Gold AnalysisGold is a safe haven at this time.
A rate cut is priced in of US Fed after worse than expected ISM Manufacturing and Non-Manufacturing PMI.
Ratecut
IWM short setup in the worksA break below 156-ish is bearish in my opinion, and increases the likelihood that IWM will retest the bottom of its descending channel. In addition to that, the RSI is showing overbought conditions. If it breaks below the 156-ish level, I will short it via puts and look for a risk/reward somewhere in that area I noted.
Fundamentally, it all hinges on the Fed meeting later this afternoon. I still believe a meager 25 BP rate cut will send the market hopesters to their "safe places," while they pout. Therefore, sending the markets lower while they sulk in their own pity.
Don't be a hopester ... use solid analysis. DO YOUR OWN RESEARCH AND BE RATIONAL ABOUT IT!! Yes, I know the markets are irrational at times. However, you can still give yourself an edge that the hopesters don't have by analyzing instead of guessing (gambling).
FOMC tool - 40% NO-CUT Using the FOMC tool, we see a:
25 basis points rate-cut --> 58.8%
NO rate-cut --> 41.2%
To get these rates:
www.cmegroup.com
Tomorrow's volatility will surely grow, even if the FOMC cuts rates; with these percentages, we can expect J. Powell to suggest no more cuts in the future.
You can also expect Trump to fight this, hard.
**FOMC meeting to take place in 26 hours.
EUR/USD prior the ECB Meeting this Thursday I am thinking Euro/Dollar could finish a bigger corrective structure, however during the ECB meeting I am also expecting another move to the downside. After the meeting is done there could be bigger long swing playing out since I am assuming that most of the ECB rate cut on Thursday has been already priced in.
NZDUSD Likely To Decline Further Towards 61 Cents!
Have a look at the snapshot above. It represents the nearby support and resistance levels on monthly TF of NZDUSD. A convincing close of monthly candle below 0.64000 would likely confirm probable bearish continuation until 0.61000 where the next support lies.
Looking at the main chart, there is a nice descending channel continuation! Should the monthly candle and this week's candle close below 0.64000 we can take this pair SHORT to target 0.61000 level.
The fundamental outlook too is against the KIWI as global slowdown due to trade war is affecting the KIWI. With the Tradewar far from over and RBNZ leaning towards slashing rates again to boost the economy, a visit to 0.61000 is highly likely.
This just represents my outlook on this pair, shall a trade opportunity arise i will post it in a new thread.
SPY remains with a specified range range:
$281.72-$294.15
Going long the lower end of the range and shorting the upper end of that range has been profitable for the past few trading weeks.
FED Rate Cut Outlook & TradeWar May Take SAFEHAVEN YEN TO 105.00INSTANT ENTRY AT AROUND: 107.350 LEVEL
POSITION TYPE: SHORT
STOP LOSS: 109.500
TAKE PROFIT: 105.00
RR: 1:1
SHALL THERE BE ANY UPDATES I WILL PROVIDE THEM IN THE THREAD BELOW. BENEATH YOU CAN FIND THE ANALYSIS BEHIND THIS TRADE SETUP
As seen from the main chart, the weekly TF shows the price respected by a long term held triangle (black lines). The blue line represents another concrete trendline which was broken as the weekly candle closed comfortably outside the trendline. As of now the next support that lies is present at 105.00 level where the main triangle's lower trendline is present. So we can expect the price to make its way to that level in the coming weeks.
On the fundamental perspective, the prospect of US interest rate cut has already sent the greenback tumbling against all major currencies. USDJPY is the most sensitive pairs of them all. Inevitably the FED would cut the interest this year and it might be two times potentially! although this event has not been priced in at 100% in the markets, the coming weeks may seem to reveal further USD weakness as the prospect of eventual rate cut gets priced in!
Additionally, the trade war is not helping the greenback either against the yen, as any negative news or developments seems to favor traders rushing for safehaven yen. As said the coming weeks are crucial and will show clear picture as to where the price headed but at the moment the technical and fundamental picture are both in our favor.
GBPUSDThe Sterling Pound
The markets were optimistic regarding Germany’s Merkel agreement for the Irish backstop. The divorce with the EU, and Boris Johnson’s plan to meet with the Merkel will probably not accomplish any progress but headlines have moved Sterling a little higher.
Swiss Franc(CHF) to fall ahead! With ECB committed to ease in September, pressure is increasing on SNB to further cut rates towards minus 1 percent from current minus 0.75%. CHF has appreciated considerably as a safe haven move recently making higher possibility of intervention by SNB. chart structure has started to favor fall in Swiss franc in coming weeks. Further looking at SMI 20 strong bounces on dip support that franc is going down by SNB actions ahead. It makes high interest rate currencies good buy against chf... USDCHF, CADCHF, AUDCHF, NZDCHF and GBPCHF may remain bid and shall be accumulated on dips for solid gains in coming weeks.
Opportunity Knocks For The NZDJPYWith global equities continuing to be supported by favorable liquidity conditions and little else, it was really just a matter of time before risk assets came under more pressure. The biggest red flag was flying in the bonds market, where global bonds have continued to rally sending yields sharply lower. Equities rallying strong along with bonds is not sustainable, and considering slowing global growth, trade conflicts, and political unrest risk assets have appeared the most vulnerable. The constant flows into bonds highlights the increasing uncertainty and demand for safety.
The current equities decline started when the Fed disappointed doves with only a 25bp cut, delivered with a neutral statement. The decline was accelerated by news of new tariffs that will be imposed on China by the Trump administration. This sparked a sell off of risk assets, and flows into safe havens such as JPY and CHF. The USD missed the boat this go around partly due to the unwinding of the EURUSD carry trade caused by the quick spike in volatility. There were also some EM factors that contributed to the USD decline, but those are outside the scope of what we are trying to convey here. After all, we are here for the NZDJPY.
NZD is a high beta currency strongly tied to the performance of the global economy. It is also directly impacted by the US-China trade conflict, just like its cousin the AUD. Today the RBNZ surprised the market by cutting 50bp (market was expecting 25bp). Soft inflation expectations wiped out any positive the currency picked up on strong employment figures yesterday, business confidence remains very poor, and the RBNZ has even floated the idea of unconventional monetary policy. All of these things should keep the NZD weak over the medium term.
On the technical side, we have now traded through key monthly support, which should now serve as a barrier for any rally attempts. Over the coming months we are looking for continued declines towards 65.00 and then 62.00.
BTCTrump hits Beijing with tariffs this coming September. The markets retaliate and consumers run to Bitcoin as a speculative store of value.
The last time the FED starting cutting Rates..... Please have a look at the last time that the FED began lowering rates; they began with 25 basis points, and they ended at ZERO percent.
Fed action further distanced SP500 from 3000This is a follow up to GAMS' first post.
The Fed's 25bps cut, coupled with hawkish verbiage, added more weight to the already dwindling American corporate earnings and further confirmed GAMS's bearish view towards the rest of 2019.
Strong USD will create strong headwind to heavy-weight components in SP500 like MSFT, AAPL, etc who rely heavily on foreign revenues. As corporate earnings start to take a nose dive as it is about to now, the Fed wouldn't have any ammunition to turn the tide any more.
GAMS is extremely bearish with USD and SPX, in the medium to long term. We see GLD, JPY and long UST duration as safe havens in this environment.
To express above views, GAMS had entered below strategies.
1. Bull put spread on GLD, 132/152, Dec2019 exp. This creates upfront credit
2. Credit from leg 1 to buy TLT
3. Monthly TLT Covered Call
4. ITM put on SPY, Dec2019 exp.
Market goes down = $$$A way to take advantage of volatility on this market could be this short-term futures based on the $VIX.
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FedFunds Rate Predicition is In Tact!Back in March of 2019 I put this out there...and here we are, getting a rate cut today !
EURO LONG NOW OR NEVERAs far as risk goes you have to.. for the biscuit. We see Multiple technical confluences surrounding the 1.1170 handle with an X marks the spot scenario. Quarterly chart implies a continuation of the long term up trend for the pair.
We are sitting around the 61.8% Fibonacci retracement level and have support from an ascending and descending trendline. With the possible US rate cut later this week we could have the catalyst needed to get the ball rolling. With a 50bp cut the EUR/USD could be sent back above the 1.1300 handle by the monthly close on Wednesday. Speculatively we are looking for the 1.3900 handle being respected at some point in 2020. The 1.1700 handle will be met by the end of the year.
SPX ready to attack the 3091.2 zone?Is the S&P500 finally ready to breach the to resistance and go for the 161.80% Fibo?
Zone at 3091.2 looks open now, but the price has landed just a bit above the long top diagonal resistance. Demarker is also moving inside the overbought zone, which indicates that a strong buy impulse is going to follow, before the price starts to fatigue and the movement to reverse.
USDCAD Long Term Downside SetupUSDCAD Weekly chart gives us an indication of overall price momentum to the downside as price has retested the weekly resistance zone of 1.35200.
Overall a break in upwards channel from
1.34150 has seen USDCAD sustain its shorts over the last 3weeks.
After a break - Price will usually form a pullback/consolidation zone. Perfect for re-entries.
A Weekly Pullback from Support Zone of 1.30200 has encountered yet another wall of weekly resistance of 1.31500.
Weekly Depicted Below
Daily Chart gives us a bearish flag continuation pattern with ideal swing target set at 1.25000
See below D1
Down to the 4HR Chart, a huge range of consolidation confirms our higher time frame bias on going short on USDCAD Overall .
It is important to note that the only driver of higher CAD prices could indeed be fundamental news/ lower OIL prices.
Fundamentally CAD sees itself losing steam gained against the USD as FED may hold true of cutting rates.
H&S On WatchSmall H/S in 15 min, not really big enough to short IMO, but may provide better buying opportunity prior to "expected" rate cut EOM.
Could setup to bring SP back down to lower boundary due to primary pattern.
Monthly TF Perspective Of Yellow Metal. Door Open to Test 1550!This is a monthly TF analysis of the yellow metal. The main chart shows numerous horizontal lines, these are concrete support and resistance levels taken from monthly charts. This year many people predicted the yellow metal to break out of its long term held range and it happened! After 1370 level was broken, the next hurdle was present at 1430 which held against a very bullish pressure from the yellow metal. So in short 1430 is not a new resistance just formed! it has been held on numerous occasions and broken too.
Therefore from a technical perspective GOLD is still indeed bullish however just to be safe, it is advisable for the monthly candle to close above 1430.00 before going LONG to target 1550 where the next resistance is present
Any trade deal between US and China if agreed it could take the yellow metal down where another long term held ascending trendline is present. Until this trendline is not broken we are still bullish on gold! Another thing to consider is that at the moment the price is confined in a triangle practically preventing the price from further climbing. Should a strong bullish candle close above 1430 this would not only confirm resistance break but also the triangle/trendline break too.
Fundamentally, the factors are in favour of yellow metal appreciation! First of all the tradewar is having effects on the economy and many central banks have started to cut rates with the FED thinking of cutting rates too and turning dovish in a surprising manner in the last couple of FOMC meeting. Fear of recession are also alive and well as the US yield curve has inverted again. In this classic scenario the safe haven currencies such as CHF and JPY appreciate but so does GOLD
Therefore it remains to be seen what develops in the coming months but a test of 1550 level is very much on the cards!
Bullish on $GLDWith the first rate cut of the cycle around the corner, it's a good time to look at what $GLD did during the previous time rates were cut. It looks like $GLD kept rising as rate cuts and QE announcements kept coming.
