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Oil markets and demand destruction.The Russia & Ukraine kerfuffle is opening a gap in supply and demand since February 24th with their invasion. G7 countries will have a common interest in bringing the conflict to a close as the effects begin to weigh on the economy more generally. Emerging markets can take advantage of the situation and build out their consumption infrastructure with cover of high prices. There is a 3.5-4.5 million barrel deficit in supply caused by the Ukraine war. Currently, this deficit is filled by SPR releases from the strategic stockpiles. Crack spreads are widening as demand changes for refined products. There is an 8-9% rise every year in energy consumption world wide due mostly to emerging markets. Market price signals at work. Supply is down rapidly so prices go up followed by demand going away due to high prices and demand destruction occurs either temporarily or long term. Due to sanctions, this particular demand destruction is probably more long-term. Simply put oil gets expensive so people drive less. Miles driven has been dropping for a long time with the rise of SUVs and dropped off a cliff with the pandemic before then recovering. There has been an 8% drop in gas sales in California due to electric cars. General demand destruction is starting to sink in but hasn't gotten a hold yet. Electric cars spreading creates permanent demand destruction thus long-term shorts on oil and gas based energy are good for both the investor and the planet. That being said recent shorts haven't been a good play as the price of oil likely remains elevated or flat through this recession due to the current geopolitical factors at play combined with the inflation narrative. If inflation comes down but remains elevated and supply picks up prices will neutralize and cancel out the forces before turning around completely like lumber. Emerging markets are still the greatest marginal consumer of oil and petroleum products. Such markets demand more energy every year for their growning and modernizing economies. China is currently seeing their transition away due to their malaca problem and has given themselves until 2030 to peak emissions with net-Zero in 2060. India is on the rise and needs to balance energy needs with geopolitical concerns such as an anti-China coalition with the west because something something the specter of communism. What else is new? Africa has just begun their transition to high energy needs along with South Amercia. Fundamental Bearish narratives emerging out of China are weighing on the market but having little effect quite yet. Flight numbers are way down for instance and the real estate kerfuffle continues. However the models were built to predict capitalism so they may not apply perfectly here. India continues to buy Russian crude due to need and that's got the west in a tizzy due to the aforementioned ghost of Christmas past. At least its oil and not their massive coal reserves. Oil might be the key to getting the FED to turn around due to the feedback loop between politicians and the reserve. The market seems to sense this relationship. Any bull thesis will rely on government incompetence on energy narratives. The squabble between political interests will only continue until we can quantify the externalities at play. Let's not rearange the deck chairs on the titanic and focus on the problem. The oil energy industry has lost money on long term investments for year's and finally made some due to the current unique political situation and the pandemic. Politicians need political support from environmentalists so they reasonably take profits from and industry causing externalities for the rest of us. Except for in the good old USA, as we like to ride our nukes into the ground like a bucking bronco thank you very much. Energy corporate profit haircuts accelerate the long term demand destruction which in this authors opinion is a good thing. short term we have elevated prices that will peak and drop as the recession narrative sinks in reinforcing the demand destruction reminding everyone why relying on gas prices at the pump might be a bad political strategy long term. Coming out of the recession the destruction might be permanent reductions in consumption in Europe combined with rising consumption in emerging markets canceling each other out. In short the bearish narrative on the wider market is currently driven by the energy narratives. The market is seeking a way to get the FED to print more free money. Oil prices remaining elevated causing a slow down in the market everyone can blame on a geo political kerfuffle in Ukraine and economic down turn in China, the ghost of christmas future that fits their various energy narratives looks like the current best candidate. Thus elevated crude prices will continue before collapsing with the market as recession becomes the narrative. Ride the short after the turn. All the best, see you on the moon.
NYMEX:CL1!Short
by GreatScottTheMoon
Nice Location for Short EURUSDThe EURUSD chart still looks rather bearish, with the only real bullish angle being that the huge gamma pocket and round number at 1.00 held right at the peak of EUR bearishness. Here is the daily chart, with the 60 and 120-day moving averages. A close above 1.04 would take out the 60-day moving average and would clear the pivot marked by the thin red line. The thin red lines show that each broken support has held as strong resistance with just one tiny overshoot on the one in early April. Good trends tend to hold resistance at prior support and this has been a good trend. Selling at the red line and the 60-day with a stop above the 120-day has been a good expression of the trend. A daily close above 1.04 is bullish. 1.0613 is big daddy but that moving average was only tested once (in February 2022) and the 60-day has been way more actionable. Rate differentials offer nothing bullish in EURUSD, and relative equity performance has been in line with the currency. On the bullish side, BTPs are back to 200bps after twice testing 250bps vs. Germany so you can argue the much-hated TPI (the antifragmentation tool) has worked, to some extent. Then again, BTPs are mostly just a risky asset and they have performed worse than SPX on the massive recovery in risky asset sentiment since mid-June. SPX is making new 3-month highs while BTP spreads are nowhere near the tights printed in May. To me, this all still points to EUR softness, but as I described in my newsletter yesterday I’ve abandoned the USD side and switched to EURAUD. And if you are bearish USD, that means long AUD, or long carry are the better trades as we enter a two-week period of low vol, out of office emails, early departures, and family tripping. And the UK you still have plenty to worry about, considering today's Bloomberg piece discussing how Liz Truss may be a threat to the pound and UK bonds. The chart looks particularly nice, location-wise as you only have to risk 70 pips from here. Short EURUSD here at 1.0346 with a stop loss at 1.0416. Take profit at 1.0166. good luck ⇅ be nimble bd
Short
by brentdonnelly_spectramarkets
1
USDJPY ASCENDING TRIANGLE BREAKPair: USDJPY Timeframe: 1H Analysis: Round number level, trend line, volume profile, support and resistance, ascending wedge pattern, fib golden pocket level ————— Key Takeaway: Need to see break of this ascending triangle to the down depending on the US Core Inflation rate we see today and a break of high volume level ————— Level needed: need a close by 134.925 ————— Trade: Short RISK:REWARD 1:15 SL: 31 TP: 452 ————— DO NOT ENTER OUR SETUPS WITHOUT CONFIRMATION
Short
by TheGoldRoom
1
Keep your eye on the birdie... USD DXY The DXY has been showing a lot of Bullish momentum. This could be altered at the 110 resistance level IF price reaches those heights. There's nothing certain in the markets, the price could range for years... It could tumble or it could rally... There's nothing that's perefect! In my analysis and global climate, it seems that the fall of the dollar will coincide with the rise of Crypto... This trade means that I'm bullish on crypto but I haven't been convinced to trade just yet! The market sentiment is shaky on the dollar because of the climate of inflation. The general outcome of the trade will affect all other assets. In this hypothesis, Crypto will go a little lower before it rallies to greater heights. If the dollar keeps going up, the coins will keep going down. The question is, will the future digital currencies be beat by the old and inflated fiat currencies? That's the trade thesis and it's opening a lot of opportunities in unexplored territories! Let's make money, make money!
TVC:DXYShort
by Money_Lab
Speculating on CNY .. from a "distance"Looking at the CNY and its highest probable and most immediate index levels that we can theorize and speculate (using fundamentals and reason) the currency reaching in the seemingly distant future. This is one, if not the most fascinating markets and charted data I have ever studied. As the most powerful and fastest growing economy on earth, market performance in China will play increasingly more influential roles in the global marketplace and its participants. As the post-world war II global economy continues its evolution in the early 21st century, I will certainly be keeping my eye on the Juan. On this publishing I am showing the theoretical levels on what would be a full retracement to the .618 of the already completed impulse down from the CNY's all-time high of 8.74. In order for this fibonacci retracement to be properly placed at these levels, the CNY would need to continue the monthly bullish uptrend to the golden pocket zone of around 7.7, where it would then need to break the trend or significantly consolidate. Its not my most traditional, or most immediately useful piece of work, but, hopefully this is interesting to you like it is to me. Happy trading, and good luck!
by Bobbyusesfib
GBPUSD. P-Modeling Pt C. The Macro Cajun Cups of Love Welcome Hyperspace Travelers, This is a continuation time-series analysis of GBP.USD on the 1 Week Timeframe. Time to make you think outside the box. It is interesting to note that the forex markets are seeing amazing volatility right now. The cash currencies and their swaps control all other markets. You can't convince me otherwise. Weighted re-distributions on 1 weeks timeframes are coming. With these re-distributions comes new mechanics unfolding in real time. New correlations, new inner-body mechanics. A lot of new stuff this generation has not seen. If you take a look... I posted November 4th, 2021 Part B of the 1 week macro analysis on GBP.USD and I was convinced it was headed down hard towards a rapid hyper-deflation like in 2008-2009,. ----> <-- Press play. Now many think we will continue, its very possible. But a new mechanic seen now, was not seen in 2008. The maturation of crypto and the re-weighting of forex currency into crypto stable 1:1 like USDT.. An inverse flow of these funds may potentially be the prime catalyst for a new period of correlation strings. Taking this into consideration and upon new logic, I have deduced that with a rapid capitulation of the entire cryptocurrency market (BTC + ETH + ALL ALTS) . All the crypto market peeps will flood the forex market with re-weighted cash as they seek safe havens and find none except in currency swaps, which will drive them to extreme ranges. Catalyst: Extreme DXY bull-run. Catalyst: A flood of cash coming directly from the re-weighting of swaps from cryptocurrency peeps swapping into their perspective home currencies like GBP.XXX to seek a safe haven. Result: A potential new correlating string against the USD. Result: The graph provided shows Proposition A having the higher probability against Proposition B. However, I have provided both Propositions and their Trigger Lines. What if we reverted back to linear X_A_C_X | ?? Now we wait patiently again. Is structure all inclusive? Is structure worthy of scrutiny? I think so.. ________________________________________ Thanks for Pondering the Unknown with Me, Glitch420
Long
by Glitch420
5
ULSD / Diesel Fuel LongThis analysis is contingent on data that cannot be cited due to the source's explicit restrictions placed on republishing without expressed written consent. ULSD is of particular interest in the energy markets for the following reasons: • It is quoted based on delivery at New York Harbor. This means that it has localized supply / demand factors related to the Eastern United states. Data shows supply is particularly tight at this location. • Traders are exporting virtually all US oil overseas due to the spread between WTI and Brent • No tankers set to deliver low sulfur distillates to New York Harbor for over a month. On top of these factor, there's a clear support zone at the current price. Given that simple technicals are lining up with fundamentals, the trade seems favorable. Major risk factors include OPEC+ meeting, however I speculate that OPEC will not increase supply due to negative data regarding oil consumption.
NYMEX:HO1!Long
by Vercingetorix01
1
A traders’ playbook – technically long, tactically cautious We roll into August where after a scorching run in risk assets, the NAS100 closed July +12.6%, the best gain since April 2020 (rallied 15.2%). In Europe, the FRA40 was the best performing EU equity index, +8.9% for July, while in APAC/Asia the AUS200 rallied 5.7% and trending beautifully into FY earnings. Ethereum gaining a massive 67% in July has shown us once again that if risk is going up then crypto is the high beta play and we watch this space for a new leg higher in this move. FX markets were less clear, with the NOK working well as a pure pro-risk FX play, while the once safe-haven JPY has also shone as US bond yields fell, validating the BoJ’s dovish stance – clients have been heavy buyers of JPY of late and continue to hold a positive JPY stance. We start the week pricing on a slight negative vibe, with China releasing a poor manufacturing PMI print, with the index at 49.0 and pulling into contraction territory – geopolitics was looking like making somewhat of a return with US/China relations in focus as talk of a possible Nancy Pelosi visit to Taiwan did the rounds, but that looks to not the case now. As we look ahead, we consider what themes and event risks will drive markets this week. With the Fed moving to a more data-dependent/balanced structure last week felt as though we saw a temporary ‘goldilocks’ scenario – if the data proved to be poor then rates hikes are priced out, bond yields fall and the USD found sellers – subsequently, we buy growth equity, crypto, gold and the JPY. If the data proves to be better, then we speculate the recession trade may have gone too far. One thing is clear, bad news has been bad news for the USD and certainly versus the JPY, with USDJPY -2.1% on the week – falling through the 50-day MA, which has worked as a primary trend filter since March. From a momentum perspective, my indicators are bullish and there are few reasons to be short – the NAS100 has some big levels to break into 13k – an upside break here could suggest adding to longs. The USDX tests the lower levels of the regression channel (drawn from the Jan lows), while EURUSD consolidates in a 1.0100 to 1.0270 range. XAUUSD looks interesting for $1786 but requires a weaker USD and lower real rates and SpotCrude needs to break out of a $95 to $103.70 range. The battle lines are drawn, but tactically I would be looking more favourably at short-risk trades – as always, when the tactical/fundamental view and technicals disagree on the longer-timeframes I'll back Mr Market, especially if using leverage. However, I see a refresh this week in the markets thinking and good economic should see the market price a greater chance of another 75bp hike from the Fed in the September meeting and now US Q2 earnings are drawing to a close, and financial conditions are more accommodative than they were before the Fed hiked the fed funds rate by 75bp last week - one suspects the Fed will not want to take the foot the inflation break just yet. Feels like the skew of risk is for the Fed to gently tighten financial conditions and discourage greater risk-taking from hedge funds. We can also see the bank reserves held at the Fed increased by $40.4b last week – this looks at the liability side of the balance sheet and has correlated well with growth and high beta equity and gives a good guide to liquidity. If this was to turn lower, and we won’t know until Thursday, then it will hold well with a weaker equity tape. Looking at the calendar we have the RBA and BoE meeting – we can see GBPUSD 1-week implied vols are still quite elevated and could easily see some moves play out in the quid. I think they go 25bp myself, which offers moderate GBP risk, but the job of the trader is to run the distribution of potential outcomes and assess the sort of moves that could play out. In the US, the ISM manufacturing report, payrolls, and Fed speakers will garner my close attention. After a huge July, we turn to the Northern Hemisphere summer holiday trading conditions – it doesn’t feel like traders should be shutting up shop and taking a break given the unfolding dynamics, even if it can be the best thing for the mind.
PEPPERSTONE:NAS100
by Pepperstone
USDJPY fundamental analysis: Is the yen out of the woods now?The Japanese yen rose to 133 against the dollar ( USD/JPY ), recovering from its 24-year lows. Short-term tailwinds are supporting the yen as the market has repriced Fed interest rate risks to the downside and has already priced in a rate cut in the first half of 2023. The yen is currently doing well in its traditional role as a recession hedge, with the US economy in a “technical recession” and the need to maintain growth “below potential” for a while in order to rebalance supply and demand. The yen has also recently received fresh support after Bank of Japan Deputy Governor Masayoshi Amamiya acknowledged that the BoJ should start considering the tools for ending ultra-loose monetary policy, even though the actual shift will not take place soon. USD/JPY vs US/Japan 2-year spread Treasury yields are falling, providing some relief to the rate differential between the United States and Japan, which has been the primary driver of the yen’s depreciation this year. The 2-year yield spread between the United States and Japan has narrowed to around 300 basis points (or 3pp), as the US 2-year yield fell to 2.87 percent, while the Japan 2-year yield remained negative at -0.1 percent. Despite this short-term narrowing of the US/Japan rate spread, the monetary-policy gap between the Fed and the BoJ still remains well in place, which may prevent the yen from strengthening too much against the dollar, unless some major catalysts occur. What could push USD/JPY below 130? The first refers to disappointing US employment and economic data, which would support an economic slowdown. If this is coupled with easing inflationary pressures, it would strengthen market expectations of a Fed’s policy U-turn in early 2023, pushing the 2-year US/Japan differential to 2.5 percent or slightly below. This level is consistent with a USD/JPY pair in the 128-130 range. The second factor that could support the yen’s resurgence is Japan’s rising inflation rate, which, despite remaining relatively low, has risen for 10 consecutive months, exerting pressure on the Bank of Japan to change its monetary policy. Bottom line: short-term relief, but medium-term doubts In general, the macro picture may be tilting in favour of the yen, at least in the short term, but the downside risks, in the medium term, are not over. The Fed has already stated that the Q2 GDP figures should be taken with “a grain of salt” because the labour market remains very solid and tight for an economy in recession. There will still be two inflation prints in the United States between now and the September 21 FOMC meeting. Despite the fact that the United States was already in a de facto recession in the first half of the year, inflation has continued to rise. As a result, it will be remarkably difficult to bring inflation down quickly, implying that the Fed must maintain a hawkish stance for the months to come. Analysis by Capital.com's forex and metals analyst Piero Cingari
by Capitalcom
AUDCAD at a crossroad - LongThe pair is sitting below the 50 day SMA after clearing a trendline. I would like to see more action within this zone supporting a long trade considering that the zone also has a resistance level which the price broke to the downside in June. Failure to break above this level will invalidate this idea. Therefore, the 0.86xxx and 0.83xx will come into focus Fundamentally speaking, the AUD seems shielded from geopolitical impacts affecting Europe. Australia is expected to do better than other G10 countries as central banks rush to hike interest rates. In addition to this, weakness in the oil markets could lead to a weaker CAD. Oil markets are starting to price in a possibility of a global recession despite the tightness of the supply side the world is currently experiencing. Saudi Arabia has promised to increase supply into 2023 prompting oil prices to move lower Risks to this play are as follows: AUD tends to follow risk sentiment in equities. Therefore, if the equity markets reprice lower in the event of a recession, this AUD strength is going to subside. My assumption is that equity markets have already priced in a global mild recession given that as the market is considered efficient (Efficient market hypothesis states that markets are efficient i.e. have already priced in all the available information in the public domain leaving no room for investors to make excess profits) Should oil prices remain elevated for longer, i.e. the futures curve reprices higher as time moves on, the CAD will remain relatively strong. This is the biggest risk to LONG play. Should the two above risks play out at the same time - a mild recession and higher energy prices, that would possibly push the AUDCAD pair lower towards the March 2020 Low pivot level. It's important to understand the macro background in order to inform your decision on how to position for this play. However, I'm currently bullish on this pair unless risks come to fruition.
Long
by GrizzlyBearBee
The NASDAQ 100 will fall another 40% based on previous crashesI don't believe the current 32% drawdown is the end of the pain for the NASDAQ:NDX . Given the macroeconomic climate, it makes more sense to compare the major crashes of 2000 and 2008. We could even see something more severe. We can see that the current 30% or so it has fallen, does not nearly compare with the two most serious drawdowns (2000 and 2008) in either time or price. Averaging percentage drawdown for 2000 and 2008, we can expect a drawdown of around 60-70%. Averaging time from top until bottom for those two historic crashes, we can expect a drawdown length of around 700 days! That means we're very unlikely to see the bottom until the at least the end of Q1 next year, most likely Q4. The Dec 2018 low of ~6000 lines up very nicely with the historic average of the two major crashes. Dollar cost averaging in during the marked green accumulation zone is my strategy.
NASDAQ:NDXShort
by CoinrankDotApp
1
What next for EURO?Notice how POC testing is readily rejected each time and the resumption of the overall trend prevails like clockwork. This is the value of Price control and knowing where volume and liquidity in the market exists. Another hotly contested Point of Control that adhered perfectly the volume led price action of the market participants. At his stage, picking an entry wasn't the main issue - it was sizing it correctly and preparing for the next move downwards. The uptick in the Eur is seen occurring alongside explosion of yields in key EU bonds, lending catalyst to the moves. The target is the previous POC, where price action will determine the strength of the correction or if resumption downwards continues FOLLOW ME: @icymi_macro twitter
by jbanton86829
Bitcoin Super CycleHere we can see the PI cycle top flashed early much like 2013 In 2013 it was April fools day when BTC started its correction BTC reached the Center point of logarithmic regression around July 1 This correction was only 3 months in length I do see a similar pattern here, If this plays out like the super cycle in 2013 then my personal targets are: Center of regression July 2021 second PI cycle top will be around oct-nov of 2021 followed by a bear market which takes BTC to 20k as the floor again shaking out most retail and making it less affordable to accumulate From there BTC will be on the journey of 1 million roughly a year after the 4th halving It's important to note 4th halving will put rewards close to PI at 3.125
COINBASE:BTCUSD
by ILL_Midas
21