GOLD SELL IDEAGold is weak and should be reaching for 1447.38
A great confluence is the sells we have on EurUsd currently...
Correlation
Crude Oil Can Be Turning Back To Bullish ModeCrude oil has been trading south for the last couple of months, but the price action is not so strongly bearish anymore and the wave structure is getting overlapped. It means that Crude oil is running out of steam within an ending diagonal (wedge) shape.
Well, with current break out of that wedge pattern and with recovery above the upper ending diagonal line, seems like Crude oil found the support. However, from technical point of view keep in mind that bulls can be confirmed only above 97.50 region.
One of the main reasons why Crude oil can be supportive is bearish USDMXN as they are in negative correlation. Looking at the USDMXN daily chart we can see it clearly bearish, currently finishing a big bearish triangle formation within wave B. So, it can send the price even lower within wave C towards February 2020 pandemic lows.
Respecting the price action from technical point of view and wave structure from Elliott wave perspective, seems like USDMXN will face more weakness, while Crude oil may start recovering in an impulsive fashion.
Happy trading!
Correlation between FX and Equities! (Chicken or the Egg?)Which came first, the chicken or the egg?
Traders all over the globe are constantly looking for an edge, something that's going to give them an extra indication on market directional movements prior to them unfolding. I know from personal experiences and from chatting people at the firm that many traders lean towards finding correlation between the equities market and the FX market. There are a lot of analysts out there that say the equities market is what moves the FX market, and in return there are a lot of people that say the FX market is what moves the equities market.
So, which one is it?
Reality is will never know. There have been many of times where the FX market and shows clear indication of direction and then about a day later or a few hours later we have the equities follow suit. For example the RBA's recent decision to hike interest rates by .25% instead of 0.5% sent the Aussie dollar down, but when you move over to the AUS200 or look at General Equities in the ASX, you'll see that they had their biggest day in 2.5 years.
Then there are times, and this is more into day trading, where the indices in the equities movements tend to correlate well moving into the FX markets.
So there is evidence to support both sides. Not ideal.
It goes without saying that correlation between equities and FX is slowly starting to fade as volumes kick up since we are in the technologically advanced era. But, what is or was the correlation and how does it work?
The basic theory (aged) is that when equity markets rise, confidence in that specific country grows well, leading to an inflow of funds from foreign investors. Therefore, equities go up, FX value goes up. It's simple supply and demand when you look at it. If the equities are going up and you're a foreign investor and you want to buy into those equities, it creates demand for holding, let's say, the US dollar if I wanted to buy into the S&P 500.
On the flip side, when the equity markets are falling. Then confidence falters, causing investors to convert their invested funds back to their own currencies outside of that country.
This is a general theory and I don't recommend basing any of your trading decisions on this, because if you actually have a look at the charts and the correlation, you'll notice that recently it's not been too hot. While you do get a general directional bias, one tends to move before the other and they tend to be quite random in which one goes first. If you have the ability or the skill to be able to work out when something is correlating and when something isn't, then for sure I think you'll be able to find an edge in the market trading some kind of correlation between equities and FX.
One correlation I have seen to be quiet useful in recent times is the S&P 500 And the Nikkei. Although in the Asian session the Nikkei is open in the S&P 500 isn't. Usually you see the S&P move and the Nikkei follow suit. Keep an eye on that correlation and tell me if you find any patterns.
As a whole, trading correlations can give you an edge in the market. It can provide you with valuable information when it comes to trading, whether you are trading FX or trading Equities. But it's not as simple as it seems. It will take more diving and understanding the markets on a deeper level to know when their correlating and to know when to ignore.
I hope you guys have enjoyed this article. If so, please give us a like leave and a comment. It does help the post a fair bit and I'll see you next week for some more content. Happy Trading!
-Jordon Mellor
EUR is about to offer a great selling opportunity in daysEUR is fundamentally bearish currency due to all sorts of problems. It will turn down at some point.
Technically, there are no more clear levels to the upside, only the yellow Break of Structure near 1.556 This means there will likely be a significant spike above where we are now.
But I will not enter hastily. I also watch other charts and I would like SP500 to top in the Premium Zone between 0.5 and 0.8 Retracement. This needs to happen at roughly the same time. Both SP500 and EUR started to rally at roughly the same time, both shall die at the same time, also.
LINK, DOT, FIL & ICP - Coincidence ?Hello TradingView Family / Fellow Traders. This is Richard, also known as theSignalyst.
I find these 4 altcoins interesting.
📌LINK, DOT, FIL and ICP have been stuck inside a range 5.0 and 10.0
For the bulls to take over, we need a break above the 10.0 round number and resistance.
Meanwhile, as we approach the 5.0 round number / demand zone, we will be looking for short-term buy setups.
What a coincidence! or is it? 😉
What do you think? Is there any correlation among these 4?
Always follow your trading plan regarding entry, risk management, and trade management.
Good luck!
All Strategies Are Good; If Managed Properly!
~Rich
Breakdown on BTCUSD Yet To Come? When SP breaks the bitcoin follows. Bitcoin is still ready to break lower IMO
The Rise of the Dollar Ends with a CrisisHistorical rallies regarding the US dollar show an unpreceded rise for high-risk assets, including stocks, which in the past had led to some sort of financial/economic crisis. For sure, always is very difficult to make an accurate forecast in price and in time, but we must not forget the explosion of the tech bubble in the 2000s, the ‘’Great Recession’’ in 2008, as well as the sovereign debt in 2012 since the one factor that has a high correlation to those declines, was the strengthening of U.S Dollar at least by 19% each time. Just to remind you that the benchmark S&P500 has already fallen by 23% this year.
An estimation from Morgan Stanley is that the profit margin of US companies will be dropped 0.5% for every 1% of the rising Dollar. And if we consider that during the fourth quarter due to the rise of the Dollar earnings will fall by about 10%, we can imagine the disaster that will follow in stocks, excluding other issues of energy costs. Moreover, the occurrence of major central banks’ policy tightening now in an aggressive manner is amazing. Therefore, this new bubble has to break out suddenly.
The possibilities are raising for more rate hikes, according to the recent stubbornly high inflation, which in turn will strengthen the Dollar even more. And this is good for the US because strengthening the dollar means cheaper imports and a record purchasing power for Americans. But for non-American citizens is bad and especially for the other Central Banks that have deposits in US dollars. It will be more expensive to repay their loans – companies and emerging market governments – since, from the debt data perspective, $83 billion dollars are going to be matured by the next year covering 32 countries. According to the World Bank, there are warnings of heading a global recession and many developing economies will face huge damages respecting the cutting in spending on education and health care to cover their debt payments.
What’s even more concerning for now is that volatility and VIX is still relatively low despite lower stocks. So is extreme fear yet to come? Check our VIX chart in one of our past ideas.
Bitcoin vs S&P 500: Who's Lying?There is a narrative that the cryptocurrency market anticipates the traditional market; that is, that it anticipates tops and bottoms, reversals and the beginning of trends.
It would be like the canary that enters the ore cave to see if there is toxic gas.
As the canary is an extremely air-sensitive bird, if the bird comes back alive, it means the cave is a safe place to explore.
Otherwise it's a dangerous place.
Comparing the BTC chart at the top with the SPX futures chart at the bottom, we have a divergence as ES1! is testing the support of June 18th, while Bitcoin has yet to arrive in that region.
From this perspective, Bitcoin would be behaving like a canary, anticipating the market, indicating the end of the bear market, or is this just a lag in the price, or simply a trap, coming to test the bottom of June 18 in $17,600?
A Resistance On US Yields Can Be Supportive For GoldHello traders and investors, today we will talk about US Yields and its relationship with GOLD from Elliott wave perspective.
As you may already know, US Yields and gold are in negative correlation. And, as you can see, while US Yields are on the rise, gold is slowing down. However, US Yields can be now finishing a five-wave cycle from the lows, while gold is approaching important support within a three-wave A-B-C correction for a higher degree wave (IV).
So, if we are on the right path, then US Yields may start slowing down soon after reaching 10-year high, while gold could continue its uptrend within wave (V).
Happy trading and investing!
If you like what we do, then please like and share our idea.
Disclosure: Please be informed that information we provide is NOT a trading recommendation or investment advice. All of our work is for educational purposes only.
The DXY gameplan (through halloween)DXY has had quite the run and doesn't appear to be losing any steam. It just recently hit my July target level of 108 again... and this time I expect it to act as support as we gravitate towards Monthly R1, R2, and R3 levels. If I were to make a prediction as of today, it's that by Halloween (October 31) we will be knocking at 115.
While I don't know the actual path, crawling along this current trend line and having a major run up to 115 level would make the most sense to me. Markets move in waves, I do expect some down before a gigantic push to the top. Time will tell. Lose the trend line and perhaps the overall market gets a nice breather for a relief rally and we reassess.
Some interesting levels to note that are not quite as clear on my chart are Traditional Yearly R4 Pivot (111.1) and Yearly R5 Pivot (115.8). One of these could have a reaction as well. It will be important to watch price action as we get towards them for potential pullbacks.
Be safe out there!
SECRETS the USDT.D chart can reveal - Crypto Bullish or Bearish?Hi Traders, Investors and Speculators 📈📉
Ev here. Been trading crypto since 2017 and later got into stocks. I have 3 board exams on financial markets and studied economics from a top tier university for a year. Daytime job - Math Teacher. 👩🏫
In today's video analysis, I share with you the SECRET of the USDT.D chart, that otherwise seems irrelevant in predicting the ENTIRE crypto market direction... right? Watch this video to find out what the USDT chart can reveal about the general trend of Bitcoin and altcoins / TOTAL cryptocurrency market cap. I also use one of my favorite technical indicators, the correlation coefficient.
Now , you might wonder, why are market caps relevant? In general, the higher the market cap of a cryptocurrency, the more dominant it is considered to be in the market. For this reason, market cap is often regarded as the single most important indicator for ranking cryptocurrencies. The market cap of a cryptocurrency is determined by the current price multiplied by the circulating supply.
The market cap of a cryptocurrency more or less reflects the popularity of a coin over a longer term and can reveal how much market participation there is in a specific asset.
Large-cap cryptocurrencies are generally considered to be safer crypto investments. These are companies with a market cap of more than $10 billion. Investing in coins with large market capitalization is usually a conservative strategy. These coins are likely to be less volatile than other cryptocurrencies but still more volatile than traditional assets like stocks. Mid-cap cryptos (think top 20ish altcoins) are more volatile but also have a lot more growth potential than large-cap cryptocurrencies.
Micro-cap cryptocurrencies are extremely volatile and considered a highly risky investment, even though they may sometimes have a lot of potential (short-term) growth. However, be aware that they may also crash, literally from one minute to the next. They are also popular for pump and dump schemes, and liquidity rug-pulls.
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CryptoCheck
Bitcoin Correlation to the S&P 500Had someone ask me today what I thought about Bitcoin.
I had to say, They're the same thing!
Since last year Bitcoin and S&P 500 have had a tight correlation of peaks and troughs.
Each step lower for bitcoin or S&P and the other follows suite.
Bitcoin is in tight consolidation now waiting for direction.
Next major move for the S&P 500 is CPI on Sept 13.
Lower CPI.. Upwards
Higher CPI... Downwards.
Consolidation / volatility expected for the next 2 weeks.
If you enjoy the charts, please boost and follow.
CRUDE OIL vs SPXSeptember and October in red?
1. What Is Crude Oil?
Crude oil is a naturally occurring petroleum product composed of hydrocarbon deposits and other organic materials.
A type of fossil fuel, crude oil is refined to produce usable products including gasoline, diesel, and various other forms of petrochemicals.
It is a nonrenewable resource, which means that it can't be replaced naturally at the rate we consume it and is, therefore, a limited resource.
(Investopedia)
2. KEY TAKEWAYS
- Crude oil is a raw natural resource that is extracted from the earth and refined into products such as gasoline, jet fuel, and other petroleum products.
- Crude oil is a global commodity that trades in markets around the world, both as spot oil and via derivative contracts.
- Many economists view crude oil as the single most important commodity in the world as it is currently the primary source of energy production.
(Investopedia)
3. Stock Market
The Brent Crude oil was originally produced from the Brent oilfield in the North Sea.
About 2/3rds of all crude oil contracts around the globe include Brent Crude oil, making it the most popular marker.
Its relatively low density and sulfur content are the reasons why it’s described as light and sweet.
One of the advantages is transportation since this type of oil is waterborne.
The Brent Crude oil marker is also known as Brent Blend, London Brent and Brent petroleum and has a UKOIL ticker symbol.
(TradingView)
4. Correlation with SPX and market sentiment forecast
As mentioned, many economists view crude oil as the single most important commodity in the world as it is currently the primary source of energy production .
Therefore, it is important to consider how this market can impact other sectors.
Looking at UKOIL in parallel with SPX and their correlation, we can see that September and October have a very bad track record.
See red circles.
When crude oil broke down the red channel between $100 and $88, the market did not react well.
At the moment UKOIL is in the same region as 2008 and 2014, with the correlation about to equalize and the prices of the two symbols fall together.
So I don't know if is a good time to go long.
Global Commodity Price Index versus SPXCommodities are basic good used in commerce of primary origin, produced on a large scale and used as raw materials by various economic agents.
Examples are soy, corn, cotton, meat, oil, natural gas, wood and water.
They are classified, according to their origin, into agricultural, livestock, mineral and environmental.
Its main function is the supply of raw materials for the production of industrialized goods.
Its commercialization works, according to the international market, through negotiations carried out on stock exchanges.
They are of paramount importance for the supply of primary goods for the functioning of society.
(Mundo Educação - UOL)
This index represents the benchmark prices which are representative of the global market.
They are determined by the largest exporter of a given commodity.
Prices are period averages in nominal U.S. dollars.
(fred.stlouisfed.org)
This index is at an all-time high, due to the high cost of energy and the world apocalyptic scenario.
The Stochastic RSI on the monthly chart is about to cross downwards.
Allied to this, the correlation with SPX is decreasing, which could indicate an important moment.
Historically, when these two technical events happened (stochastic crossing down and correlation falling), there was a sharp drop in SPX.
This can be seen in the red circles.
Working Money vs Stock MarketM2 is the money in circulation issued by the government.
(fred.stlouisfed.org)
M2REAL is the real value of M2 deflated by the CPIAUCSL (Consumer Price Index for All Urban Consumers).
(fred.stlouisfed.org)
(fred.stlouisfed.org)
M2REAL is in an infinite uptrend, with a downward correction now.
The correlation with SPX is positive as both are falling.
A change in correlation, either up or down, could indicate a move in SPX.
Scenarios:
1. M2REAL falling, SPX falling: positive correlation
2. M2REAL rising, SPX rising: positive correlation
3. M2REAL falling, SPX rising: negative correlation
4. M2REAL rising, SPX falling: negative correlation
With money more scarce and expensive due to inflation, I believe more in scenario 1.
After this inflationary crisis is over, maybe scenarios 2 and 4.
DXY importance to current setups!Just a bit of a reminder to always cover risk and never forget market structure. This is why I have already taken some profit on AUDUSD as the US dollar is still on a bull run in the longer time frame.. been a forex trader is about creating the best opportunities and limiting the amount of risk, this is why I believe the way I trade and analyse the market works so well for me because I understand that the market has a mind of its own and you have to treat it like that!!
BTC - Dear August, Be Good! ETH Analysis insideHello TradingView Family / Fellow Traders. This is Richard, as known as theSignalyst.
As per my last picture idea, we have been waiting for BTC to test the gray zone and lower red trendline to look for trend-following buy setups.
BTC is already around the gray zone , and yes, as per the current market conditions, a movement till the 28k-30k resistance / supply zone is still expected.
Now What? As usual, as per my trading style, I will be waiting for the bulls to take over by breaking above the last high highlighted in orange.
Meanwhile, the bears can still kick in and break the channel downward, in this case we will be expecting a short-term bearish movement because the last major low (as highlighted on the chart) wouldn't be broken yet.
Regarding ETH:
Price broke the purple pennant downward, and as mentioned in this case, we will be looking for buy setups around the lower red trendline.
ETH rejected our red trendline and traded higher . for the bulls to take over again, we need a break above the last major high in blue.
Meanwhile, just like BTC, if the bears break below the trendline, then the first support would be around the 1500 zone.
Which scenario do you think is more likely to happen? and Why?
Always follow your trading plan regarding entry, risk management, and trade management.
Good luck!
All Strategies Are Good; If Managed Properly!
~Rich
GOLD and JPY Correlation!Hello TradingView Family / Fellow Traders. This is Richard, as known as theSignalyst.
We all know that GOLD and JPY are usually positively correlated. Means when Gold goes up, JPY pairs goes down due to JPY strength.
Gold is currently sitting around a critical area 1675 - 1700 zone that has been respected since 2020.
Here are the possible scenarios:
1- Rejection (blue projection)
Gold rejects the 1700 support zone and trades higher. In this case, we will be expecting a reversal bearish movement on USDJPY.
The next resistance for would be 1760 while the next support for USDJPY would be 135
2- Breakout (purple projection)
Gold breaks below 1700, in this case an over-extended bearish movement would be expected. On the other hand, a continuation to the upside would be expected for USDJPY to test the 150 supply and upper brown trendline.
Which scenario do you think is more probable and why?
Always follow your trading plan regarding entry, risk management, and trade management.
Good luck!
All Strategies Are Good; If Managed Properly!
~Rich
GBPAUD H4 - Targets of 1.73 short termGBPAUD H4
Little bit messy here with this pair, but we have also seen evident AUD strength in line with recent trade. Support at 1.75 has seen a break, we are simply waiting for a correction to this 1.74750-1.75000 region to look to jump in with the next wave short. GBP not looking to great in current climate.
Dollar Index Corrections Almost Finished?DXY H4
We have been pretty spot on with the dollar performance, marrying up correlation fundamentally and technically. Refer to the FX technical rundown for more information.
This has really helped identify handles to trade from amongst other USD related pairs, especially cable.
Power of Correlation Good day friends... From my last post I shared how I have a bullish bias on XJPY pairs. And here sits beautiful EURJPY giving us a bearish setup 🤣... Am I looking to go short ? Answer is no... Why ?... In simple and plain terms ... Audjpy, EURJPY, CHFJPY, NZDJPY, GBPJPY are all positively correlated so if 4 out of the 5 have ruptured bearish order flow it's only a matter of time before EURJPY follows suite.. so probability is not on my side here. Isn't that what trading is all about? Putting probability on your side?... There you have it, the reason why I'd be sitting this beautiful setup out. Have u been making use of Correlation?
Remember this isn't financial advice.
Bitcoin Bottom & US Dollar Correlation This is a strength analysis to help see the strength of Bitcoin correlated to the US Dollar.
We have to analyse the Dxy (US Dollar) to understand the weakness or strength of BTC.
BTC vs. CPIWith BTC SPX correlation at all time high level, the impact of inflation on BTC prices increase accordingly. Unfortunately, supply side shortages make it tough for the Fed to deal with the inflation issues at hand. So I wouldn’t be calling the bottom now even with lots of on-chain metrics at historical oversold levels.
Most crypto traders are more focused on the FOMC results rather than the inflation data, but in reality, inflation data is crucial for the FOMC decision. Below is the timeline for what happened in June.
- June 9th: 4% probability for 75bps rate hike; 96% probability for 50bps rate hike
- June 10th: May CPI data released (actual > estimate by 0.3%)
- June 10th – June 14th: probability for 75bps rate hike surged from 4% to 94%
- June 15th: Fed raised rate by 75bps
The majority of the 30k to 20k BTC drop happened before the FOMC (June 14-15th) and after the CPI data release (June 10th).
If we look at the differential between estimated and actual CPI data, it’s interesting to see that BTC has faced tough market conditions when the actual data beats the estimated inflation data. Current estimate for June sits at 1.1% MOM and 8.8% YOY.
11 more hours till the next CPI data release. 14 more days till next FOMC. Tick tock.
