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.
Good to see a Chinese version is opening on TV.
We are now more like buying A shares of China stocks in some specific sectors. The weighted JPY is weakening all across the board, risk off.
Think about North Korea... congratulations, now China has four nuclear neighbors around the geopolitic map, a "great" success.
Technically the 7 waves may have been truncated but need more confirmations. We're bouncing off from 55 months SMA and invalidating 10 months SMA around 112-113 area. Now we're watching out the key level at 114.495, then 118.662. If the down trend line is breaking, we shall go to the 120-123 area for forming an A shares topping cycle in 12 months, the stock market is always the first then the squeezing, then the inflation, one by one.
The speculators sentiments are supporting to long this with 3 times net short holding by the FXCM data.
Technically, it's lack of the 7th. wave, or lagging with core one.
I'm working on an special edition today, but in Chinese version. I predict that there might be an inflation reset before the cutting sheet and the power transferring from the ECB to FRB, it's not a smooth moving in a condition of such huge money policy changes.
It's very interesting to see the U.K and Taiwan and the Japan may have female Prime Minsters.
Please be careful now with the Japan election and the VIX is at historically lowest level, an huge risk off is suggesting here.
There's no small time frame correlation with the DXY and XAU, BTW. In a condition of risk off mode, they may rise together and the Yen quickly rising shall do harm to the stock markets.
Yen shall rise to hurt stock market soon. Risk off mode has a possibilly over 90%, DXY and XAU both rising.
Watch out Japan election. Japanese may have to drop peaceful constitution for protecting themselves from N.K and the first ring too, because US pull back to the second ring. They'll become a "normal" country soon. If this's the future, no good.
Watch out Renminbi's hike or Japanese Yen moving. The DXY and Yen are both rising to harm the stock markets, risk off. Weighted Yen may rise to deeply correct 0.786 from low. A failure of Anbei tree arrows or an Japanese political incident (Anbei may lose his power) could happen here. VIX is too low to be true.
Something looks like the first hike of US dollar in 2015 is gonna happen.
Now the markets don’t want to a Yen’s weakness but need its rising.
The interesting question is that Japan Prime Minister Anbei’s policy “tree arrows” is in fact based on the weakness of the weighted Yen. Is this hinting us that there will be a new female Prime Minister in the future? Who will be against the older one, because of there’s no need for him and his policies? A black swan on 22nd. Oct. 2017?
Source: BOJ official website
The new correlation doesn't support Yen's devaluation. If Abe will be re-elected, the Yen's squeezing into the DXY will cause the SPX500 and DA30 also the inflation failure which will be against "political right" in western markets. If Yuriko Koike wins, it's good for all markets.
We suggest all flat before the 22nd. Oct. Japan election, also Chinese 19th. meeting will end in Oct. may lead to Yuan's hike. No body expects the Brexit before it happens, but we predicted it.
Be careful here, ok?
The stocks should be ok, not so sure how the DXY goes but the trump’s Election Day low should be tested, a small squeezing. The Euro moving down should be limited. The gold may benefit from a save heaven, but no guarantee here, in a condition where the negative interests is still in Euro.
Boj may pull back big companies deposit from foreign banks around the world.
I've talked with my friend who is working in a Japan company. Recently their sales are boosting aggressively where's showing China and Asia economics are getting better in 2016-2017. The Yen's rising will output inflations with Japan global production chain, it has been delayed by 2 years. Abe or Yuriko Koike.
President Trump: "NAFTA ends it or re-negotiates it".
"Japanese prime minister Shinzo Abe has won a big election victory according to exit polls that show him close to the two-thirds majority needed to revise Japan's constitution. As soon as polls closed in ...Yahoo Finance an hour ago." )
On 20th. Oct. 2017, "If Abe wins the market will be in a range, then an huge hike from the FRB." We have no bias but with the evolutions, remember? We don't bet on it and suggested a flat, right? It's not like a gamble for investor's point of view in forex market just a matter of the mathematics.
On November, President Trump will visit Asia, then the NAFTA which is key to the Japan global production chain will be re-negotiated. It's very strange that the North America trading deal is affected by Japan. Because in the globalization, Japanese has built the chain for investing out-broad to form cheaper supply of the automobile parts and so on. Many factories have been constructed out of Japan where is near the consumers and the markets.
It looks like that they have to pull back investments from foreign banks around the world soon. There might be a capital flow back into Japan and Yen to start a tightenning cycle. Also the breaking chain will lead to inflations or saying Japan will output inflations by it. Globalization is reversing, please remember it's just beginning. The China party is still against it by the way, always late... like predicted...
It's called "mei wen hua" in Chinese, very disappointed...
fish food, fish hook, fish fat, fish cook, time to serve soon...
Merry Christmas and happy new year!
We wish investors have good luck!
We're looking for a rang from here, only long will be setup, incase a break out impulse to higher.
The more seriously is that China could be selling US10Y bonds too, for Renminbi's tightening. Two major US bonds buyer are both selling it... Goldman Sachs has predicted 3% yield before the end of 2018 in the US10Y yield.
Again, we suggest traders to long it from lower level, in case this pair makes an impulse to higher. If traders short this pair, we suggest you to setup orders based on harmonic patterns with smaller SL.
We suggest traders to short this pair only from range higher.
We don't work for China government and China banks. We don't trade news too.
The SSI is showing 4:1 net long on USDJPY, 4:1 net long on USDCAD, 6:1 net short on EURUSD, 6:1 net short on GBPUSD, 10:1 net short on AUDUSD, 10:1 net short on NZDUSD. We've never seen this extreme condition from US dollar for many years.
Technically, the price still can move before the extreme level turns. The extreme sentiment across the board is showing that we may have a trending market. All fibs on US dollar is failed now.
Fundamentally, the USA hike may have been paused but we have to wait for the Feb. 2018 to confirm it. Yellen is leaving, as predicted right?
From now on we only short this for intraday trading with small stop loss until the market is proving the trend is turned.