Greetings Everyone, and Happy Sunday!

Post-Time  is 10:15 a.m. my time, so it is 17:15 GMT.

With a somewhat-related View to yesterday’s Ideas about truly “looking and seeing” The Markets, I was struck by a recent conversation I had with a friend concerning The Dollar and all of the recent Implications and Rhetoric surrounding it.

The Topic also came to mind, as I am working on several new Installments of the “Fundamental Forex Foundations” Reports for The Education Section of FXStreet for all of you, so I thought we would address this whole Dollar Debate.

Unfortunately, the conversation with my friend was IN ACTUAL AGREEMENT… which was deeply surprising and disturbing! All of you know this guy is literally the Anti-Thesis of me, and we love to banter back and forth.

Many of you may remember a few references I have made concerning him… one of my early Equities Mentors who I enjoy wagering lunches and such with on various issues.

Here is an “Old School” Professional if I ever saw one… I say Black and he says White. He feels trading OTC Currencies is “The Wild West” of the Trading Industry and will have nothing of it. He is proud to be a “conventional” Stock Trader who enjoys a lot of the “Buy and Hold” philosophies. He also feels The Dollar is not going anywhere… despite what China wants, thinks, or jawbones… and anyone else for that matter!

(In his defense, he is also one of the finest and most consistent Traders I have ever known, and the Foundations I was exposed to and learned from him in the late 1990’s are a direct reflection of his Work and Diligence.)

So we were having this conversation about the Chinese Rhetoric at the recent G8 Summit and before, we found ourselves really seeing “Both Sides of The Fence”, as I like to say here on The Blog.

In Its Simplest Form… as we can have this discussion for weeks, the concern about moving away from The Dollar as The Global Reserve Currency sees BRIC Powers such as China looking to Due Diligence of their Treasury Reserves in the U.S. Economy.

China is, at least, expanding Its Horizons into thinking of “Other” Currency possibilities… such as The Euro… and not just The Dollar here. With Obama and Big Ben throwing money out of The Helicopter, and potentially more to come with talk of a 2nd Stimulus Plan, the continual Treasury Buy-Back Program that is being done is surely “weighing” on all of us, not to mention on the minds of China. This “Pressure” places The Dollar in “true” Decline against other World Currencies in general, simply because we do not see the “Depth and Level” of QE that the U.S. has been engaging in.

The Currency simply becomes more “Plastic”, for lack of a better term.

The $130 Trillion in U.S. Debt is dominating any “Real” GDP at around $12 Trillion, so this “Disconnect” just by itself  keeps Weight on The Dollar’s inherent Value moving forward.

The Chinese Population of about 1.3 Billion people surely is a formidable potential World Buying-Power with a remarkable Savings Rate of about 28% to 30%, ensuring Liquidity for future purchases on the Whole.

***

Now… on “The Other Side of The Fence”, are we really deeply concerned about China’s concerns and rhetoric moving ahead?

Are they truly emergent as a Power of Economic and Production Stability?

It depends who you ask.

 We can, perhaps, rule out some “Validity” here since we know The Yuan is not “free-floating”, so it is like comparing Apples to Oranges. The continual Manipulation of The Yuan is not helping the Case as well.

The massive Treasury Reserves held by China would have to go somewhere, and “logic” would dictate the Funds will stay within Its own Currency as Macro-Development improves. In the meantime, Is there another Entity that handle the “potential” Treasury Inflows that China would be replacing as “sound” Asset Diversification?

 As their own Economy grows, wouldn’t China then need more and more Renminbi of it’s own and keeps It’s own “Treasury Funding” and other Asset Classes to Itself?

Of course, there are many Aspects to this “Argument” on both sides… as we are dealing with a still-developing albeit massive Economy.

I certainly do not have the answer… but there exists enough “plausible” Criteria on “Both Side of the Fence”

that one can exhaust him or herself for a while.

So what did my Friend and I do in this case of “literal” Agreement?…

We split the Check, of course.

Please join me later for Monday’s “Big Blog” Update, as we prepare for another interesting and volatile Week!

*** Image/Cartoon courtesy of BlueWire Studio.

Greetings, Everyone and a fine Saturday to All!

Writing-Time is 8:30 a.m. for me, so 15:30 GMT.

While we have a Reprieve in the Volatility and Risk-Averse Climate with most Units involved with IntraDay Consolidation, we may certainly be in store for another Volatile and Risk-Averse Week.

While this may seem “Negative” to some, it is largely “Positive” to others.

BUT… We are already “flawed” with this Climate… and this rather Esoteric Thought is what I would like to address.

We always hear of various Perspectives in Trading… Trends, Counter-Trends, Range Views, Faders, Support and Resistance Perspectives, etc.

As we formally analyze Price Action via Technical Analysis… we will see Order Flow fit into one of the Categories mentioned… which instantly Conditions us to “Choose A Side”,  if you will.

This is where we may “See” what I call in a Fine Art context, “The Fatal Flaw”.

( This is a direct reference to when we see a Painting for the first time… it is too late. We have absorbed the Initial Reactions of what we are seeing, and are already forming Subjective Judgements. It is then when we go back and re-examine the Piece that we begin to extract more relevant information concerning The Work Itself… )

Again… My Perspective here is absorbing what we are actually “Seeing”… whether it is a Painting or a Chart of Price Action.

Is it not true that the instant  we pull up a Chart we instantly define a Trending, Non-Trending, or Ranging Environment?… and then it makes us FEEL a certain way?

Then… we go back, pull out our Toolbox of Technical Analysis, and begin to bring some Objectivity to the Table.

Perhaps one of the most Untenable Goals of Trading is to arrive to Price with as little Pre-Conception and Neutrality as possible… it is certainly something I personally work on everyday, since I am such a Visual Person… obviously most Artists are.

So let’s put this rather Abstract idea into Practice.

Here we have a Monthly Chart of Gold with Text, so give it a Click.

The more “Neutral” we can become about what we are actually “Seeing”… the more we  can remove some of The Emotional Component when we begin our Analysis.

Have a fine Day, Everyone and I’ll see you tomorrow!

Hi Everyone, and Welcome to the Weekend!

Writing-Time is 7 A.M. my time, which is 14:00 GMT.

My Apologies for not posting a Late-Day Update, as we really drove into Quiet Consolidation as the Indices continues subtle losses and most Majors slowed the Swing “Roller-Coaster” Momentum of the Day.

( Plus… my Niece is visiting… so the mandatory Requirement for being a Citizens of Phoenix is to swim 23 hours a day from May until September… )       

The wide IntraDay Swings yesterday had me thinking about how most Shorter-Term Traders work within their Style and find their “Personal Edge”… So I submit an Inquiry for all of you.

Where do you find your “Dependence” in these cases?… meaning what “Part” or “Portion” of your Trade Plan do you think of FIRST when working with this Price Action?

Is your first thought touched with Fear on your Position going against you?

Is your first thought concerned with your Stop-Loss being triggered?

Is your first thought concerned with your Technique or Strategy for entering the Position?

Is your first thought concerned with simply wanting to “Break-Even” due to a Timing and Execution Issue?

Do you feel instantly like this???……

Or do you feel instantly like this???……

Of course… I have an underlying Motive for asking such “Open-Ended” Questions… and will save my own Responses for Yours in the Interim!

So please bring them aboard and Share with Everyone!

All Responses WILL be Posted right here, as well as follow-up Commentary.

Remember…I am interested in your FIRST INITIAL RESPONSES… not what you “should” do or “Should” have done.

No Strategies, Theory, or Techniques in this Case.

Stick with your Thought Processes.

We ALL know there is a significant difference between Psychological Tendency prior to the Position… so my Interest is your Initial Feeling after the Position is Executed.

All Comments are Welcome and Encouraged!

Have a fine Saturday, and I hope to have plenty of Participation and Responses to post and engage a Dialogue here!

I will see you tomorrow morning, as see where we are… as well as some Pre-Market Thoughts ahead of the Sydney Open!

Please join me then!

Greetings Everyone and Welcome to Monday!

With the Sydney Open ( in terms of Foreign Exchange Liquidity ), we have seen some Gaps emerge due to Institutional Block Order Sentiment, and despite this slight activity and the Lower Market Volume… we do see movement.

As you scan your Platforms and Data Feeds, you will notice we are entering that “surreal and apocalyptic land” I like to call, “Wick City” !  

It is a fascinating town… full of surprises and beautiful women!  ( uhhh…. just joking… hee hee hee… )

OK… but we still have “potential” for plenty of twists and turns in activity!

We always have a visit to Wick City when Volume is Low and we simply have “Noisy Indecision” as the Big Boys and Institutional Entities are out of the Major Markets and Exchanges for the Holiday.

Since the Euro and, conversely, the Swissy are rather “Weighty” in this type of Environment, let’s look at the Hourly Views of both Units.

Give the Captures a Click for Commentary, and Post-Time is 3:10 GMT.

The Swissy provides a “Clearer” View of Directionality without any “Counter-Trend” Bias overall…

The Euro looks to a “Counter-Trend” Opportunity with it’s Channel… which will favor “Sell-Into-Rallies” Sentiment if it is not under the pressure of Violation.

I will be back with you throughout the day,  despite the fact that FXStreet is still “Officially Closed” for the Holiday.

We may, indeed, see some Volatility as we deal with the lighter Market Volume as we move forward!

Greetings again, Everyone!

We move through the European Session into the U.S. Markets with the NYSE Open.

The Dow and S&P a ever-so-slightly positive, as we come off the subtle Corrections of most Majors gaining a bit of strength, as well as the Yen Crosses in the previous hours. It will be interesting to see if our “2nd-Hour Reversals” in the Equities may allow some Pullbacks, and then possible “Pressure” again while we still digest the overnight Bearish Views ( concerning the Dollar and Yen Strength…).

( Gold and Crude Oil are “Caught” in tight Ranges on the Hourly IntraDay perspectives… so we may have a little “insight” into where the Dollar may lead us overall… as Oil simply cannot sustain Itself above the coveted $50.00 Handle lately… )

We bring back the Daily Views of the Euro and the Swissy… to get a “View” of this possible “Shift in Sentiment” moving forward towards the Price Action muted ”quietness”  as we move into the FOMC Minutes later today.

Remember… we do often see the “Institutional Re-Positioning” ahead of any major Rhetoric or Data Points, and this whole Central Bank Global View lately has been in need of Observance.

Here are the Dailies for a larger View, so give them a Click, as always.

Post-Time is now 13:50 right after the NYSE Open.

The Swissy is also in an “Appreciation” Mode…although we have Pressure arriving at the 1.1520’s Area to maintain the Bias.

EUR/USD is showing some Upside Bias as we come off of the InterSession Lows @ 1.3140’s, and look towards the 1.3300 Handle in the Near-Term.

I will certainly be back with you for the Hourly Views of Gold and Crude Oil ( as I promised from last night’s Post…),  after we “digest” the Oil Inventory Data Points and the U.S. Wholesale Inventories… right around 16:00 GMT!

Hi everyone!

Let’s check on where we are with Crude Oil after a bearish day yesterday and the release of the Crude Inventory Data.

We find our thoughts in yesterday’s Post to still be valid.

We are still bearish in sentiment with Crude Oil in the near-term…as seen on the Hourly view.

(click once for captures)

The Monthly view is again in concert here.

Despite Commodity Inflows dramatically decreasing of late, we still maintain an upside Correction is highly probable off in the distance.

This is certainly not right around the corner…we are off the highs on Crude $100 after all…with no signs of slowing in sentiment.

My view of “Fair Value” here is several years out, and I arrive at my subjectivity in this fashion.

The $80-$95 Range seems a logical compromise between what Supply can support its’ work upon with providing Product to the world… and what Demand can self-adjust with and find contention.

Does “Compromise and Cooperation” work in the markets?

Every second of every day in the Trading Pits and Floors around the world.

It is the true Essence of Trading itself….finding “Fair Value” for both parties all day long.

Now…concerning today’s Title…

(The “Crazy CVJ’ers” Fan Club has arrived Stage Left…)

“What’s wrong CVJ?…Are you ill?…Did Godzilla eat the truck yesterday?…Why no witty story ?…No funny analogy?…No animated antics today?”

 ”Oh no!…All is Well!  I have simply hit the “Mute” button on Myself.”

“What does THAT mean?”

 It is Genius Week!…Crystal Ball Week!…The Powers-that-Be will shower their Wisdom upon the Masses!

 We have Central Bank Rate Decisions due from the BoE and ECB…

We have a deeply high probability of another dismal Non-Farm Payrolls Release on Friday…

Earlier in the week the RBA “Down Under” cut a full Basis Point with perhaps more easing to follow…

RBNZ at 5% for our Kiwi friends…

Well let’s see…Who’s Next on that List?…another Central Bank we know of?  

In these times, we see Currency Market action grind down to a literal halt while we quiet down and await massive Data Points to be injected into the Markets.

When we have “cluster” groups of Releases like this…it is not a trading environment that is needed…by ME!

I emphasize this point because this is where knowing myself and my Trading “Style” really comes into context when it comes to Foreign Exchange.

I will monitor and adjust my work in other Markets as well as open FX positions, but I am simply choosing not to participate in this Market environment over the next couple of days with any new  Spot OTC Currency positions.

Period.

Will I be tempted by high volatility?…perfect dynamic Price action?…missing the finest trading opportunities known to Man?

No.

Period.

You may do as you wish.

Do not listen to me or do as I do.

There is someone more important to always listen to…

Yourself.

Hi to All !

Today I would like to introduce a somewhat semi-regular Feature on the Blog!

In a joint effort with my friend and author of the “Forex Advisor” Blog and Resident Advisor right here on FXstreet, Valeria Bednarik, I will be doing a Crude Oil Post a few times a month when necessary.

Now…A Caveat here.

I will not always be referencing our Crude/Canadian Dollar correlation criteria, as I feel it is important to see Crude Oil on its’ own merits.

Most of you know I enjoy correlations, but in this case…I would like to use these particular Posts for what we actually correlate with!… Crude…the Dow…S&P 500…Gold…etc.

So let’s check on “Black Gold”…Crude Oil, and then we will follow up with “Godzilla” and our Dollar Yen analysis from yesterday.

 We have been speaking quite a bit about both of these Units lately in our FXstreet Premium Sessions, so I thought I would combine them today.

(click once for captures and remember…this Chart is the January 2009 front month Futures, so yours may vary a bit…)

 Crude Oil continues its’ massive “Inverse “V” Top” Reversal on the Monthly view ( not illustrated), and we continue to slip and slide down the Ski Slope here.

Even though we have a Daily chart here…you can clearly see the Market sentiment!

The “Bear” is insatiable here…so stop feeding him your Crude!  

Tomorrow, we have the weekly Crude and Distillates Data Points released @ 15:35GMT by the Energy Information Administration.

With a touch of a 3 1/2-year Low yesterday @ 47.36 on the NYMEX Crude Futures…do not expect a massive appreciation here in Price per Barrel.

The Hourly below simply verifies our views and perspectives.

OPEC can do what they want and say what they want.

Crude Oil is largely ignoring any Fundamental Body and their activity anyway!

Now…let’s see how our buddy, “Godzilla” (USD/JPY) is doing rolling through Tokyo!

Well…there you have it.

One “Big Black Monster” (Crude) that is depreciating moment by moment….

One “Big Green Monster” (Yen) that is appreciating moment by moment….

Hmmm…is there a relationship there somewhere?

,

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 another week everyone!

 I often spend time catching up with my FXStreet Premium friends over the weekends, which got me to thinking about some of the thoughts we may have as we go into a new Trading Week.

A thought that came to mind was “Hope”.

As a “lapsed” Catholic, I am certainly not an expert on religious doctrine, but being involved formally in classical music and fine art has taught me quite a bit about Music and Art History of the Western World through the ages.

For some reason, I was thinking about Trading and a Monastic life….(perhaps because trading really is solitary….and in the end…it becomes You and Yourself…)

St. Benedict came to mind, and a basic tenet of his teachings jumped right out at me.

The concept of “surrendering the Will and surrendering all Hope” I found intriguing with the Monks.

To paraphrase…Benedict’s view was that “Hope is the enemy of Peace of Mind…as is Fear and Greed. These are a hindrance and a distraction.”

Let me explain.

When we “Hope” for something….wishing for it to happen…we are desiring to a particular outcome. We are acknowledging that something is not quite right.

 See where I’m going with this?

In Trading, we may do this quite a bit. We execute a position, only to immediately HOPE for it to go our way!

My thought here is if we do this right away…we are already questioning the validity of the trade, and also acknowledging we are not quite as secure in the trade as we may have liked to be.

My little “built-in” Lesson for today is to try and be mindful and fully aware of the reasons you are taking and executing a Position.

Make sure it makes sense to you…and is simply not filled with untenable emotions.

Our Fiber (EUR/USD) is a fine example of “Hope” possible coming into play with the pending break of the Triangle…have a look!

(Click once for capture)

Now…are we going to “HOPE” that Price breaks to “our” favored direction?

Or are we going to follow St. Benedict here…and simply let it follow its’ own nature?