ECB & Fed: Checking The Turn
Updated
Wave 3 - Chapter I
Introduction and general comments
After clearing ECB & FED it is well known that hikes are cooking very creditably and the monetary side appears to be quite helpless in the endgame. The most well-handled analogy from poker is "checking the turn", both Powell and Lagarde showcased the ability to play this with skill. It may be in the nature of things for markets to gather first plenty of participation in the opening, but this problem for bears must be tackled as soon as possible. You must be aware that from the very start of June we have seen one way traffic for sellers, there are now stale leftovers compared with the feast that is cooking for buyers. The realisation will soon kick in that not enough time has elapsed for sellers to pack and defend the ladder appropriately, meaning a material occupation of control from buyers will trigger a slingshot higher as they cover quickly.
Example 1:
Buyers were the most important actor present during the Covid Compression. They headed for the apex and at the same time eurobonds protected the base and propelled the swing into 1.20+.
Example 2:
Here too from the zoomed out picture we can see how buyers control the flows and choose a 5 wave sequence, first targeting the 1.20xx main area which we cleared in the tweet, and second, the 1.25/1.26 area which can now be made more enterprising in Q3.
The next move in play here is an impulsive wave from 1.185x => 1.25xx/1.26xx. Since the immediate expectation of inflation is now being forced via Fed, this is an exchange the ECB will lose. Breaking below 1.17xx will imply an imbalance between sellers and buyers.
Introduction and general comments
After clearing ECB & FED it is well known that hikes are cooking very creditably and the monetary side appears to be quite helpless in the endgame. The most well-handled analogy from poker is "checking the turn", both Powell and Lagarde showcased the ability to play this with skill. It may be in the nature of things for markets to gather first plenty of participation in the opening, but this problem for bears must be tackled as soon as possible. You must be aware that from the very start of June we have seen one way traffic for sellers, there are now stale leftovers compared with the feast that is cooking for buyers. The realisation will soon kick in that not enough time has elapsed for sellers to pack and defend the ladder appropriately, meaning a material occupation of control from buyers will trigger a slingshot higher as they cover quickly.
Example 1:
Buyers were the most important actor present during the Covid Compression. They headed for the apex and at the same time eurobonds protected the base and propelled the swing into 1.20+.
Example 2:
Here too from the zoomed out picture we can see how buyers control the flows and choose a 5 wave sequence, first targeting the 1.20xx main area which we cleared in the tweet, and second, the 1.25/1.26 area which can now be made more enterprising in Q3.
The next move in play here is an impulsive wave from 1.185x => 1.25xx/1.26xx. Since the immediate expectation of inflation is now being forced via Fed, this is an exchange the ECB will lose. Breaking below 1.17xx will imply an imbalance between sellers and buyers.
Note
A quick update here for those following the flows:
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.