Thread: Discuss the AUD/USD, NZD/USD , USD/CAD and more

Originally Posted by Mary R

it also looks like make or break time for the S & P 500

Seems to be playing out like before. You can see there have been five 75+ point straight advances that all stalled around 1200-1230 and reversed. They have been great short entry points, target 80-100 lower. The bonus for foreigners is that the ride down coincides with a rise in the dollar so you gain on two fronts in one trade. Then on the ride back up I would pick tech or a commodity index, last week I chose energy although diversified metals did better.
This should work until it doesn't.

Originally Posted by Mary R

A "broad based lending program" doesn't necessarily mean quantitative easing. As a bank, the Fed has the ability to take unconventional measures under extreme circumstances that most people aren't even aware of. They can actually lend directly to small and large businesses or consumers , although they don't ordinarily compete with commercial banks. After the stock market crash of 1987 when the Dow dropped 30% in one day some of the specialists on the floor of the NYSE couldn't even open their stocks because they had run out of money and the Fed lent money directly to the specialists. They could open up a lending program at low interest rates such that small businesses could borrow directly from the Fed. I dont think they are going to start another round of QE3 right now.

Thank you. There were contradictory reports about what he said. Perhaps some people are biased by their positions or wishful thinking.
As for consumer borrowing from the Fed, I would love to be able to borrow unlimited amounts of Fed Funds at 0% like the primary dealers, go play craps with it, double-or-nothing until I win. An almost sure-thing according to mathematic probability if you have unlimited funding and cannot go bankrupt first.

Originally Posted by SkiBunny

Thank you. There were contradictory reports about what he said. Perhaps some people are biased by their positions or wishful thinking.
As for consumer borrowing from the Fed, I would love to be able to borrow unlimited amounts of Fed Funds at 0% like the primary dealers, go play craps with it, double-or-nothing until I win. An almost sure-thing according to mathematic probability if you have unlimited funding and cannot go bankrupt first.

Only if you play a martingale system.

Good Morning Traders! As we start the second week of October, more of the extreme volatility of the previous months and weeks is with us.

Here are list of upcoming economic announcements that could move the markets.

Pip and Run Trading Room Results: 11 Wins out of 12 Trades for +44.6 Pips- I was able to squeeze out a few wins on Euro longs in the 1.3581- 1.3598 area near the Daily R2 Pivot, I flipped got short the majors versus the dollar as the up moves in the Aussie, Euro and GBP looked a little tired after moving some 200 pips from Asian session lows. News of a recapitalization plan for European banks caused the dollar to sell off. Sandy, a new Pip and Runner asked about shorting the GBP/CHF and that gave us good trades both long and short as I don't usually trade that pair as my luck with it has not been stellar. However, walking Sandy through the possible trade scenarios gave me confidence to actually take a trade long after the GBP/CHF for a "dead cat bounce". I grabbed 11.2 pips trading the counter-trend bounce up to the 38.2% retracement of the move down from 1.4288 down to the low of 1.4216.

Join Greg McLeod, Daily FX Moderator and Trader as he trades live at 6 am Eastern Time /10:00 GMT in his "Pip and Run" Trading Room

According to the DailyFX Speculative Sentiment Index (SSI), retail traders are trying to fade this current strong rally in AUD/USD. As the shorts are "squeezed" look for AUD/USD to get above the psychologically important 1.0000 area.

AUDUSD - The ratio of long to short positions in the AUDUSD stands at -1.14 as nearly 53% of traders are short. Yesterday, the ratio was at -1.07 as 52% of open positions were short. In detail, long positions are 7.6% higher than yesterday and 28.7% weaker since last week. Short positions are 14.8% higher than yesterday and 62.0% stronger since last week. Open interest is 11.3% stronger than yesterday and 10.7% below its monthly average. The SSI is a contrarian indicator and signals more AUDUSD gains.

Here is the DailyFX SSI for USD/CAD and NZD/USD- The Speculative Sentiment is like the Commitment of Traders (COT) for commodities or Odd-lots for stocks because it measures the sentiment of retail traders. Traditionally, the idea of using retail sentiment as a contrarian indicator stems from the fact that 90% of retail traders are wrong so when large numbers of them are on one side of the trade, chances are the instrument will move in the opposite direction.

No indicator is 100% so SSI should be along with technical indicators and price action:

USDCAD - The ratio of long to short positions in the USDCAD stands at 1.15 as nearly 54% of traders are long. Yesterday, the ratio was at -1.22 as 55% of open positions were short. In detail, long positions are 64.0% higher than yesterday and 105.4% stronger since last week. Short positions are 16.6% higher than yesterday and 36.6% weaker since last week. Open interest is 37.9% stronger than yesterday and 10.9% below its monthly average. The SSI is a contrarian indicator and signals more USDCAD losses.

NZDUSD - The ratio of long to short positions in the NZDUSD stands at 1.13 as nearly 53% of traders are long. Yesterday, the ratio was at 1.14 as 53% of open positions were long. In detail, long positions are 8.0% higher than yesterday and 3.0% weaker since last week. Short positions are 8.8% higher than yesterday and 37.2% stronger since last week. Open interest is 8.4% stronger than yesterday and 24.8% below its monthly average. The SSI is a contrarian indicator and signals more NZDUSD losses.

USD/CAD Profit Taking Could Take Pair Below Parity in Coming Days- After a meteoric rise from the July 26th low of 0.9405 to the Oct. 4th high of 10656 covering some 1200 pips, it is expected that USD/CAD was overdue for a pullback. As the old saying goes, the "taller they are the harder they fall" and fall USD/CAD has done moving over 400 pip down over the last 7 days. The selling may not be over, and we could see the pair revisited its old "stomping grounds" around parity. However, expect a bounce from that 0.9800 to 1.000 area to hit new highs in the 1.1377 area.

Originally Posted by Gregory McLeod

According to the DailyFX Speculative Sentiment Index (SSI), retail traders are trying to fade this current strong rally in AUD/USD. As the shorts are "squeezed" look for AUD/USD to get above the psychologically important 1.0000 area.

AUDUSD - The ratio of long to short positions in the AUDUSD stands at -1.14 as nearly 53% of traders are short. Yesterday, the ratio was at -1.07 as 52% of open positions were short. In detail, long positions are 7.6% higher than yesterday and 28.7% weaker since last week. Short positions are 14.8% higher than yesterday and 62.0% stronger since last week. Open interest is 11.3% stronger than yesterday and 10.7% below its monthly average. The SSI is a contrarian indicator and signals more AUDUSD gains.

Aussie Regains Parity! AUD/USD may take 1.0300 area over the next few days

Pip and Run Trading Results: 8 Wins out of 10 Trades for +40.2 Pips!
EUR/USD , GBP/JPY and GBP/USD were are big winners. My first trade shorting the the Euro limited out in 1 minute!

Other trades were moving in my favor but were giving back initial gains, so I closed them all out for small gains or small losses.

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The stochastics on the 4h charts for both the A/U and the N/U are indicating negative divergence.
This should be good for 100-150 pips I think.
I think I will wait for the stochastics to start heading back down and the MACD to cross down for some sort of confirmation.

according to the VIX indicator for both the stock market and AUD we are near an important sell level

Originally Posted by wynan101

Hi Mary, I'm quite confused, why would you sell stocks on low point and buy stocks from highest up trends? or did I mix things up? thanks

When the volatility index (VIX shown on the chart below) is high it means there is a high demand for put options so the implied volatility rises . When it reaches a peak up out of its Bollinger bands there is usually some type of rebound rally in the stock market. Since AUDUSD moves in very close tandem with the stock market this would mean a rebound for AUD.

when the VIX is low it means that complacency reigns in the markets, and everyone has been buying and not selling. So it is a contrarian indicator.

The chart below is a chart of the VIX not the stock market

Maybe a drop maybe it goes back up to parity? I don't know if you ask me, lol, but am going to do later what the chart tells me.

Originally Posted by Mary R

according to the VIX indicator for both the stock market and AUD we are near an important sell level

Originally Posted by Mary R

when the VIX is low it means that complacency reigns in the markets, and everyone has been buying and not selling. So it is a contrarian indicator.

Originally Posted by SkiBunny

there have been five 75+ point straight advances that all stalled around 1200-1230 and reversed. They have been great short entry points, target 80-100 lower.

Vix of 33 is still high and indicates continuing nervousness. The S&P apparently confirmed Monday’s big rise on light volume by not rolling over Tuesday like it has previous times recently around these levels. So I am not shorting this stock rally like I have times before in recent months. Maybe sometime later when I have more conviction about direction but for now I am on the sidelines. As bailing out Dexia this weekend was a potential game changer if it signals more of the same is coming. Also China bailing out banks too. Let’s also see whether the FOMC minutes show something too.