Month: September 2016

The definition of a cross pair is the creation by two separate currency pairs with USD and Non USD normally employed as the basis to calculate. The term is triangulation and done through the various legs. What is created is a cross pair. A cross pair triangulation and creation of a currency pair is the opposite to a synthetic currency.
A synthetic currency is created by pairing a convertible currency to a blocked currency. A blocked currency lacks ability to freely trade and trades on the black market. Argentina ARS and other South and Central American nations are prime examples. The last manner to create a synthetic currency is to match a currency pair to a Non Deliverable Forward. Many nations Forwards are non Deliverable. Prime examples include Brazil, South Africa, South Korea, Israel. The key is to match the spot equivalent currency to the NDF to lock in a price on X date and to guard against volatility.
A few examples to triangulate cross pairs include JPY. EUR/JPY is created by EUR/USD X USD/JPY. GBP/JPY is created by GBP/USD X USD/JPY. NZD/JPY is created by NZD/USD X USD/JPY.
CHF/JPY is created by USD/JPY Divided by USD/CHF. CAD/JPY is created by USD/JPY divided by USD/CAD.
GBP/NZD is created by GBP/USD divided by NZD/USD.

GBP/CAD is created by GBP/USD X USD/CAD. AUD/EUR is created by dividing AUD/USD by EUR/USD.

EUR/GBP is created by EUR/USD divide by GBP/USD. AUD/NZD is created by AUD/USD divided by NZD/USD.
A pair like MXN/RUB triangulates as USD/RUB divide USD/MXN but sometimes must factor USD/MXN, EUR/RUB and EUR/USD. Depends on the time of day, liquidity and spreads. When those markets are open and traded, spreads are low but widen significantly upon market closes. Both RUB and MXN are oil producer currencies however RUB tracks Brent while MXN follows WTI. Both respond to Brent/ WTI spreads. OPEC influences more Brent than WTI. Overall 70% MXN exports travel to the United States therefore MXN is most sensitive to DXY.
Cross pairs move more than underlying USD and Non but are never as liquid. Liquidity depends on USD V Non USD for cross pair movement because those pairs are most liquid.
One factor influences RUB is the CBR cut its USD reserves below Euro for the first time since 2008. USD reserves since Jan 1 was 39.6% from 44.8% in 2015. Euro current is 46.1% V 41.5%.
The general rule for cross pair triangulation is if USD is the base for both currency pairs then divide to obtain the cross pair price. If USD is located in the quote position then divide, otherwise multiply. Basic formula is A/B X B/C = CB. Cross rates equal the ratio of the two corresponding pairs.

Brian Twomey Inside the Currency Market, btwomey.com

USD/JPY is the case of the interest and yield curve rivalries between the BOJ and the FED. The FED is purposefully driving down the DXY by a high balance sheet and reinvestment of proceeds, by holding FED Funds at 40 since July 2016 and 36 – 40 since December 2015.  In currency price movement, the result is s slow and dead price drip but overall meaningless to effect a real market price.  The result overall is a lower DXY and barely 1% GDP as high money balances negatively correlate to economic data. At 40 FED Funds effective, USD yields remain on the floor with no end in sight and no end in sight to economic recovery and a USD rise.

The BOJ counters the FED by holding 10 year JGB’s at zero to drive up short term yields and in turn to drive USD/JPY higher. Japanese 3 month yields are 50 basis points from USD yields, 80 basis points to the 1 year, 100 basis points to the 2 year. The USD interest rate corridor  from 3 month to 2 year is 57 basis points and held steady around 55 for many many months while the Japanese corridor is currently 12. Not sure the cost to buy 50 and 60 basis points inside the promise of higher inflation and a zero GDP print last quarter against 0.2 annualized.

USD/JPY Most vital breaks to travel higher are found at 103.14, 103.38 and 103.51. All lines are dropping by the day. Most vital break points to consider 103.00’s are located at 101.70 and 101.66 then 102.18. Next above points to see 101.66 and 70 is located at 101.22 and 101.28 based on the 100.98 close. Supports below are found at 100.90, 100.78 then a drop off to 100.37 and 100.18. USD/JPY 100.78 is crucial to the downside. Until 103.00’s break, any rises in USD/JPY are corrections in the larger picture. Intraday, USD/JPY is middle range and best long targets on a price drop is 101.20 to 101.30’s.

Brian Twomey, Inside the Currency Market, btwomey.com

Within the GBP framework, GBP/NZD, GBP/CAD and the new graduate GBP/AUD earns the distinction as most volatile due to most widest ranges while GBP/USD, GBP/CHF and GBP/JPY are currently less volatile and trade within shorter ranges. Inside the GBP context, GBP/USD, GBP/AUD and GBP/CHF will drive the GBP complex this week.

Last week currency prices were driven by USD and Non USD pairs and both combinations drove the cross pairs.. NZD/USD for example drove its cross pairs upon the RBNZ announcement while AUD followed.  Friday, USD/CAD dragged GBP/CAD and AUD/CAD  higher upon poor Canadian Retail sales and Inflation. This week I see the opposite as cross pairs will drive USD and Non USD pairs.

Among GBP pairs, GBP/USD, GBP/AUD and GBP/CHF are  oversold while GBP/NZD, GBP/CAD and GBP/JPY are middle range. GBP/JPY is in assessment mode to the 12th Japanese economic experiment since WW 2 and many more since the 1868 Meiji Restoration. Every experiment ended in colossal failure. GBP/CAD is middle range until  USD/CAD decides how overbought can one currency pair travel while GBP/NZD is always ready for takeoff.

GBP/USD from the 1.55 Brexit fall now trades from the 1.2956 close and dropped 2600 pips and is highly oversold from 1.55. GBP/USD dropped 4196 pips from July 2014’s highs at 1.7152 and dropped 6931 pips from 1.9887 at the August 2008 crisis.

The current base is located at 1.2700 and monthly bottom at 1.2200. Just above, supports are located at 1.2925 and 1.2871. Next above lies 1.3006, 1.3022, 1.3059, 1.3074 and the channel top at 1.3130. A must break of 1.3130 must occur in order to to see  a run to most vital 1.3359 and 1.3411 then on to 1.3600 and 1.3700’s. The current strategy is a view to the channel top at 1.3130.

GBP/CAD. From the 1.7060 close, most important break points above are located at 1.7416, 1.7471 and 1.7500. GBP/CAD achieves those lofty goals by breaks of 1.7026, 1.7111 and 1.7167. GBP/CAD’s current price is the result of a failure at 1.7400’s. The current base is located at 1.6722 with supports at 1.6894, 1.7002, 1.7023, 1.7026 and 1.7091. Then on to 1.7167. GBP/CAD trades middle range and between 1.7091 to 1.7023. GBP/CAD is a wide ranging currency pair and has every ability to move far and wide on any given day. The strategy is buy drops and not touch  the current price.

GBP/NZD. The granddaddy of currency pairs due to wide movements is currently in an uptrend upon the prior  breaks at 1.7522 and 1.7426. To maintain the uptrend from the current 1.7893 close then 1.7817 and 1.7807 must hold. Next above comes 1.7935, 1.7942, 1.7962 then 1.8063 and 1.8065. Most vital to continue the uptrend is next major point at 1.7962. Overbought begins from 1.8130 to 1.8168 however 1.7962 must first break or GBP/NZD will correct lower to 1.7817 and 1.7807.

GBP/AUD. From current close at 1.7011, GBP/AUD is oversold and any drops to supports at 1.6965, 1.6939 and 1.6873 allows GBP/AUD to become more oversold. GBP/AUD earned its elite categorical status  with GBP/CAD and GBP/NZD because recent drops opened GBP/AUD ranges. Vital break points above are found at 1.7600 and 1.7700’s while the current base is located at 1.6674. What decides if GBP/AUD trades to 1.7214 and 1.7219 is next break points at 1.7042, 1.7104 and 1.7131. GBP/AUD becomes middle range and aligned upon breaks at 1.7131 to 1.7219. The current channel top is located at 1.7319. The strategy is long on drops.

GBP/JPY. Big break points in GBP/JPY to see 136.00’s from the current 130.69 close are located at 138.26 and 138.39. GBP/JPY must travel above 133.20, 133.36 and 133.55 to consider 136.00’s. Next support is located at 130.38 and is crucial to GBP/JPY as next supports are found at 129.30 and 129.53. To travel higher, next resistance is located at 130.73 and 130.98 then on to 131.30 and 131.66. Next targets then become 132.31 and 132.37. Higher or lower for GBP/JPY is decided at 130.38.

GBP/CHF. Current focus shifted from GBP/CHF and CHF in particular because USD/CHF and EUR/CHF are set, ready and due for an explosive move. The question is does the move come from the CHF or EUR side as price ratios remain not only elevated  for both but warn of an imminent breakout. Yet overall GBP/CHF is oversold enough to warrant attention as its current close price at 1.2579 is 500 pips from its next major break points at 1.3022 and 1.3057. The 5 year average for example is off the charts oversold and must travel to 1.2849 to again enter the radar. The current base point sits 200 pips below at 1.2330 and next resistance points are located at 1.2600, 1.2655, 1.2660 and 1.2675. Most vital is 1.2675 to target next 1.2729, 1.2747 and the channel top at 1.2787. The level at 1.2787 is vital as a break targets a run to 1.3000’s. Below supports are located at 1.2520 and 1.2469. To understand the GBP/CHF situation, 1.2579 is an exact level of support and /or resistance. Long dips is current strategy.

The overall commonality in GBP pairs is current prices are extremely low particularly GBP/JPY, GBP/NZD and GBP/AUD. Low means overall bottoms are close while GBP/USD, GBP/CAD and GBP/CHF  are approaching its bottoms and remain very close. The key to GBP pairs is if the economic data agrees as expected to show signs of growth then all GBP pairs will travel far higher.

Brian Twomey, Inside the Currency Market, btwomey.com

Trade methodologies is a factor not only for current trades but mainly for my own purposes to further understand the deep dark intricacies of exchange rates and the revelations I found within the daily model and never noticed before. As I report trade methodologies, I’m taking detailed notes on many factors not known, seen or understood in currency prices and movements. Few examples include cross pair relationships to USD and Non USD, correlational factors, Technical analysis Gaps, Euro as most transparent currency pair, GBP as best predictor and USD as hardest and least transparent, NZD and AUD as best to hit targets, technical analysis as failures, currency pairs as interest rates, currency pair classifications. Many more detailed notes but overall reason is the journal of Trading or even a top top journal would love to see my information.

Last week currency prices were driven by USD and Non USD pairs and both combinations drove the cross pairs.. NZD/USD for example drove its cross pairs, Friday USD/CAD dragged GBP/CAD higher. This week I see the opposite as cross pairs will drive USD and Non USD pairs. The example is AUD.

What drives AUD/USD, AUD/CHF and AUD/EUR this week is overbought AUD/CAD at the 1.0038 close. Bottoms for AUD/USD, AUD/CHF and AUD/CAD are located at AUD/USD 0.7581, AUD/CHF 0.7357 and AUD/CAD 0.9987. Important to bottoms is AUD pairs hold strong strong supports just below current bottoms.

AUD/USD supports and rising are 0.7541 and 0.7549 AUD/CHF 0.7358 and 0.7344, AUD/CAD 0.9963. AUD/USD will severely struggle at 0.7650’s, AUD/CHF at 0.7420’s and AUD/CAD at 1.0048 and 1.0058.

What I’m looking for this week is AUD/CAD to correct lower to the 0.9960 to 0.9980 area then take longs in AUD/USD, AUD/CHF and AUD/CAD for at least 50 pips in each pair. Hopefully as I see it now, this trade will be a 1 day trade for 150 pips. Only way this forecast changes is if AUD pairs break the lower support points. I don’t see it.

Overall, AUD pair prices are lower to middle range and encouraging for longs but hardly revealing to trends or big moves. We will see more of the same slow price movements on a daily basis. Any drops in AUD is an opportunity. AUD/CAD is the big mover within the AUD framework and why I picked the 3 currency pairs is because all correlate to AUD/USD at + 90%.

Why stay away from AUD/JPY and AUD/NZD is because both hold opposite correlations to AUD/USD at minus 67% and minus 53%. AUD/NZD and AUD/JPY won’t perform as expected if they don’t agree with their underlying currency pairs.

GBP pairs next. Yes to my friend oversold in GBP/USD especially from the 1.5500 brexit drop point. From the current 1.3359 break point GBP/USD as well is oversold and overall encouraging to AUD/USD longs.

Suggestions, comments then feel free anytime at [email protected]

Brian Twomey, Inside the Currency Market, btwomey.com

AUD/USD Short Thursday from 0.7662, exit Friday at 0.7610, + 52 pips.

AUD/CAD short Thursday at 0.9984, exit 0.9974, + 10 pips. Was tired of  no short movement so exited.

GBP/CAD this morning long from 1.6922, target 1.6972, Met 50 pip criteria, + 50. Why 1.6922 entry. Bottom broke at 1.6939, three supports remained at 1.6915, 1.6907 and 1.6999. Take half the distance from 1.6939 to 1.6999 and a support existed at 1.6919. Entry was off by about 20 pips as GBP/CAD traded to 1.6999. GBP/USD bottoms at 1.2969 also broke so it was a question to match GBP/USD next supports to GBP/CAD.

I realize GBP/CAD skyrocketed on CAD Retail Sales and Inflation data and many more pips were available but I didn’t take it. GBP/CAD was wide open to 1.7029 once 1.6939 broke above. Its rarely seen to have that much daylight and then price actually trades through to the upper points. The target was set and I took it.

Now have 2 lots short USD/CAD. Open targets so far.

11 trades complete in last week, 11 winners. 10 trades X 50 pips each = +500 pips but 510 to include AUD/CAD at + 10. Overall 3 longs to 8 shorts.

Sharpe Ratio on all trades = 2.29. Sharpe Ratio on long trades = 2.64. Sharpe Ratio on shorts = 2.07. AUD/CAD + 10 pips dropped the Sharpe Ratio from 2.54 to 2.07. Overall Sharpe Ratio is really terrific even 2.07 on short trades.

Higher the Sharpe Ratio then higher is ability to manage and take on risks in all trades. Ultimately, the range is about 3.00 to 1.0 . A 2.29 current Sharpe Ratio is really good. It says the trades were good. When done, I will go further and report the Sortino Ratio as well. When done I will report all trades and trade data.

The alternative measure to Sharpe Ratios is Risk to Reward Ratios. Maybe you’ve seen trade taken with 2 to 1 or 3 to 1 risk to reward. Risk to reward ratios are highly deceptive, mis applied and fails to tell the proper story to the trades. Its assumes, stops were used and placed correctly but how much profit was earned in relation to the stops. And what does Risk Reward say in relation to money management and the amount of money traded per trade based on account balances.

Something like 3 weeks remains on my time so I will continue to complete the mission. More trades will post. One factor to mention. I send 21 trades per day and those trades are separate to the trades on the present account. Its an incredible task I’m taking on but if all goes well, I will be with a really good group of traders and good guys.

Brian Twomey, Inside the Currency Market, btwomey.com

AUD/USD short at 0.7662 remains ongoing and + 23 pips so far. Take profit set at 0.7619 however i’m lowering take profit to about 0.7612. If I catch a break at 0.7612 then 0.7602 comes next then bail out.

AUD/CAD short at 0.9984 remains ongoing. Profit target was set at 0.9945, price hit 0.9948. Why 0.9945 is because a range break exists at 0.9944 as of this morning. The new range break point exists at 0.9954. I’m not falling in love with this trade because profit potential is not great and I only have so much time to get as many trades and pips earned.

The greatest problem in AUD is AUD/CHF  because at 0.7400 current two vital break points exists below at 0.7355 and 0.7340. AUD/USD correlates to only AUD/CAD and AUD/CHF at + 99%. AUD/CHF is holding up further AUD/USD and AUD/CAD downside progress. If AUD/CHF breaks 0.7340 and 0.7355 then all 3 pairs head much much lower.

The ultimate way to go this morning was profit on AUD/CAD at 0.9953 then re short higher. I’m looking for that exact trade now in another pair where we can go in and out a few times in one pair and maintain decent profits.

Also looking for  good long trade for a 200 pip or so move. GBP/NZD is coming to that point now and I’m watching closely.

Last is to maintain a good diversity of currency pairs.

Brian Twomey, Inside the Currency Market, btwomey.com

AUD/USD short at 0.7662, target? currently set at 0.7620 but looking for bit lower to 0.7574. Current AUD is overbought and tough resistance exists above t 0.7677 and 0.7683. The best AUD/USD could achieve today is 0.7694 on break of 0.7677 and 0.7683. Here”s the major points 0.7674, 0.7677, 0.7683, 0.7688 then 0.7694.

Below major points 0.7572, 0.7562. Most vital overall is 0.7538 and 0.7535.

AUD/CAD. Short at 0.9984, best short point today was exactly 0.9994. Best AUD/CAD could achieve today is 1.0043 but breaks must occur at 0.9994, 1.0024, 1.0031, 1.0038 and 1.0043. Most vital overall is 0.9994 and 1.0031.

Target looking for 0.9930’s to 0.9940’s as those are today’s bottom points. Further supports 0.9886, 0.9872, 0.9840 and 0.9831.

Overall 8 trades done for 450 pips. An extra USD/CAD short was added and not reported and profited 40 something pips. GBP/NZD exited for bout 100 pips. The 8 trades were 6 shorts and 2 longs. GBP/JPY long remains and down about 50 pips. GBP/USD longs remain and down 100 and 50 from CPI.

Key point  is remain focused and get this done correctly.

Brian Twomey, Inside the Currency Market, btwomey.com

Only 2 currency pairs among the majors have equal correlational association to their cross pairs, NZD and GBP.

Currently, NZD/USD correlates +90% to NZD/CAD, NZD/CHF, NZD/EUR and NZD/AUD.

For NZD/JPY, the correlation remains negative at minus 0.05. The commonality in JPY pairs is only GBP/JPY correlates to GBP/USD while EUR/JPY correlates minus 52% to EUR/USD and AUD/JPY correlates minus 67% to AUD/USD.

NZD/USD at 0.7300 encounters solid resistance at 0.7445 and is the 10 year average. Next above 0.7445 comes 0.7567. On the bottom exists many solid supports at 0.7190, 0.7167 and 0.7140. Overall, the range from 0.7190 to 0.7445 is 255 pips. In the larger picture, 0.7100’s was built upon 0.6600 and 0.6800’s. From 0.6600, NZD/USD is dead center middle range. In the interim, 0.7100’s was built upon the current base at 0.7056.

Longs must hold above 0.7291 and 0.7262 then  overbought begins at about 0.7380; to 0.7409. A break of 0.7291 and 0.7262 then watch for the next level at 0.7190. Long any drops has been the long standing strategy.

Brian Twomey, Inside the Currency Market, btwomey.com

The first point of note in GBP/JPY is the bottom at 132.02 is holding. This is the long point. Below 132.02 then next comes 131.50, 131.36 and 131.22. Above targets are located at next 132.76, 132.82 and 132.96.

Above 132.96 then comes 133.09 and 133.54. The point 133.54 is top channel for today and a big level because a break opens the flood gates to the overall vital break at 134.66.

Overall, GBP/JPY base is found at 129.91 and supports at 130.39 and 130.38.

Brian Twomey, Inside the Currency Market, btwomey.com

GBP/NZD  hit lows at 1.7643 and those lows are located from today’s 1.7616 to 1.7653. Longs should be taken in this current area. Next above comes 1.7661 and a vital break to see next 1.7722. The 1.7700’s are wide open and this derives both from my daily and full Stat model. Above 1.7722, then next above is 1.7790. So a wide 68 pip range from 1.7722 to 1.7790.

Below, the base is now 1.7440 and next supports 1.7504 and 1.7598. Then begins 1.7616, 1.7653 and 1.7661. My current longs must break 1.7661 then its home free to 1.7722.

Overall, the big line break rose to 1.8115 and only a break of 1.8077 would see a run to 1.8115. Above 1.7790 then targets become 1.7820, 1.7823, 1.7830 and 1.7850. What is 1.7850 is a huge break to open 1.7927’s. Don’t look for 1.7850 to break today unless extraordinary circumstances hits the markets. We can view today;s overall range from 1.7616 to 1.7850. Its overall 234 pips but the average range is exactly 130 pips. GBP/NZD is a monster currency pair and not for new traders to consider.

Brian Twomey, Inside the Currency Market, btwomey.com

The current granddaddy of the currency market besides USD/BRL is found in GBP/NZD because its ranges and ability to move runs far and wide. Current ranges for example runs from 1.7400’s to 1.8200’s. From a daily perspective, 100 pips and more on any trading day  is quite an easy accomplishment for GBP/NZD.  Currently, GBP/NZD  correlates to GBP/USD at + 90% and like GBP/JPY runs with GBP/USD.

From current 1.7850’s, GBP/NZD is dead center middle range. Dead center middle range means 1.7853 to lower at 1.7814. Above 1.7853 then next comes 1.7983 while below 1.7814 comes 1.7712 and 1.7610.  Above 1.7983 comes the top channel point at 1.8126. Overall, GBP/NZD like its brother GBP/JPY price is extremely low.

The current base is found at 1.7494 and many massive supports exist above at 1.7579, 1.7586, 1.7687. Then comes 1.7700’s from 1.7709, 1.7712, 1.7725 and 1.7742. The two top points are 1.7877 then 1.7944. The level 1.7944 is top and a break would travel to the most vital point break at 1.8077. If this sounds like GBP/JPY, its the price when currency pairs correlate so strongly. GBP/CHF, GBP/CAD and GBP/AUD will find the same situation only the numbers of the exchange rates change. All are middle range.

The game plan to complete a long trade is to long at lower 1.7700’s. Ultimately, I want to catch 1.7712 to 1.7725 and target back to the 1.7814 area. We have a few hours until Asia gets going so I’ll try to catch correctly.

Brian Twomey, Inside the Currency Market, btwomey.com

Currently 6 trades for 50 pips each were complete for 300 pips. The last USD/CAD short from 1.3196 hit target this morning at 1.3135 for the last of the 6 trades.  Two long GBP/USD trades remain and are deeply underwater at 1.3106 and 1.3153 as I got caught in Friday’s CPI.  I’m watching oversold GBP/USD at 1.3090’s break then GBP/USD heads higher which means 1.3107 is okay and reevaluate for 1.3155. At worst I’m looking for break even.  I didn’t realize until this morning of the 6 trades, 1 trade was a long and the other 5 were shorts. I want add to long trades for a balance. I also realized USD/CAD, GBP/USD and GBP/CAD completed the 6 trades. Time to change the mix for diversity. The overall goal is just 30 trades, 50 pips each for 1500 pips overall. We had a rocky start but the trades were done. What I need to do now is really get busy and hit targets properly. Last, these trades are extra to my day as I send 7 pairs per day, 3 times per day.

My thinking to change the mix is focus on GBP/JPY, GBP/NZD and maybe NZD/USD?. EUR/USD and cross  pairs won’t perform. I’m open for suggestions. Why GBP/JPY is because its a JPY pair and because it correlates to GBP/USD at 99%. Other JPY  cross pairs correlate negative to their underlying pair such as AUD/JPY, EUR/JPY and NZD/JPY.

GBP/JPY. The problem with current price is 132.99 is tops and a break opens the clear path to 133.49. For the daily model to reveal such a top, it means 132.99 won’t break and current price is to close to the top. I’m looking at long from 132.00 to 132.09 or even lower at the next lower break point at 131.86. We would then look to targets at 132.80 area. The second problem with current price its pretty well balanced at 132.50. Ultimately to go long for an extended period and many pips is to long at 130.82 or short at high 133’s.

The current base in GBP/JPY is 130.14  Where GBP/JPY sits is top uppermost channel is located at 134.94 with must breaks at 133.82 and 132.80 to 132.99. A break of 130.90 below begins oversold then comes a huge drop to 129.84 so 130.90 below is a vital level.

The overall disposition with GBP/USD and cross pair rises is USD/CAD is overbought yet has many strong resistance points below to hold USD/CAD in small ranges. GBP or USD must break the dead lock to get the pairs moving.

Brian Twomey, Inside the Currency Market, btwomey.com

USD/JPY longs encounter many and tough resistance points  starting at 103.54, 103.68, 103.75 and 103.90.  The must break levels to achieve 103.54 begin at 102.77, 103.07, 103.22 and 103.48. Any shot for USD/JPY to see 103.54 then 102.25 and 101.87 must hold. For the week, 103.22 will be the vital break and / or turning point as a sharp reversal is likely at 103.22.

Most vital break points below are located at 100.77 and 100.81. Two downtrend points exist at 102.25 and 101.87. A break of both could see USD/JPY travel to 100’s and 99.00’s before oversold becomes a consideration. What holds USD/JPY from 100.81 and 100.77 are two levels at 101.37 and 101.33.

Brian Twomey, Inside the Currency Market, btwomey.com

Before Friday’s CPI release, GBP/USD V USD/CAD  Correlated +36%. After CPI, Correlations dropped to current + 27%. GBP/USD at the 1.2995 close sits exactly on USD/CAD’s 200 day moving average while GBP/USD fails to register inside its own moving averages from 5 to 253 days. USD/CAD at the 1.3207 close sits exactly on its own 253 day average and between GBP/USD  5 and 10 day average. A collision will occur inside the current structure at GBP/USD 1.3237 and USD/CAD 1.3046. USD/CAD enters a downtrend while GBP/USD travels higher.

Before CPI, the vital break point for GBP/USD above was exactly my own 1.3229 alongside many tough resistance points including its own 5 day average at 1.3238 and USD/CAD 253 day average at 1.3212. GBP/USD’s 10 day average at 1.3301 crossed above the 20 day at 1.3252 and what was next was the 50 day at 1.3170. Once GBP/USD broke 1.3170, it entered into no registration to its own moving averages from 5 to 253 days. The best GBP/USD offered was USD/CAD’s 5, 10, 20 and 50 day averages in order at 1.3148, 1.3014, 1.3026 and 1.3009.

USD/CAD before CPI bolted from its own 253 average at 1.3212, broke GBP/USD’s 5 day average at 1.3238 and dead stopped before GBP/USD’s 50 day average at 1.3252. Once USD/CAD broke 1.3212, it failed to register to its own moving averages.

The current big line break for USD/CAD is 1.3403 and found at GBP/USD’s 100 day average at current 1.3392. Rough resistance is found at 1.3305, 1.3307, 1.3351 and 1.3364. Supports are located at 1.3162 and translates to USD/CAD’s 5 day average at 1.3160 and GBP/USD’s 50 day average at 1.3165. USD/CAD to see 1.3160’s must first break GBP/USD’s 5 day average at 1.3189.

If USD/CAD breaks below 1.3160’s, it enters into uncharted moving average territory from  5 to 253 days in terms of GBP/USD  but USD/CAD MA’s exists support at its 20 day average at 1.3046 and 10 day at 1.3044. The separate model then reveals next supports below 1.3160’s at 1.3122 and 1.3120. The base current is located at 1.3113.

USD/CAD above lacks registration to its own moving averages but resistance is found at GBP/USD’s 10 and 20 day MA’s at 1.3263 and 1.3237 in current order. The separate model reveals resistance above at 1.3262, 1.3268 and 1.3274. Above 1.3274 then USD/CAD heads to lower 1.3300’s.

GBP/USD Current big line break above is located at 1.3158 and is found at USD/CAD’s 5 day average at 1.3160 and  GBP/USD’s 50 day average at 1.3165. The base for GBP/USD is 1.2782 and 1.2799. Both levels are  uncharted in terms of USD/CAD and GBP/USD’s moving averages 5 to 253 day so derived base bottoms from the separate model.  Further above the base and below the 1.2995 close exists further model supports at 1.2806, 1.2881 and 1.2903, 1.2910 and 1.2924. A further support exist at USD/CAD’s 100 day average at 1.2981.

To travel higher, GBP/USD must break 1.3000, 1.3004 and 1.3015. Strong resistance exists at 1.3015 and 1.3010 because 1.3010 translates to USD/CAD’s 50 day average. Next above as most vital for GBP/USD is 1.3063 but USD/CAD’s 10 and 20 day averages must break in order at 1.3044 and 1.3046. GBP/USD then has a clear path to USD/CAD’s 5 day average at 1.3160 and GBP/USD’s  5 day average at 1.3189. Above GBP/USD’s own 5 day average at 1.3189 comes USD/CAD 253 day average at 1.3207 which is USD/CAD’s current close price.

GBP/USD above 1.3207 can look to its own averages for next targets because it leaves USD/CAD’s averages due to no levels associated from 5 to 253 day. GBP/USD above 1.3207 then targets next its own 20 day average at 1.3237 then its own 10 day at 1.3263. Above 1.3263, GBP/USD enters uncharted territory because the 50 day at 1.3165 is severely misaligned. What exist next above the 10 day at 1.3263 is the 100 day at current 1.3392 then 200 day at 1.3867. One can understand why the collision in GBP/USD  1.3237 and USD/CAD 1.3046. GBP/USD’s 10 and 20 day averages are misaligned as the higher 10 day average at 1.3263 crossed above the lower 20 day at 1.3237. Further misalignment at the 50 day exist at 1.3165. The middle 1.3200’s for GBP/USD will be rough unless the averages rightsize.

Friday Sept 16. 2016. CPI Blowout.

Friday Review. The big break for GBP above was 1.3229 and 1.3232 then more resistance to the day’s top at 1.3296.  The range break point above was 1.3447 but 1.3393 had to break to see 1.3447. All last week 1.3270’s was strong resistance and it held. What was seen from the cross pairs in  GBP/CAD, GBP/NZD and GBP/JPY as well was massive resistance points above. The message was short and we knew the short information on the Thursday evening post of GBP/CAD. The question was where to target. The side information is GBP/JPY and known intimately because we been trading it 3 times per day for the past 4 months.

The day’s bottom was 1.3160 against reinforced support levels at 1.3155, 1.3153, 1.3141, 1.3138 and 1.3111. The long was taken exactly at 1.3153. GBP continued lower to break 1.3111. The level at 1.3111 was located between a wide daily range from 1.31111 to 1.3035 as next break level. A long was taken at 1.3106. GBP/USD continued lower to break the average of the range at 1.3085 then broke  below the next levels at 1.3035, 1.3028 and 1.3010.

The most vital aspect to the lower 1.3035 to 1.3010 levels is 1.3010 was a range point. Levels in currency trading are trade able support and resistance points but ranges are quite different dimensions because they are huge affairs as they become new and solid supports and / or resistance . Yet ranges like levels are dynamic and change daily. To continue, GBP broke the range point at 1.3010 and settled to close at 1.2995. Where was 1.2995?  The next range point below was 1.2958 and the next day’s break point level was 1.2962.

Overall from 1.3229, GBP dropped 234 pips and 165 pips from the 1.3160 bottom. To say this was a rare day to break a bottom and continue to travel lower is an understatement in the highest regard. The most rare of events is 2 long lots are down 158 and 111 pips. In thousands upon thousands of trades over the last few years,  to be down like this never happens. Bottoms are bottoms, targets are targets and bottoms  don’t break except only on rare NFP days. Bottom breaks are actually market gift opportunities to go long. Above targets are market gifts to go short. And all work perfectly as magic.

The strategy. I will refactor GBP based on the new price and I will know if a profit potential exists, exit at break even or take a small loss. The 30 trades at 50 pips or better will continue as well as to post trade methodologies. The vast majority of the 30 trades will trade in GBP/USD and cross pairs, USD/CAD and hopefully in NZD/USD and cross pairs. The 30 trades are extra to my daily trade signals in 7 currency pairs and the 30 trades for a vast majority are mostly hand calculated. So speed is vital.

Why continue. Based on the first day of USD/CAD trades and to leave lots at 1.3170 and 1.3168 as USD/CAD wandered, my feeling is the opportunity presented is lost because the stats won’t meet the criteria. Fat fingers and acclimation to the new system caused the lots to become actual but correct fingers could’ve easily taken the lots out. Further, the missed opportunity at 1.3138 on the spike low was the time to exit for profit. Add GBP to the mix and I’m dead. After the 30 trades then I might perform another 30 trades to be accurately scored and because I know my win rates, targets and the rest of the criteria hoopla is extraordinarily high. Last is the methodologies to post as vital to me personally because I’m seeing aspects to the one model I haven’t seen before and these points not only advanced my further understanding to the currency price but I found ways to make faster and easier calculations. Today I’m going through the GBP pairs then CAD comes and hopefully NZD. I want to get an understanding where we stand in levels and targets for next week. This info will post here. I’m not posting this overall stuff for the public so view the trades and info here if anyone wishes.

Brian Twomey, Inside the Currency Market

GBP/CAD target from overnight short at 1.7409 now done and exit at 1.7361 for 50 pips. For remainder of this day, no further activity in GBP/CAD.

USD/CAD. Short at 1.3209 saw CPI blowout and USD/CAD bolted to 1.3242 and 1.3244. Where is 1.3244 and 1.3242 was mentioned in last post. Its the top points to prevent USD/CAD from bolting to 1.3291. Good lesson as I never anticipated a CPI blowout. Since top is 1.3244, I might add another lot short yet current at 1.3228 I might not. Under normal market circumstances and normal fundamental data, USD/CAD would’ve reversed at the 1.3214 target area. The short is fine and I hold to target despite  35 pip miss on entry.

GBP/USD. Bottom for the day was 1.3160 with supports from 1.3155 and 1.3153 to 1.3111. Price hit 1.3103 lows. I’m long from 1.3153 and added another lot from 1.3109. Target for now is open and I will report a target as I re calculate. I see so far at least 1.3195 target. More to follow.

Brian Twomey, Inside the Currency Market

USD/CAD. Target at 1.3196 from 1.3140’s now done, price went to 1.3209. Where is 1.3209? Between today’s 1.3203 and 1.3242. See how the points and levels change dynamically from day to day. Now I’m short USD/CAD from exactly 1.3209. Target below is 1.3156 to 1.3163. Why 1.3163?  The point at 1.3163 if broken takes USD/CAD to far lower 1.3100’s. The bottom today for example is located at 1.3092 and 1.3082. As I write, I’m setting target right at 1.3163 ish. The game plan remains 50 pips per trade, 30 trades. And  1 lot each trade. Game plan is out by 10:00 am but we’ll see and I monitor continuously.

Down points for today, 1.3203, 1.3191, 1.3188, 1.3185, 1.3175 then 1.3163. Above 1.3242 and 1.3243, top for today is 1.3291 and why 1.3243 is vital, it holds USD/CAD from 1.3191. Kinda ironic today’s USD/CAD target was actual 1.3214. The target may have to fulfill before the reverse, price now at 1.3211.

GBP/CAD. Couldn’t resist the temptation to short last evening at 1.7409 with a target at 1.7356. Dead stop came at 1.7363 and 7 pips off from target but how about 4 pips off from the 50 pips. Now I’m running something like a 10 pip profit. As long as GBP/CAD remains under today’s 1.7411 and 1.7417 then shorts are good. Above 1.7417 then 1.7432 comes next and 1.7495. See 1.7432 holds GBP/CAD from upper decks at 1.7495.

The bottom in GBP/CAD today is 1.7316 and I believe 1.7356 is a support. The game plan is remain short for now with target at low 1.7360 and a monitor because if price breaks 1.7356 and 1.7360’s then hello 1.7316. Low 1.7300’s means long back to 1.7350’s and 1.7360’s for another 50 pips.

GBP/USD. I was prepared for GBP/USD today but GBP/CAD and USD/CAD took the focus. GBP/USD bottom hit today at 1.3160, actual was 1.3159. GBP/USD should be going long today. Below 1.3160 comes next massive supports at 1.3155, 1.3141, 1.3138, 1.3133 and 1.3111. 1.3133 holds GBP from big fall to 1.31111.

Shorts overall must remain below 1.3229. Above is nothing but headwinds at 1.3232, 1.3236, 1.3248 and top for today at 1.3296. See 1.3248 hold GBP from upper decks at 1.3291. Good short at 1.3248 if seen.

If the 1.3160 bottom breaks hurry long to vicinity of 1.3229.

These trades are monitored and are scoring under a full slate of statistics as I write. So I will maintain perfection and diversity of currency pairs. The first day with the new buttons under USD/CAD didn’t assist so I may add a few more trades to bring the numbers to my best perfection. If this venture works, anybody can come and join me and takes these trades daily.

By the way, thanks to all for views and comments. I’m not placing these trades “out there” but its written exclusively here for the trade methodologies.

Brian Twomey, Inside the Currency Market

A common them runs through GBP pairs and its tough resistance lies ahead in terms of current prices. I’m not convinced to jump yet but I;m informing as to alerts and what I’m looking at in terms of the next trade set ups.

I like GBP/CAD, its a great pair accompanied by good movements but at current 1.7420, massive resistance ahead lies at 1.7493, 1.7553, 1.7569. From a daily perspective in current model, 1.7509 is not only a big break but GBP/CAD is out of range above 1.7383. Overall GBP/CAD is in a terrible location as any downtrend begins at 1.7245.

The current bottom is located at 1.7275, then comes 1.7245 and a drop off to 1.7225 and 1.7201. Short may be the way for GBP/CAD. Overall, I like GBP/CAD long because its price is extremely low but its not ready yet. Low price means GBP/CAD has potential to skyrocket higher.

GBP/USD. Most vital break is not only 1.3260 but the top of the daily point is located at 1.3282. Above 1.3260 then range becomes 1.3260 to 1.3371 and in no man’s land and its the same location for GBP/CAD.

GBP/USD bottom is located at 1.3146 and 1.3141 then a drop off to 1.3130, 1.3127, and 1.3107.

GBP/JPY above big line break is 135.60. GBP/NZD big break is 1.8178.

How about as I write, GBP/CAD dropped from 1.7431 to 1.7410, that’s 21 pips and half  of the 50 pip goal would’ve been done.

In the overnight, strategy is sell any rises in GBP pairs. The other recommendation is stay clear EUR/USD and cross pairs except EUR/INR.

Brian Twomey, Inside te Currency Market

Based on big candle drop, Profit taken on these trades in the 1.3140’s. 3 lots paid total 96 pips.

Now long again from 1.3146, take profit 1.3196 for 50 pips. Supports below located at Bottom 1.3075 then 1.3048 and 1.3052. Further below 1.2946 and built on base at 1.2687.

Big line break above 1.3318. How to achieve target is through 1.3175, 1.3184, 1.3188 then 1.3213, 1.3228.

I’m looking for other trades for today. We’ll count last CAD trade as 1 trade, 29 more to go. Maybe GBP/JPY offers an opportunity. I will look at GBP and crosses.

Brian Twomey, Inside the Currency Market.

USD/CAD is termed the ‘Loonie” and named after a bird. For further name info, go to the BOC currency museum.  USD/CAD is anything but loonie, it was born and constructed in design  to fly far and wide. Its a fascinating currency pair and a great pair to trade continuously.

The recommended sell last evening in the high 1.3220’s came at 1.3235, so far USD/CAD dropped 42 pips to 1.3193.

The vitals. The big break point above is located at 1.3394, up 18 pips from last evening and failed to mention 1.3376. The level at 1.3394 is protected by 1.3304 and 1.3346.

Break points on the bottom 1.3163, 1.3123 and 1.3108. Break points above first comes at 1.3224 and travels to 1.3289 at the peak. In between 1.3238, 1.3251, 1.3259, 1.3263, and 1.3289. These points were built in to stop the USD/CAD rise.

Further below much supports begin at 1.3096, 1.3080 then drops to 1.3020. Overall Supports 1.3042 and  1.2978 and these points are built upon a base at 1.2760.

Today’s bottom 1.3149 and the perfect long point for quick 30 pips or so. We may not see it until much later in the day, if we see it. USD/CAD is now way way overbought so sell is the way. Look for a 1.3199 sell point. Level 1.3163 must break first and a big point break to see USD/CAD much lower. Do or die at 1.3163.

I severely slept on my trades from yesterday. As it stands, 3 lots short at 1.3208, 1.3168 and ? 1.3170. Target for today is 1.3122 to 1.3102 and the bottom of the channel is located at 1.3096. Not sure we see lower 1.3100’s today. Last 1.3168 and 1.3170 wasn’t supposed to become actual. The overall plan yesterday morning was short 1.3219 to 1.3210 and target was around 1.3160 for the 50 pip targets, we saw 1.3138 and we should’v bailed with 70+ pips profit.

I have to complete 30 trades, 50 pips or better. So much more coming.

Brian Twomey, Inside the Currency Market.