Happy New Year’s Eve again, Everyone!

I will be back with you throughout the week with intraday updates and thoughts as we head into the first week of January 2009.

The concept of “thin” Markets and high and low volatility you have heard 4 billion times in the last month has a perfect…and I mean PERFECT …example on our Euro Pound pair today.

Let’s have a peek!

(click for the capture)

We have a rapid and stout correction here to the downside that is surprising…given the Average True Range of this Pair…despite it’s recent strong uptrend!

An intraday correction of 300 pips on this Pair is surely unusual!

But..we are in deeply unusual times, aren’t we!

This Price action, in my view, speaks louder than words as a “Lesson” for being extremely cautious about trading in this current Holiday climate.

If this example is not a “Deterrent” for you….than have a look at the Yen Crosses!

Here is a look at the Pound Yen earlier today!

As we can see…most Institutions, Hedge Funds, and Professional Traders have been away at the beaches and Ski slopes around the world!…

Price action is one of many reasons…but in my view…it is the most important!

NYSE just closed, and we are in positive territory across the board…the Dow, Crude, Gold, NASDAQ,  and the S&P.

Russia is planning to clip Natural Gas supplies to the Ukraine, and with the conflict with Israel and Hamas…we are certainly feeling some geopolitical “flashpoints” as well !

We will see how this carries over to Friday’s Market Open’s around the world!…

Happy New Year’s Eve to All !

I thought we would revisit our big Battle of the English Channel going on with the EuroZone and the U.K.

It is certainly timely since we have had such devisive appreciation of the Euro in this case…Her Majesty may need us to rescue Her again from the Deep Blue!  

When we last looked at the Pair, here is what we had.

I kept the original Chart from that Post a couple weeks back….and what a difference those several trading day made!

Our Daily Bull Flag certainly came to fruition in a massive way and even reached a new paradigm in Price!

(click once for captures)

We never did have a correction there, did we!

 Down on the Hourly, I have written my current  Price action views on the Capture, so be sure to give it a “click”!

It really is my personal view  that the Bank of England will cut rates again next week…

It really is my personal view  that the European Central Bank will pause and hold rates at their next meeting…

 So where does that leave us if my views come to fruition?

“Parity my dear friends and colleagues…Parity, I say!”  

 Parity!

DISCLAIMER:

If I am right…I give my U.K. friends…led by my dear FXstreet Premium friend, Ray….full permission to drown me in the Thames!

If I am right…I give my EuroZone friends and everyone at FXstreet…full permission to throw me a big party in Barcelona!

Either way…I’m pretty neutral about it, wouldn’t you say??? …hee hee hee…

Happy “Thin” Tuesday !

Yes…our “thin” Volume continues all across the Markets…and with plenty of illiquid Price action thrown in there as well !

This becomes an oxymoron, if you will…as high and low liquidity can equal low and high volatility and vice versa!

In this case…we do have recent geopolitical events in the Middle East which helped these two cases…but thats’ another topic!

Let’s jump right in and have a look at our Gold and Euro Dollar Hourly views from yesterday and see where we are….

Immediately, we notice our “general” correlation here has certainly “unwound and decoupled”!

My thought yesterday on a fundamental difference with these two has been validated.

We do, indeed, have Gold continuing its’ appreciation…and holding its’ Value…

And…

We do, indeed, have the Euro also continuing its’ appreciation…and skiing straight down the slope !

 As of this writing…about 2:10 GMT…here are the Charts.

(click once for captures)

Now…some macro-Fundamental points that we must consider in why our Euro/Gold “cousins” are not hanging out together on the Winter Ski slopes lately!…  

First of all, the EuroZone is truly feeling what all of us have been feeling around the world: a state of risk aversion and fear with probable Interest Rate declines in the months to come.

Despite the generally “hawkishly firm” stance of the ECB and it’s continued focus on Inflation…the world is surely proving this “sentiment” to be ill-advised.

Of course, more verification comes from the weak German and overall EZ Data Points lately and while we still may appreciate…the Euro Bull is beginning to tire.

The Chart of the Euro above illustrates this and also signals weak momentum and sentiment with such a robust reversal in Price behavior.

A significant breach of the “Basing” area there will take us to the 1.3820 Support level.

…And what of my old “girlfriend”, Gold?

We should find Her potentially revisiting the major Resistance at $890 and if this is not breached…a potential retracement to the $865 38.2% Fib/dynamic area is highly probable.

Tomorrow…I would like to revisit one of my Posts from last week on the Euro Pound and see how we are faring with the “Battle of the Channel” !

Happy Monday Everyone!

We have all emerged well from Christmas and Boxing Day around the world…hopefully in one piece!…so let’s have a look at a a particularly interesting move on Friday, as well as the Sydney Open a few hours ago…

First off, I would like to focus on a Unit that actually did move on Friday!

Remember my Post on why I still love Gold a month or so back? 

Friday’s interesting move in Price action fits right in here…

The significant trending appreciation in Gold with the intraday breakout was a fine example of  Price behavior taking advantage of a “thin” Market climate!

Let’s have a look…

(click once for captures)

Now…interestingly enough…especially in a “thin” environment…the Euro did not follow this correlation quite as heavily.

While still in an uptrend and appreciating…the Euro does not have what it’s “cousin”, Gold, has… 

A “Safe Haven” history.

Of course…I am speaking of the proverbial “Apples and Oranges” here in the same sentence.

We certainly cannot make a “true straight correlation” with a Currency and a Metal…but we do know exactly how close they are due to the fact of how much the Euro is backed by Gold.

Here is Fiber on the same Hourly view…

 Fiber may also pullback to the 38.2% Fib as we see in Gold as well…but we may see looking out a bit longer-term that these two “Cousins” will begin to “unwind” from each other.

“Why would this be, CVJ?…when again…the Euro Currency itself is so heavily backed by Gold?…

A fine question, my friends!…and one we will get to tomorrow!

Hello Everyone!

I hope everyone had a safe and festive Christmas, and Happy Boxing Day!

Pardon me for my “allusion” to those infamous German evenings in the 1930’s with my title, but just as those Long Knives were symbolic of troubles and dangers to come…so can Price action today with the “Long Wicks” that we are having all over most markets!

When we see this, it is due primarily to what we call “indecision” and “Pushing and Pulling” Price action.

In times of light Volume, this sentiment is strongly magnified.

Those of you who are choosing to work in this environment, watch your Stop Losses carefully!

These angular vertical moves can certainly trigger them all day long.

Let’s have a brief look around….about 15:00 GMT as of my writing….

Euro is hitting its’ all time High against the Pound coming in at .9575 according to DJNewswire!

Euro itself clocking in currently at 1.4046…pulling back a bit after touching around 1.4120.

Swissy in a strong Daily Bear Flag pattern, and holding at the support of Sept. 22nd Fib Upleg @ 1.0700 area.

Aussie and Kiwi still rather rangebound on an Hourly perspective, and our Blog friend of the last couple of days, the Yen, is hovering around the 38.2%  of the Hourly Upleg we put in a couple days ago.

Dow, S&P 500, Gold, Crude, and the NASDAQ are all  in positive territory, so let’s see if our “usual” correlations persist throughout the day…

So…have a travel Tour around your Platforms if your Brokers and Dealers are open…and we will check in later to see how any of our Dynamic areas in a few Pairs have fared!

Merry Christmas again to All !

The final “Purge” of Japanese Data was just released, and it is not encouraging…albeit not surprising either.

The Nikkei opens us about .5% higher…which is interesting. We’ll see where She heads as all of the lackluster Data is digested.

November Industrial Output falls to -8.1% Month-over-Month…which is the largest decline on record!!!

 Overall Retail Sales is down 0.9% for the Year… although Core CPI is down just a tiny bit at +1.0% when we were expecting +1.1%.

For our concerns, we will see how the Dollar Yen absorbs and work through this Data tomorrow, the 26th.

Currencies may still be quiet, but rather volatile…due to Boxing Day and your particular Platforms and Brokers may or may not be open.

It will be an interesting day, and I’ll stop in for another update!

Happy Boxing Day tomorrow for all!  

Greetings to All and Merry Christmas!

It is my sincere hope for a fine day today with your Family and Friends!

The latest News from Japan is rather tepid, but we will get some real “meat” tonight with the last purge of Japanese News.

The Corporate Service Price comes in right in line at -1.9% …rather neutral for the Yen itself…as a high reading is rather bullish and a low watermark is bearish.

This is similar to the U.S. CPE, and can be used as a broad indication of Inflationary pressures.

November Annualized Housing Starts of new homes were down about 73K units, as was Year-over-Year Housing Starts which flatlined at 0.0%.

Construction Orders tells the tale here moving from 47.2% down to -12.5%.

Nothing new here…and in my view…these Data Points could originate from just about anywhere in the world.

We are all feeling the same thing here, aren’t we !

I love to do this every Christmas, so try to if you have a moment:

With Platforms and Markets closed today…take a look at virtually any Currency Pair and see where Price is “frozen in time”.

You will find many at Round Numbers…Price resting on Support and/or Resistance…respecting significant Trend Lines… and the like.

Now…please tell me there is not “Order” in these Markets!

I do not know why or how…It Is what it Is.

I’ll ponder it over a Football Game and a Spiced Rum….  

The November Meeting Minutes of the Bank of Japan certainly offer us no surprises here…and is certainly not Hawkish in any sense of the term!

The “cohesion” within the BoJ itself was rather refreshing, as the Board unanimously held Interest Rates at .30bps…( currently at .10bps as of last week). 

This was in sharp contrast to new Governor Masaaki Shirakawa having to cast his Vote last meeting.

Perhaps they are holding equal “Sentiment” lately and functioning as an actual Board of Decision.

How many instances over previous years have we literally seen the Bank of Japan come apart at the seams?

When you are truly the only Central Bank of the Industrialized Powers tied directly to your Government…

then this new ”Perspective of Cooperation” certainly is a change of pace!

See you soon for 5:00 GMT Data!  

Hi again, everyone!

18:10 GMT now at the early-day Close of the NYSE with the DJIA @ 8468.48…the S&P 500 @ 868.15…and the NASDAQ @ 1524.90.

Gold was on a nice $10.00 appreciation this morning closing at $849.00…although it did not really translate to its’ Correlation with the Euro.

Crude drops off  @ $37.52 currently, and appears to still respecting intraday Support @ about $33.60.

Our Euro is still jumping around in its’ Range on the Hourly, and now appears to be forming a Symmetrical Triangle on this time cycle.

We’ll check back in later, and see if our “Coil” pattern here gets even tighter with lowering and quieting volatility! 

Official Time is 16:19 GMT now, and we have seen the Currency markets digest the “tepid” U.S. Data of this morning as mentioned in my earlier Post.

Euro Dollar is caught in about a about a 100-pip range on the Hourly…and is the FIRST real Indication of quiet thin Volume in my view  we have discussed  in this Trading climate going into Christmas Day tomorrow.

Let’s see if we stick to this tight ”sidewinding” movement we have here…or…if we extend out a bit later in the day where our Daily Fib Area of the 1.2550-1.4718 recent Upleg @  1.3889 to 1.4260, indeed, becomes a new Range.

Have a Look…

(click once for the capture)