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!

Happy Saturday, Everyone!

( Writing-Time for me 8:00 A.M., so 15:00 GMT. )

As the heat begins to build here in the Desert Southwest, most Phoenicians look to taking advantage of “last-moment Swan Songs” of outdoor activities…

Golf, Hiking, Biking, various Games at Parks all over the City… are the Play of the Day as we find 100F Temperatures,  and wait for the 110’s-120’s to hit over our Summers.

As I am so “notorious” known for saying to many of you… I eventually refer to my City as the “Pizza Oven of America”… being the hottest City year-around in the U.S. overall!

This has me thinking about having a “Proper and Varied” Divergence AWAY from the Markets that is so essential for Long-Term Success and Survival.

It is so easy to Eat, Sleep, Live, and Breathe this Industry, that all of us at one point or another may find ourselves simply “Too Stimulated” and “Too Close” to the Markets to spend quality time with all of the other aspects of Living.

As most of you know already… my Divergence comes from my Art and Composition Work where I my Identity as a “Human” lies in the first place.

I have always considered myself an Artist and Composer FIRST…and a Trader SECOND… in my life.

Some may see this as a Disadvantage…. perhaps questioning my “Loyalty to The Cause”, if you will… hee hee… 

One the Contrary… I find it to be the greatest Asset I have to compliment my trading Activities!

Painting and Composing encompass many of the same types of “Processes and Analyses” that Trading does… but most importantly… they are Solitary Self-Disciplined Activities which is a Process ESSENTIAL to Trading.

Remember… in the End… It really is just You and The Trade…. You “against” Yourself…

So perhaps take a few moments to think about how YOU are finding ”Proper Diversions” in YOUR Life will assist in helping to step back and move away from the Intensity of Trading.

Whatever it may be… Sports, Cooking, Poker, Golf, Riding your Motorcycle, Reading, Film, Shopping… Whatever!… It is all healthy in one way or another and give you “Fresh Eyes” to come back to the Markets each week!

Now… with today being Saturday… It is my sincerest Desire that this Post will not even be READ by any of You!…

… As you are out doing these exact things and taking advantage of your Day !

Happy Saturday, Everyone!

( Writing-Time today is 8:00 a.m. for me in Phoenix, so 15:00 GMT )

I recently had an experience talking with various types of Traders via a Chat Room, which for me, resulted in some thoughts I would like to share on how we “develop” as traders and how we “feel” about that Development.

It is indeed, difficult, as part of one’s Learning Curve,  to wade through the “Muck and the Mire” that is out there and truly find your Place with positive Support and Information!

With thousands of resources, educational opportunities, Trading Rooms, Live Sessions, Chat Rooms, Forums, Expos, Shows, etc… there are SO  many options to find information and comraderie that the process itself can be staggering, at best.

I have found, in my personal experience, that the most advantageous Act one can take in this “Journey of Exploration” is to try to dismiss what you know and feel immediately to NOT be appropriate or working for you.

Just as we do not want to “Force” ourselves into a Trading Position… we also do not want to “Force” ourselves into “Curve-Fitting” an Idea… Resource…Strategy… or Enviroment… that is innappropriate or detrimental to our ongoing Development and Learning.

Ealry on with my own learning with Equities in 1997/1998… I found this process surprisingly easy… but it took a few years to truly understand Why…

It came from my development as a Artist and MUsician… of all things.

We are all effected by our own History, and the Formal processes in Painting and Composing allowed me to immediately dismiss what was not working for me.

The Opera I mentioned a few months ago is the prime example here… I have left the Work through constant Revision for months and months at a time… sometimes a couple of years… NOT out of frustration or lack of direction… but because the Piece was not simply WORKING… it was not cohesive.

We can use the same types of Principles all over the various aspects of the Trading Industry and our own Trading Development.

We try to set clear and logical Stop-Losses for our Positions… why not try to set these same Stops for that same Learning Environment that is not helping you?

Every Industry and Human Endeavor is full of Ego, Arrogance, and Greed… and Insecurity, Frustration, and Fear.

Trading is no different.

The sooner we realize this is NOT  about You against Me… Us against Them… or Right against Wrong…

The sooner you will actually “SEE” the rapid Development within YOU  as you move along and find your OWN Place.

Try to be mindful of the fact that… in the end…

This is ALL  about You against Yourself.

Have a fine Saturday, and I will see you tomorrow!

Happy Monday to All !

As we head closer to Christmas and think of other aspects in our lives, it is appropriate to take things a bit slower and have time for a little reflection.

Our Markets, as we have mentioned before, are beginning to “thin” in volume and increase and decrease in volatility with plenty of intraday noise.

A Currency pair that historically matches this “leisurely” pace  is the EUR/GBP…the Euro Pound.

With such deep similarities in all sectors of the economy, the EuroZone and the U.K. enjoyed a constant “Push and Pull” Price action.

Until almost two years ago…

I have always enjoyed working with this pair, and it is where I first began learning about Chaos Theory outside of my formal music composition studies…Beethoven would be proud!

Early on, I was able to really accelerate my learning curve with proper range and pure support-and-resistance trading strategies using the euro pound as my vehicle.

The Pair allows for consistent momentum in most cases, and can be a fine “learning curve” pair in this way.

I would often joke and sarcastically comment on the pair with my dear friend and Primary Mentor, Ed Ponsi, about this daily.

We finally described the pair as the “Pair that was fascinated by watching Paint Dry”.

It was so slow and literally immobile…that the act of watching paint dry was faster than the euro pound Itself!

And then…BOOM!…All Hell Broke Loose!

My playfulness with the Pair was over…  

Let’s have a look at the Monthly and and see where this epiphany took place!

(click once for capture)

 A couple of views with the Hourly chart reveal just how “proportionate” and “even” this pair is…there is equality in exchange rate similar to the “horizontal” Fractal areas we spoke of last week on the Pacific Dollar pairs.

 Now…if your view is Bullish, you have quite a trend to draw probabilities upon.

As we know with Foreign Exchange as a whole…once we do trend…we usually see these trends sustain themselves nicely, especially with the multi-year Breakout we have here.

Look to the Key S/R areas to “shift and roll over” and pullbacks will lead you on your way.

If you are bearish…you have literally equal probabilities here…at least from an intraday perspective. These same ranges can be used to “Fade” and short this pair in more of a classical Support-and-Resistance manner.

Of course…giving almost double the Pip Value certainly does not hurt either!

A Caveat from the three CVJ Fan Club guys, though…

“As always, define your risk!…

We are using any potential gains to buy that dinner for Ben Bernanke…

If our trade stops out…it is fine.

Paulson can pick up the check…he’s got a few bucks to spend, doesn’t he!… hee hee…”  

Tomorrow, we’ll do a brief check of the battle and see how we have progressed…as we await the final FOMC Interest Rate decision in the States of this year, and of the current Presidential Administration.

Hi All !

Well…today we catch up with our old friend, the ”Big Green Monster!”

The “Harbinger of Doom!”

The “Bringer of Mayhem and Terror!”

“But CVJ!…do you mean that Monster from the movies?”

“No!”, I reply…”The Japanese Yen!”…  

Once again my friends…our Risk Aversion scenario is seriously back on the table!

Did we really think the big “everything-will-be-fine-Rally” of the Dow and the S&P 500 Indices last week would make us feel all warm and fuzzy inside?

Of course not!…but our worldwide Media would surely have us believe this.

And once again…they go home disappointed from another Manic Monday!

(Here it comes…the “Crazy CVJ’ers” are back to support me in my world famous Rhetorical Questions…)

“But are WE disappointed???”

NO! 

We are Traders…and do not consider such media content in our criteria for working with Price action and Exchange Rates.

The Japanese Yen continues to move along with the Dollar due to safe haven inflows of being the lowest yielding Currency Instruments.

As always…if we were in a Risk Appetite climate…we would be focusing on the Carry Trade concept and selling Yen off by the boatload.

Instead..we continue to have Fear and Insecurity…translating into Risk Aversion…which translates into buying Yen by the boatloads.

Either way…a pretty heavy Boat!…

Now..the ideas floating around that I alluded to yesterday are that the Bank of Japan is becoming suspect of such strength in their own Currency.

When we see this, Intervention by the Central Bank is certainly a possibility.

The strong Yen is deeply detrimental to Japanese Exports as a whole…despite the overall benefits to various sectors of the economy.

So we have a conundrum here that the BoJ needs to keep a watchful eye on as we move along.

Now…lets move onto the USD/JPY Dollar Yen itself, and see where we ventured from the Sydney Open Sunday and all day Monday.

Here we are back on our Daily view, and I kept my Symmetrical Triangle intact to emphasize the downside momentum we saw today.

(click once for captures)

 An Update a few hours later…take a look about 10:25 GMT… 

There is a high probability here that we will, indeed, see these retracement corrections to the upside here….and we are seeing it begin in the recent hourly candle above in the Update.

We’ll see if it prevails this morning as we move along.

Remember…with strong unidirectional momentum…we will lose energy and need to rest a bit…just as if we were descending the mountain.

Do you ever notice how much more difficult it is to walk down the mountain than it was to climb it?

Our equilibrium is off balance, and we need to be much more attentive so we do not fall and tumble.

Our Yen strength is “You and Me walking down the mountain all day long”…we need to take a rest at one point.

In my view…I will continue down the mountain after I rest…as I am a “Bearish” climber with my buddy, Godzilla.

I personally think he is hungry for a Test of the Fib Low there @ 90.90 on our Daily view!

If you prefer to be a “Bullish” climber, then make sure Godzilla has a handle on Tokyo around the 96.00 Resistance handle and above!

Our Big Green Monster needs more of the City to devour…so let’s see which direction he heads in!

Hmmm…I better make sure the Nissan Truck is in the garage!…hee hee…  

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.  

I bring up this allegorical reference to famed American Poet and Writer Dylan Thomas for a specific reason.

OK..maybe not an “allegorical reference”…

OK OK…I stole it already!…Relax!  

The actual title is “Do Not Go Gentle Into That Good Night”, and I simply substituted a little meaning here as we move into the Asian Session overnight my time.

We still have our friend, the Euro, …coiling, winding, grinding, and consolidating away…as we did about this time yesterday.

Our Symmetrical Triangle pattern is still very much in play here, so what can we gain from this boring tedium?…this lack of activity?…this “Quiet” movement into the Night?

(click once to enlarge capture)

We really have a non-tradable event at this particular time. We really are not doing anything…irregardless of your particular directional bias.

(Personally…I see the pair as Bearish…but again…this is just ME!…I’m only one guy…so don’t be lazy and pick your OWN direction!

See! This is where my cool play on words in the Title comes from!

We WANT to go gently into that Good Night!

We WANT to move quietly and carefully into our Good Night!

Today’s “built-in” Lesson is in many cases…you will learn more about your own trading learning curve by simply observing. Just because the Platforms are open in front of you…does not mean you actually have to trade!

So…while we wait for the pair to make some decisive action…we do the most COMPLEX and DIFFICULT task in all of Trading throughout History…

Nothing.

So… crack open a good book of Poetry or something…a little culture will not kill you!  

OK…let’s get one more thing straight.

I do not play Golf.

I have played the game a few times…and just like most ”weekend warriors” do… we drive the Golf Carts around, have a few libations, and run people over.

I just thought another analogy would convince you of my wit and humor.

I know I know…it’s not working…

When I was considering the quiet and muted Market “hangover” from the Presidential Election, and the often-muted action we go into ahead of the Non-Farm Payroll Report each month…I thought of one of those days you hang around on the driving range of the course instead of shooting a full front or back Nine.

Our Daily chart of Fiber (EUR/USD) gives us a clear view of our massive downtrend, and I threw in some Fibonacci levels for reference.

(Click once for Captures)

I have some intraday support and resistance levels of this Range here that would be ideal to work in…

We may continue this type of Price Action as we move closer to Friday, so take a look. The “Outliers” also provide extreme areas of the sideways “Range” channel, providing for more potential opportunity to work in.

We have a day and-a-half worth of Hourly candles here, so let’s see if they play out.

Of course…we may get strong breakouts on either side and blowout the Range itself as well as the Outliers.

With the ECB Rate Decision eminent, this is certainly a possibility we must consider. But…it also reinforces our “muted and quiet” rangebound view for now.

Remember from a Post last week…I advocate always to be aware what the “other side of the fence” is doing…

Anything is possible, so look for a highly-probable opportunity with your risk tolerance in place here…you do not want to run yourself over with the Golf Cart!   :-)