$EURUSD Weekly Outlook - To Summarize - ShortCoT has the commercial banks shorting the EURUSD still. Yeah, they added a few long positions this weel, but that was to get back to a level they wanted to add more shorts. They/ve been shorting since the height of the Pandemic swing. so for the Central banks to start being profitable, the price will have to be below 1.13500. If you draw a fib from the start of the EURUSD commercial shorts to the height of the commercial shorts, you can see it unfold in the fib extensions where price wants to reach.
I personally like to see a bit of a larger retracement to the green box notated in this chart during the London/NY session before aggressively going short.
Plus theirs divergence in the 10 year bonds between the currencies. As most are going up, the EUR is taking a dip as of recent.
DIVERGENCE IN 10 YEAR BONDS
Strong Bear tendencies this week. It will be London op and NY open to find the best setups to go short.
Bondyields
GBP STILL BULLISHlooking at the chart we have marked out key levels with active Options strike prices supported with high volume and open interest. We plan to observe how price reacts at 1.3300 and 1.2500 levels prior the the expiration of these contracts. In terms of price action , Cable still maintains an upward trajectory in line with non-commercial sentiments and seasonal outlook. UK bond price maybe trending downwards in line with its inverse relationship with the GBPUSD. However, the Brexit fears may invalidate this move if the trend line is broken and prices fall below 1.2500
Correlation between SG Bond Yields and TLTIn an interesting comparison, Singapore Bond Yields precede the TLT (blue line) slightly, especially in the recent year. See the elllipses marking out the break points, and SG Bond Yields are leading.
Noted that the SG Bond Yield has been strongly downtrending, ahead of the TLT bullishess (inversely indicative of the US Bond Yields).
I think it signals the undercurrents that something is not as rosy as it appears. The SG bond Yields are telling...
US 10 Year yield looks to be heading lower soonThe 10 year treasury yield looks ready to resolve its multi-month consolidation triangle to the downside. There's room for another run up to the .70% area over the next couple weeks, but I ultimately believe we are heading for lower yields. Note the fairly swift rejection from the rally above the 50MA at the end of May / start of June.
I'm not making any plays directly on treasuries, but watching closely because a definitive break lower in yields would signal that stock markets may be heading for a major risk-off move.
10 yrConclusion is:
Bond market seems to think this pump in the stock market is suspect. 10yr should rally up to .80 zone if investors were actually risk on.
I am just keeping an eye on DXY, 10yr, WTI at this point as they r all showing mixed conflicting signals.
DXY looks to have slightly more downside B4 reversing up (only question is how strong)
10 yr looks to be showing me that bond investors don't feel that this pump in stocks are worth the follow thru.
WTI RSI looks destroyed and could get a bounce but the shale stocks OAS WLL not showing any signs of buying pressure & also have lost bottom TL or are loosing the bottom TL. When the bounce comes to WTI if there is no volume or follow thru on the bounce I would expect that to be a scam.
I think that the markets have entered bear market territory late June into July & we are at early stages of the new trend. Unless WTIC can get the mentioned volume buyers I think we are better off watching for now.
STARS ALIGNING FOR THE EURO Looking at the yield spread between the German 10-year and US 10-year bonds, the Euro may be undervalued giving more potential to the upside. Though the correlation between the prices of EURUSD and the bond spreads may not be perfect, in hindsight we have seen prices trail this phenomenon.
Asset managers and hedge funds have been placing big bets pushing net long positions in favor of the EURO by 12% since June. However, this bullish sentiment for the Euro may already be signaling an over-crowed market as exposures reach bullish extreme levels. The sentiment for the Dollar has been diminishing on the negative impacts of the virus. We have seen 90% reduction in Net long positions since the beginning of June. We have also observed a bearish extreme signal as net long contracts reach all time low. The dollar index is reflecting the perception of large speculators given the sustained decline in the past week.
EURUSD technical setup see prices above the monthly highs of May @1.1139. We would expect support to hold at this level for further push to the upside. A 30-year seasonality cycle may also support the bullish play for the Euro. EURUSD rest above the 200 EMA on the daily time frame.
In our opinion, any improvements in the daily incidents of the virus may invalidate the bearish outlook for the dollar
10 yrTreasuries look to be signaling that yesterday & today are in fact buy the dip we have risk on sentiment coming next couple weeks.
If we check the weekly RSI 10 yr yields r very overbought, coincidentally so are all major indices RSI weekly indicators.
Conclusion is we are in the final chapters of the bull market since March and another crash is imminent. But will likely be another opportunity to buy the best dip before another massive bull market over the next few years.
10 yrGuys just so you r all aware. There will be no bear market, they have been canceled indefinitely.
Every-time any of you think about getting into bunker and hoarding food, gold bars or paying Peter Schiff Harry Dent or any of the fear mongers just look at my chart. In fact burn it into your brains. Stock always go up. Just buy buy buy. So easy