USA inflation is representing by DXY now as our researching. The second rates hike will prove the overheat phase of USA. In that phase, commercial currencies will rise agaist Usdollar especially the weighted JPY(JPY could be weak because of it's already strengthening for 24 months) and OZ dollar. The more hike the more inflation. FRB rising rates with 0.25% will push USA inflation up by 0.7% volume like last year and we have had 5 months DXY weakness after the hike.
That's why we are saying it's a self fulfilling machine. We've had too long deflation to realize that we're at the beginning of the inflation cycle.
The situation looks like the year of 2011, don't be fooled by the indexes, inflation, gold, stocks they're time lagging correlated in 2016. Even if in 2011 weighted JPY still tested back the high after the tragic accident that means there're more downside of indexes. If you look at stocks then you shloud follow the gold.
1, We can not get 2% inflation target now, the "a" wave on chart.
2, We begins "b" wave for pushing A shares and stocks new highs. Flat wave b could be higher than start of a wave, that's a new high or A shares testing 5178 even breaking 6124 (not likely but still possible) historical high.
3, Strong "c" 5 wave impulse will get us inflation target 2% or plus.
4, At "c" wave point BOJ will save the world by G8 industry countires permission of forex market intervention like the year 2011, a 7 years cycle completion.
5, Stocks indexes like SPX and DAX they're human infinity stones. Never short human civilization it's the dark side.
We've ended overheat phase now (usally it's lasting 20 month of weighted JPY's strengthening and we have 24 months of it from end of 2014 ). If FRB rises rates in Dec. 2016 the inflation will reach about 2.1% very shortly and falls. I called it an "artificial inflation".
If FRB and BOJ don't give up, the resolution is a second pushing of stocks as "b" wave on chart but the time is very limited. Because we should have strong "C" wave down. After Brexit weighted JPY high Jul. 2016 to Oct. 2018 intervention it's only 27 months. That's too short for weighted JPY to form a second 20 months overheat phase(20 in 27 is too big ).
So we shall have a very volatile market to catch the time window. We've seen UJ run about 1500 pips from 99 that's the catching wave. I think in 2017 we will have the very quick rising of indexes from global stocks markets and we will top somewhere from the end of year 2017 to 2018, follows a very quick and a big crashing for reaching inflation target in Oct. 2018.
From EW wave technical analysis the weighted JPY first rising move is a 5 wave structure because the pull back must be a 3- 7- 11 waves so it's not complete, we must have a 535 zigzag from weighted JPY. As we have on the UJ chart is a 335 flat.
now to 2017/3 traditional new year and Christmas if FRB rises same as 2015/3
2017/3 triggers the 50th. law ( gold topped stocks rising rapidly) risk on
2017/7- 2018 stocks are topped and weighted JPY rises again risk off
2018/10 completes sequence ( BOJ intervention time window) new cycle begins
2019/3 UK quit takes effects another 7 years recovery risk on
If the "b" wave is compelted with 2 conditions fulfilled, 1, renminbi is NO easing from PBOC, this condition will keep A shares lower and weighted JPY second rising as the real overheat 20 months phase. 2, FRB is changing back inflation and gold negative correlation.
From 2014/12 to 2016/8, there're 20 months FRB has been inverting the inflation and gold positive correlation causing a seriously problem of stagflation mixed with overheat. Good thing is that FRB had enough profits to hike in Dec. 2015 but the bad thing is that when inflation fails the gold is rising to against DXY rising. ( A guess: Now in Dec. 2016 FRB has NO enough profits to hike from Brexit stop loss( 100% stopped out) and Trump stop loss ( partially stopped out about 50% of first order) And also it's a market cheating way too. It has to be changed back now.( Trump will find out it soon after he puts someone in the board) )
I suppose that in a normal overheat phase FRB should be longing gold from 2014/10 and it's very easy to make profits from inflation rising and that money will be handed to US treasury for paying USD interests hike.
We counts down back 20 months "real" overheat from 2018/12. 2017/12+12 minus 20 equals to 2017/4. That means in some where next year in Spring or Summer season, FRB will earn enough money to do the second hike and that will be a huge hike.
We're looking for FRB changing back the correlation in Dec. 2016. From then FRB will turn to long gold for performing the overheat phase as stop the cheating way. So in 2016 they had about 75% profits and next year they will have about 175% profits to hike or more profits that depends how high the inflation will go.
The next hike will be huge and NO hike in Dec.2016. We're saying "it's paused".
If FRB can make it lower to 1100 then they can still hike but only 0.25%. That's a failure too. Because the market has been priced in already.
USDCNY 7.0 could go back to 6.0. A shares, weighted JPY and Japan inflation.
Scalpers should always have good habits to check up the SSI before entries. The market mostly time is against speculators sentiment, few times speculators are right. If you check up it and keep using the same account management, you should have been a very stable trader for long term profits already.
Now all scalpers crying for BOJ intervention, but the SSI is heavily net long from FXCM data, the UJ is 2.9, others are bigger than 3.0 from Yen crosses. Even if BOJ want to do it but the costs will be huge. Also Yen now is very politic, BOJ can't act without Prime Ministers Anbei's permission and President Trump's permission.
I hope you guys are on the right side of the market...
Risk on is coming back soon. The global stocks markets are still going higher with the core inflation till next summer in 2018.
I suggest traders be prepared for this condition where NO circulation will be provided for banks and for brokers to execute trader's stop losses.
Consider an potential EURO huge impulse to 1.20 will drag down DXY and will drag down gold from SNB's weakening CHF possibility is becoming higher. The second black swan could happen but inverted the Jan. 2015 sequence.
USDJPY flat in this simulation.
Can't wait to watch the movie "Guardians of The Galaxy" any more... in hours...
A very good movie as expected the "Guardians of The Galaxy 2". Here comes the joke. We've seen In Star Wars 7 Kylo Ren killed one father, in Guardians of The Galaxy 2 Peter Quill killed two fathers, guess there're more fathers to kill... Lol...
Structure is clear here. Halted at once...
Now we pray for U.K and be ready for against terrorism like always. My anti terrorism attitude is very clearly showed on TV.
On 16th. June the BOJ may do a intervention for an excuse of pushing Japan inflation target, in fact they're helping the indexes. Sneak attcking like always. Lol
This's not a signal...
This is good for indexes especially for A shares bad for metals, the silver is crashing today.
Source form Dailyfx Asia :
The BOJ plans to purchase 330B 3-5Y Yen Japan Government Bonds, plans to purchase 450B 5-10Y Yen Japan Goverment Bonds.
I will update this publishing soon, a pure technical chart with both directions.