Correlation
US 10Y 6%+ jump scared investors, triggering another selloffAfter pulling back from 1.56% and consolidating for two days this week, US 10Y yield started to moving again!
From the daily chart, it's inevitable as the recent demand zone holds very well!
What I'm expecting is the below two scenarios:
1. yield keeps going up and investors are scared to flee the stock market. Bull market ends!
2. yield keeps going up and investors are concerned first, but eventually shrug off the yield hike. Bull market continues!
Personally, I prefer to the second one. By looking back and studying the history, bull market ended with fed rate hiking. US 10Y yield weigh on the market, but the decision maker is the target rate.
So, my overall asset allocation strategy is buying the dip. There is warning for sure, but it's not over yet!
Where will NQ go today(March 4th, 2021)In this 10 minutes video, I discussed where the NQ might go after yesterday's drop. Some highlights are as below:
1. Price is coming down to a key support zone (Weekly & daily)
2. Two possible scenarios
3. Review some trading opportunities on 5 min and 1 min in the overnight session(mainly Asian session)
4. Check US 10Y yield and crude oil(linked with inflation) to predict today's move
New Range of Gold, US 10Y and next possible moves!In this video, I reviewed the price move of gold and identified new zones for gold. Some highlights are as below:
1. The relationship between US 10Y yield and gold
2. New range formation and why?
3. How to trail your stops on smaller TF and pattern you need to pay attention to
From US10Y Yield to Tesla and JPMIn this video, I explained the logic of recent market move caused by US 10Y yield. Actually, what caused the volatility doesn't matter at all, the key is what you're going to do.
Some highlights are as below:
1. Why JPM rallied in the recent month?
2. Concern of the US 10Y rally continue to weigh on stocks..
3. Similar pattern between US 10Y and JPM
4. Valuation drove the buyers to cheap stocks.
Enjoy your trade. Be careful if you're using leverage to trade stocks, like Tesla.
BEWARE OF POTENTIAL REVERSAL - OBSERVATION WEEK COMING - ZB-30MNThe T-Bond 30 Years ZB is falling when the S&P500 is rising, Shouldn't it be the opposite when the economy is not going well?
Beware of the possible super return of trends that might come soon.
What about the timing at the moment?
We notice that at open or 2h after American open an acceleration of the price movement occurs. Also at London closing time.
What about the forces?
Forces are clearly dragging the prince down but no vision in where the price is going.
What about correlations?
Opposite correlation with S&P500, ES.
Same direction with Gold, GC.
The green vertical line is at the time in which tomorrow, Monday 21st, we probably should see some nice movements if the market price follow same pattern as during the week before.
We will still observe during next week. To repeat again, beware of trend sudden reversal. Probably, you can use this chart in combination of your S&P500 trading session, going in opposite direction.
EURUSD - Get in on RETEST (See DXY Chart)EURUSD seems to have faked us out last week and now is creating another high. The way we can enter this is if we wait for a impulse and a retest on the neckline shown on the chart. With this, we can have a tight stop loss.
See DXY chart below for correlation. DXY down = EURUSD UP
Is EUR/GBP indicating the S&P500 Crash ?The last test of the weekly trendline in EUR/GBP was the March 2020 Crash, thats when EUR/GBP spiked up 1200 pips within a few weeks.
Now price is moving close to the Trendline again, could this be a indication for the S&P500 Crash, i think so.
Those that follow my Charts know that im looking for a Market crash in the next few moths, it seems like This EUR/GBP trendline could be a Indication for it.
This correlation can be seen in most EUR pairs, i also posted a important EUR/AUD chart about this a few days ago, all of them give the same indication, they could be Indicating the Market crash from the technical side.
This proofed to be working in 2000 / 2008 and March 2020, will it work again? Lets see.
USDJPY correlation with interest rates USDJPY has been bullish for the past four weeks. Of interest is that the spot currency is moving in tandem with treasury yields.
What's next for the USDJPY?
It has approached a strong level of resistance and a 50-week moving average
I'll be monitoring the currency to determine whether it will break the 50-week moving average as rates keep rising.
AUD/USD headed to the down side AndrewTheSage reporting to you live. My charts are messy and colorful. I am not a financial advisor I use arrows and different types of fib levels to show what's going on.. I will not put up an essay. I feel if you can read a chart you can understand what's going on with price by showing you a visual effect. The Dollar is going up....notice as the dollar goes up notice the negative correlation it has on AUD/USD it's going down mirroring the opposite.
EURUSD - One more push up?Last week we anticipated a breakout but it failed to break a major level. This week we may see one more push up before reversing. Paying close attention to the double top region.
EURUSD - One more push up?Last week we anticipated a breakout but it failed to break a major level. This week we may see one more push up before reversing. Paying close attention to the double top region.
Cycle is up for the Aussie. Cycle is up for silver.Check the related idea for USDRUB. It is a very similar story but the Australian dollar has an even stronger correlation to silver. Longer term cycle turned up in March. And now inside a topping medium term cycle there is a rising smaller cycle - which is up until mid April - same as silver. Upside price target is 0.85 for AUD. Remember futures trading involves a substantial risk of loss and is not suitable for all investors.
Tesla brings down the whole marketThis is the product of NASDAQ:TSLA being included in the AMEX:SPY . Look at the price action today. A selloff in Tesla brought down the whole market. The correlation is nearly 1.00 (see below...)
BTC Bull Run Not Over BTC vs. USDOLLAR A quick idea.
This is BTC compared to USDOLLAR.
For the most part you can see when USD goes down BTC goes up and vise versa.
USD seemed to be breaking out of the falling wedge like it did previously that marked the end of the last bull run.
But is has went back under and is continuing on a downtrend.
This is good for BTC.
US 10Y continue to weigh on stocksNeedless to say the importance of US 10Y treasury yield. It is used as a proxy for many financial matters.
From the daily chart, I can clearly see that price has completed the pullback and is very likely to rise. It will weigh on the stock market at least for a short period of time.
Given the OMO of Fed, I think the bull market is far from over. However, the recent drop, as well as the WSB, indicate the high volatility in the near future. It's been up for quite a long time. It's better to take a while before heading up again.
BTC and ETH Correlation from + to - ! Now What?Hello everyone, hope you are having a fantastic trading week!
Bitcoin and Ethereum have been trading in Sync as shown by the blue projection, both making higher highs, and higher lows almost together.
Lately, the positive correlation we used to see started to fade away! and in fact, ETH and BTC are now trading in the opposite direction.
As you can clearly see, BTC is trading inside a descending channel while ETH is trading inside an ascending channel.
What Next?
Are we going to see the positive correlation back by Bitcoin trading higher from here to catch up with Ethereum?
Is now Ethereum leading?
I find the comparison very interesting. What do you think will happen?
AUDUSD Correcting. Uptrend still intact.#AUDUSD:
(1D):
Also here the USD is getting weaker, resulting in a clear uptrend, which is confirmed by the 200 EMA as well. After last complex consolidation, the chart has been overextending for quite some time, so consolidation was to be expected.
(4H):
On a shorter period indeed, we have a downtrend. We recently had a fakeout to the downside, when sellers tried to accelerate without result.
(1H):
Right now, we have a range which means indecision in the market. This also means that we could see a deeper correction, as well as a strong uptrendtrend rebound if broken to the upside. This aligns with gold analysis (AUD positively correlates with XAU).
XTZ correlation with LINK - still alive & beats buy-&hold nicelyPlenty of traders buy XTZ whenever LINK makes a big move in the hope that the same will hapen with Tezos. There has been a lot of discussion if this practice is a waste of time or has an acctual edge. I will share here an idea that is being developed for the past 3 months. The sample size is still low at 20 trades, 30 would be optimal, so this is in progress.
WILL POST ALL POSITIONS BELOW
The strategy:
Toyed with plenty of indicators, support and resistances that affect LINK. However using them on a different asset produced quite some noise because of the lag that was acctualy needed in this correlation strategy. So in the end the winners were simple increases/decreases in the price and volume at which LINK was trading. Used many different increases/decreases tresholds to time positions. Small price increases like "up by 2% in the last day" were not productive.
Secondly the need for a confirmation indicator to close positions became apparent as we were holding winning positions too shortly. A simple SMA, albait at length 60 SMA did the trick.
The rules:
Painfully simple rules is the way to go. This is all done on the 1H timeframe, although we look at the previous day price/volume movements too. So in our case we will:
Open an XTZ position when: LINK/USDT price is up by 5% in last day
Close the XTZ position when: LINK Total Volume is down by 4% in last day AND Price is below SMA (60)
No Stop Loss or Take Profit
Do not open a psoition if both the open and close rule are true at the same time (price is up, but volume is tanking)
The results:
In the last 3 months the strategy brought in +66% on spot. If you were just holding XTZ you'd have +39.5%, so a significant imrovement with a lot of potential on futures.
We saw 20 trades in the 3 months, loosing 11 and winning 9. The wins are more sizable with the gains, so maintaining this rate would be ideal. Most positions are held for 2-3 days.
The max drawdown in the entire period was 7.75% which is excellent.
The optimization:
It might be worth looking for a third close indicator as it still does not capture the peaks to perfection. In case anyone has an idea, please post it.
The positions:
21/01/2021 00:00
25/01/2021 00:00
4 days
OP 2.9099
CP 3.0431
+4.58%
18/01/2021 06:00
19/01/2021 19:00
2 days
OP 2.9157
CP 2.9351
+0.665%
17/01/2021 19:00
18/01/2021 05:00
10 hours
OP 2.8984
CP 2.8806
-0.614%
13/01/2021 14:00
17/01/2021 08:00
4 days
OP 2.4038
CP 2.7634
+15%
12/01/2021 07:00
13/01/2021 00:00
17 hours
OP 2.3687
CP 2.2979
-2.99%
09/01/2021 16:00
10/01/2021 19:00
1 day
OP 2.6017
CP 2.547
-2.1%
09/01/2021 04:00
09/01/2021 05:00
1 hour
OP 2.5415
CP 2.5249
-0.653%
03/01/2021 01:00
08/01/2021 01:00
5 days
OP 1.9975
CP 2.4438
+22.3%
01/01/2021 13:00
02/01/2021 00:00
OP 2.0743
CP 2.0081
-3.19%
24/12/2020 23:00
31/12/2020 00:00
6 days
OP 2.0752
CP 1.9896
-4.12%
16/12/2020 17:00
19/12/2020 00:00
2 days
OP 2.3128
CP 2.3253
+0.54%
12/12/2020 12:00
16/12/2020 01:00
4 days
OP 2.1392
CP 2.2155
+3.57%
09/12/2020 23:00
11/12/2020 00:00
1 day
OP 2.1786
CP 2.1059
-3.34%
03/12/2020 04:00
03/12/2020 06:00
2 hours
OP 2.4209
CP 2.38
-1.69%
27/11/2020 17:00
03/12/2020 00:00
5 days
OP 2.2312
CP 2.3885
+7.05%
20/11/2020 09:00
26/11/2020 00:00
6 days
OP 2.1004
CP 2.5969
+23.6%
16/11/2020 18:00
20/11/2020 00:00
3 days
OP 2.0879
CP 2.0773
-0.508%
10/11/2020 10:00
12/11/2020 00:00
2 days
OP 2.1627
CP 2.1244
-1.77%
05/11/2020 15:00
09/11/2020 03:00
4 days
OP 1.9195
CP 2.0808
+8.4%
27/10/2020 17:00
29/10/2020 00:00
1 day
OP 2.1036
CP 2.0003
-4.91%
Happy to answer any questions!
LITECOIN - Reversal Soon!LITECOIN is overall bearish trading inside our two red trendlines forming a Wedge pattern. And the first major support that may hold it back is the blue zone and round number 100, so as LITECOIN approaches it, we will be looking for reversal buy setups.
The upper red trendline is not valid yet (only connecting two swings) so we will be waiting for a third swing to form around it to consider it valid (projection in purple). In this case, the third swing would be considered our trigger swing.
Trigger: Waiting for a momentum candle close above the gray area to buy. (after the swing high is formed as shown in purple)
Until the buy is activated, LITECOIN would be overall bearish trading inside the red wedge pattern and can still dive inside the blue support before going up.
And of course, as LITECOIN approaches our upper green supply zones, we will be looking for sell setups.
As per my trading style:
When our buy is activated, the stop loss goes below the last swing low, and I target double the stop loss size.
Always follow your trading plan regarding entry, risk management, and trade management.
Good luck!
All Strategies Are Good; If Managed Properly!
~Rich
EURAUD: Bearish TheoryTwo global economic crises so close together in world history, what are the odds?
In 2008, the USA stock market bottomed out and began it's recovery just as the EURAUD pair hit a top and sold off.
This correlation to the SPX, from a global market view, is interesting because there is such a great shift from negative 80 to positive 80 in a 4 year span after the 2008 recovery.
It will be interesting to learn how this trend plays out in the coming years. The correlation coefficient has been dropping as the prices are starting to diverge negatively again. If it's anything like last time, we could be starting a long-term bearish trend in the pair.
Or, the positive correlation holds strong and leads the pair up during the recovery.
Or, the least likely scenario, the correlation holds but the pair drops like last time and the SPX goes down with it.
Check back in three years.
