FXStreet Premium South African friend, Boykie, is none too happy about!  

(click once for captures)

We notice a significant “unwinding” in the correlation here the last few months, don’t we?

See how strong Gold is?…how resilient it has remained?

It has simply not continued to slide down to the sea as the Aussie has, but has had plenty of consolidating “Push and Pull” Price action within itself.

This is where our “safe haven” nature comes in…HISTORICALLY, at least! This certainly has not been the “pure” relationship that it appears to be!

Gold has lost more than 20% of its’ value since the March 2008 Highs…so it may not quite be the strong “Safe Haven” we would like it to be.

In its’ most simplistic form…when we see “Fear” as a sentiment racing across the Financial Spectrum, we see see a “Flight to Safety”, or a “Flight to Quality” into Gold as an Asset Class.

We are trying to “hide and preserve” the integrity of our inherent value, so we will convert our Funds into Gold.

Of course, these relationships are deeply complex…but for our needs here, I am trying to be as simple and concise as possible.

Let’s start with a little basic Technical Analysis and see where it may lead us…

( Once again…that Masked Marauder is back who says things do not work! First it was Markets have no Memory, and now Fibonacci Analysis is invalid…OK..we need to get this guy to open his eyes and take off his Mask!…hee hee…  

Onto the 4-Hour, where we can clarify some Triangular Consolidating Patterns.

OK…now the really fun part!

Are you not going to ask me what my Bias is?

Just like my “wife”, Crude Oil…I am Bullish on the ”Pretty Metal Lady” over the long-term.

“Not AGAIN, CVJ!…Bullish again?”

I hear you, I hear you…do not revolt against me just yet!…

Just as with Crude…I will provide a singular Argument for you in defense of my position tomorrow.

In the meantime… I bid “Good Day, Madam!” to Gold.

Her new Beau… I.M.A. Hedge Fund, is sweeping her away for a long weekend.

You guessed it…to Australia.