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Market opened with big downward gap and GBP made new 5 yr low and added further panic during Japanese session nearly 300 pips net change ,at that time, EURO was rising later when GBP starting rise EURO dropped. USD/YEN dropped along with GBP and then recovered almost all the losses for the day.USD/CAD made massive rise when USD/CHF dropped and above pairty in CHF/CAD cross was achieved.
All the big moves happened in the market.Panic ridden traders were watching mostly,but some one was inolved in all the big moves.There might be many attributes like the CB,Chine etc,actual story will be known only in close circle.In the name of financial market meltdown some close circle people exploited the situation and captured all the lower level sells of distress traders or institutions who unwinded the positions.
It is not new to the market circles.Because the market always makes a big bang during such uncertain conditions.When all are busy talking about the golbal economic crisis in the name of market response such moves happen and many such instances were forgotten by the market in a few weeks to months.
Even though the differences between the high and low is huge in a given day or in months,the market was moving indicating the trades happened.There was no grinding halt in any market.Exploiting the panicness is the way to make huge money by some.I am hoping next week, new stories could takeover the market action.
When analysts bring the past conditions as reference like 5 yr low or 7 yr high etc., it implies the market had similar such situations during that time and then made other way moves to come back to the same levels.So market does not remain like this for ever.Look for new stories and new moves in coming days.If the firming up moves continue during US session for week end then new stories will take over very soon.
Regards
Dr.Sivaraman
Doc,
Do you have any insight as to whether the current “credit crunch” could interfere with over the counter FX trading?
Doc, you are great, you crossed the limits of greatness. Keep it up. Keep giving fuss to very few people left here that this happened because of this, that happened because of that. big circle people are buying from distressed traders since 1.54 to 1.35 and will continue to buy till 1.10 and then start selling @ 1.0000 and will give all their wealth to traders………… KEEP it UP doc…
Dear Dr.
I hope you are not implying that world leaders, CB Chairpersons/Governors, Finance Ministers, Bankers, etc. are wasting their time in trying to find a solution to this financial meltdown. And, it is a fact that the current currency levels are having an overall impact on businesses, economies, and the world population. Small time investors and pensioners have lost their life savings, and many more are fearing the worst - and this is a fact.
If you are trying to make us believe that these are stories created by some circle of people to exploit and profit - I am not buying it. And, is this analysis generated by your algorithm? We are experiencing something which happens once in a few decades, if not once in a life time. I want to take this opportunity to learn a few lessons from this situation, and I do this by detaching myself emotionally from the events.
I expect to read your own (original) analysis in this blog, and not analysis of comments made by others.
I may have misunderstood your post, in which case I apologise for my above comments.
regards
su25
Su25, don`t get upset. doc is excellent storymaker and fuss maker, this not his fault, this is your fault you are reading his bullshit. euro is 1.3360, accoding to doc buy, this is panic sell of by distressed traders, big circles are buying,,,, you also buy and ENJOY
I am sorry Doctor, but Today is the last day I will read your blog. It is true that some days you have read the market like a book but over all I believe you your calls are not paying off. Elliot wave readings have predicted these moves for months and hence I have gained hansomly.
Regardless I believe you are an honest man and I wish you all the best for the future and thank you for your efforts.
Kindest regards
Pippy
Pippy, don`t leave this blog. Without paying anything you are getting free entertainer like doc… pls don`t go
Dear, Dr.Neil I agree with Dr.Sivaranman the uptrend in EUR/USD will pick up but only after it taches 1.10 or even 1.00 Ges what? Sell! Sell! Sell!
Dear Wayne N. Meeks
Credit crunch means banks are cautious in lending money because of high rate of default expectations.If it continues no lending and no borrowing can happen and money cannot earn money.Money has to be converted to effort and then the effort has to be paid with money.If people trust banks then they may not trust the currency and barter trade is the only scope.Do you think they are possible in modern days.There is less trust demoralised condition than the real crisis.Can it continue like this for ever.There were many such crisis we have faced in the past.Have they ever continued for unlinited time frame.Now the Govts are working for trust building.Normalcyu will come into force soon.
Regards
Dr.Sivaraman
Dear su25
Happy days and crisis are part of life game.They alternates with each other.The financial melt down is man made.There are reasons and solutons for the same.Till uncertanity prevails with the grip of fear the solutions may not be visible.The reasons - over confidence of the bankers and investors when the going was good.The effect no trust at all in any thing.can we live iun a wolrd of no trust?The trust is built over credibility.Breach of credibility is the cause of this situation.So some one or a group exploited the over confidence in newer financial instruments.So those exploited should be holding money when all others suffer.Are they are to be punished? only then new such frauds will not emerge to affect the world financial system.
Is it difficult to find where the money is parked- such as trillions of Dollars?Why no one is talking about the or prbing where is money is gone?
The market reaction is some thing different.it is expression of uncertanity.But the financial system to collapse who are responsible?
When the Govt was formed in 2004 after the elections - the then Chairman of FED and other top people were talking every day that we want strong dollar policy.But you know from that time USD started weakening for nearly 31/2 yrs and finanlly stong dollar is achieved before the expiry of the term.Why not actions taken at that time to make USD stronger when the policy was to have strong dollar.
I am not here to deviate from the main focus or to comment on others - but when I objectively analyse the market reactions over years I find that the seed for this cause was planned way back and now we see the outcome.When the public leaders and public servants become selfish exploiting the innocent public this sort of calamities continue to happen.Actually Man mad calamities are more dangerous than natual calamities.We all know prevantion is better than cure.But leaders failed to prevent or plug the loop holes for explitation of the weakness in the financial systems and now trying to find cure.
Even in such a crisis situation DOW made a huge drop and recovered,GBP and AUD dropped and recovered much of the losses,Why such moves happen in the market?
I am not telling that trade against the trend now - I am just bring out the non spoken facts about the present crisis.
It is only my personal view and not to influence any one or to criticize any one.
Regards
Dr.Sivaraman
It is easy to find the cause in retrospect; yes, it is difficult to find the money.
And, the events which caused the USD to strengthen now are different, and were not planned. I agree that it was a disaster waiting to happen - everybody knew the bubble would burst ultimately, but nobody wanted it to.
Demand and supply, and devious fiancial schemes created the bubble, and, finally, basic fundamentals and demand and supply caused it to burst.
Everybody made money, some made more than others, and now everybody has to suffer the effect - again some more than others.
Growth, recession, stock markets, fianancial markets, etc. are all subject to demand and supply theory - when demand exceeds supply, prices go up, and when supply exceeds demand, prices go down. Here demand & greed; and supply & fear can be interchaged.
Stock markets went up because demand exceeded supply, and now they are falling as supply far exceeds demand. Reasons for demand to exceed supply (and vice versa) are many.
For example, yen is stronger against USD, partly because people who borrowed JPY and invested in high yielding currencies are unwinding those investments - such as AUD. Demand for JPY exceeds supply, which causes it to go up.
It is also likely that some invested in Australian stock markets instead of AUD cash (deposit), while some may have converted USD to AUD to invest in ASX. Now, commodity prices have gone down (again due to perception of demand and supply), which may affect performance of stocks, so they are selling stocks and buying USD or AUD. Supply exceeds demand so stock markets are falling. Demand exceeds supply for USD/AUD - so USD is gaining against USD. I am not sure for Australia, but some countries do not allow foreigners to have local currency accounts on-shore. This may put further pressure on demand for foreign currency.
Demand and supply for JPY is affected by this “real” requirement for the currency. Currency traders also affect the demand and supply by creating “artificial” requirement. Fundamental traders and technical traders affect this “artificial” demand/supply.
There is loss of trust in the system, not the currency. USD strength does not reflect trust in US. It is merely due to demand for USD far exceeds supply - and this maybe due to margin calls faced by various instituttions requiring them to top up margins by liquidating assets in other countries either by selling stocks or bonds or currencies. This is a domino effect which is affecting all countries and currencies due to globalistaion.
I wonder how the change from Capitalism to partial Socialism of US and UK and few European countries will affect the future of world economy and currencies!!!
Finally, too much analysis will lead to paralysis (inaction). Fundamental, technical, esoteric and plain toss of a coin (luck) have their place in trading. When losses exceed gains, then that system needs tweaking.