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The DXY Wavers in the 96'sThe DXY has recovered the 96 handle but is currently testing support at 96.00. We peaked at 96.44, our exact level to the tick, where a red triangle on the KRI confirmed resistance. We have already seen support at 96.00, so it is reasonable to expect this level to hold, but if not, 95.82 is the next level down. If we are feeling out the lower bound of the range established at the end of last year, then we could test as low as 95.58, but this appears to be a lower bound for now. After 96.44, there is a cluster of levels above in the mid/upper 96 handle which should provide resistance, should the dollar make another run for 96.44.
TVC:DXY
by quantguy
Yields Soar, Treasuries Smash Lows!!Bonds have tumbled off soaring yields. Rising inflation seems to be one of the key drivers, along with paradoxically increasing risk on sentiment in stocks, as the indexes are testing new highs again. ZN smashed through support in 130 handle. We saw absolutely no support from 130'00, the final barrier to the 129 handle, and even less from 129'26, the first level in the 129's. We finally bottomed out (for now) at 129'11, one of the levels we have identified months back using inverse Fibonacci Extension levels. The Kovach OBV has fallen off a cliff with the selloff, but appears to be leveling off as the price stabilizes here. Anticipate some ranging at current levels are digested. The next level down is 128'24. If we catch a relief rally, then 129'26 should provide resistance.
CBOT:ZN1!
by quantguy
US10Y-D1-NICE MOVE...BUT !First 2022 trading day, triggered, yesterday a nice move; indeed, we say, on a daily basis, three important things : 1) breakout of the daily clouds resistance 2) Crossover of the Tenkan-Sen 3) Chikou-Span crossover of cluster Still one resistance level to break which is the ongoing downtrend line resistance and the former highs, respectively @ 1.7050% and 1.7740% In addition, on a weekly basis, the ongoing downtrend channel is still intact (next closing will, maybe, add more clues about further development); Watch shorter time frames as on H4, a failure to hold above 1.56%-1.55% would be the first warning signal of a potential reversal ! Ironman8848 & Jean-Pierre Burki
TVC:US10Y
by Ironman8848
BoE Ends The Year With A Hike! (20 December 2021)Surprise rate hike! The Bank of England (BoE) delivered an interest rate hike of 0.15% during their monetary policy announcement last Thursday. Out of the nine committee members, eight voted for a rate hike while one voted for rate to remain unchanged at the previous 0.10%. All nine members voted for no change of corporate bond purchases at £20 billion and UK government bond purchases at £875 billion, totaling £895 billion. With an almost unanimous decision to hike interest rate as opposed to the previous meeting whereby only two members voted for a rate hike, it seems like the committee members are downplaying the impact of the COVID Omicron variant despite the recent spike in Omicron cases in the UK. Reasons behind the hike The first motivating factor for the BoE to hike interest rate is the resilient job market. To the surprise of the central bank, there was no concrete evidence that the ending of the UK furlough scheme in September led to a weakening in the labour market. Instead, the latest data released by the Labour Force Survey indicated that unemployment rate has fallen to 4.2% in the three months to October and that 257,000 jobs were added into the economy in November, thus showing little impact from the exiting of the furlough scheme. Moreover, the central bank’s committee highlighted during the November’s meeting that if future employment data were to be in line with its projection, it will be necessary for rate hikes to take place in order to tone down inflation and maintain it at the BoE’s 2% target. And during the meeting last week, the central bank deemed that the condition has been met, thus an interest rate hike is warranted. Another motivating factor for the rate hike is the recent strong inflation that has caught the attention of the UK Finance minister, leading to the exchange of open letters between him and BoE Governor Bailey. In November, prices in the UK rose to a 10-year high level of 5.1% and is expected to remain around the same level throughout the winter period and peak around 6% in next April. Being the first G7 central bank to carry out an interest rate hike, we can certainly expect the next hike to come as soon as February 2022 since inflation is on the way to triple the central bank’s 2% target.
by GH_Lee
1
US 10 YEARS - W1 - DARK CLOUD COVER !We are going to look at the weekly and daily time frames. WEEKLY (W1) Last week price action triggered a "Dark Cloud Cover" pattern (bearish !) with its weekly closing level below the Tenkan-Sen and the cluster (Kijun-Sen & MBB) and also already within the weekly clouds support area. RSI below 50, @ 47'98 This Dark Cloud Cover pattern neutralized the previous white candle (harami), I mentioned as a first warning signal in my previous analysis (see related ideas below) and therefore the door is reopen to the downside towards former low of 1.34% first and then probably lower. DAILY (D1) Currently in an ongoing downtrend channel since the failure to upside breakout the clouds on a daily closing basis (Nov 29th). Below the clouds, the Kijun-Sen, the MBB and the Tenkan-Sen. RSI below 50 @ 42.44 The daily picture does not look very encouraging for the upcoming trading sessions and it is likely to see further downside towards 1.34% first and then towards the bottom line of the ongoing downtrend channel. 38.2% Fib ret @ 1.22%, 50% @ 1.05% and 61.8% @ 0.88% In order to neutralise this ongoing (yield) downside pressure the US 10 Years should recover at least above 1.50 % - 1.55 % Ironman8848 & Jean-Pierre Burki
TVC:US10YShort
by Ironman8848
Bonds Gain as Stocks Sell OffBonds have picked up as stocks have sold off due to increased risk sentiment. We have edged up to 131'02, the technical level we discussed yesterday. The Kovach OBV has picked up significantly, but is starting to level off as ZN finds value in the low 131 handle. We are gradually trekking up in a zig zag pattern, but will face resistance at the next technical level at 131'12. This is a relative high for December which will be difficult to break as we enter the holiday week for Christmas next week. We should have support from below at 130'26 and 130'19.
CBOT:ZN1!
by quantguy
2
Gold Tests Higher LevelsGold dipped sharply finding support exactly at our levels. First, we saw support at 1759, then the lower wick of the selloff on the 30 min chart touched 1753 exactly, before a massive bid took us back to the 1780's. As anticipated, 1795 remains the max upper bound for gold, and we are currently finding resistance at the level just under this at 1789. We are seeing the price action start to round off suggesting we are running out of steam for the moment. Unless we see strong momentum come through, we are likely to continue to establish value in the 1780's again specificially, but broadly hold the range between 1777 and 1795. The Kovach OBV is surprisingly flat despite the momentum we saw at that lower bound, which supports our view that gold will continue to establish value in this price area.
COMEX:GC1!
by quantguy
The Final Sprint (16 December 2021)Doubling the pace of QE tapering The Federal Reserve ended its final monetary policy meeting for the year with a bang. While holding interest rate unchanged at the target range of 0-0.25%, the central bank doubled the pace of quantitative easing (QE) tapering from the current $15 billion ($10 billion of Treasury securities + $5 billion of agency mortgage-backed securities) per month to $30 billion ($20 billion of Treasury securities + $10 billion of agency mortgage-backed securities) per month starting from January 2022. The decision to speed up tapering comes as the central bank felt that “the economy no longer needs increasing amounts of policy support”, Fed Chairman Powell explained during the press conference. He also mentioned that the recent pace of inflation is “uncomfortably high” and employment in the U.S. is making substantial progress towards the central bank’s maximum employment goal. And so, the committee felt that the time has come to progressively withdraw from the policy enacted in response to the pandemic. Hence, in March 2022, the Fed’s massive bond buying programme will come to a complete halt, opening the way for interest rate hikes. Dot plot indicates aggressive rate hikes for 2022 In the released quarterly projection materials, the dot plot shows a big shift in the dots upwards, indicating that more members are now expecting interest rate to be at a higher level for the next few years. Specifically, all 18 members of the committee expect at least one rate hike while 12 of them expect three rate hikes in 2022. Also, 11 members expected that interest rate will return to the pre-pandemic level of 1.5-1.75% in 2023, contrasting from the previous projection materials that only three members expect so. The sense of urgency for more rate hikes come as inflation has escalated to a near 40-year high level. Persistent inflation Ever since consumer prices set new highs in decades for two consecutive months, the Fed has changed its view that inflation is transitory. The central bank’s Chief is now acknowledging that inflation “may be more persistent” and is having an upward pressure on inflation expectations. It was also mentioned in the rate statement that supply and demand imbalances have led to “elevated levels of inflation”. Thus, the Fed has revised PCE inflation expectations upwards for 2022. Moving forward, we can expect the Federal Reserve to wind up its QE during the first quarter of 2022 since good progress towards its dual mandate has been made – annual inflation has more than doubled the central bank’s target for several months and the rate towards maximum employment has been fast and is expected to continue in the near future.
TVC:DXY
by GH_Lee
"CRYPTO IS DIFFERENT, I don't need to worry about STOCKS!"There is a meme among traders that discovered markets due to crypto that they have no use for the old stock market. That's just for Boomers after all! Due to the low interest rate credit market cryptocurrency is interest rate sensitive . That is why on days like today the evidence is clear that hawkish/dovish interest rate speculation drives all risk assets ; equities market and the cryptocurrency market. Just look at price action.
BITFINEX:BTCUSD
by norok
8
US 10 YEARS - W1 - HARAMI !Last week price action triggered an "Harami" pattern, which is likely to trigger further sideways price action over the coming days ! Indeed, usually such kind of pattern, following a long black candle is normally bullish if the last candle is very small in comparison with the previous one, which is not the case now as the last weekly candle is pretty "big" which confirm some uncertainty about further development ! In addition, after having tested an intraweek low of 1.34% the week before, the 10 years recover again slightly above the top of the weekly clouds support which might be seen as a positive (yield) price action but... it is still below the Tenkan-Sen or Conversion line, currently @ 1.52 % and upcoming price action this week and more important its closing level will give more clues for the future. Globally, the ongoing (yield) bearish downtrend is still in place and only a clear upside breakout of this downtrend channel top, currently @ 1.69%-1.70% would force to a view reassessment of the expected ongoing downside pressure calling for lower yield towards the bottom of the clouds support zone around 1.15% - 1.10 % which also coincides with the ongoing former uptrend support line, currently around 1.12 % and which also was the former lows reached on July-August. On a daily basis, watch the clouds resistance area and the Mid Bollinger band as a good barometer too a clear and sustainable breakout of those areas would be the first signal for further upside (yield). Have nice trading week. Ironman8848 & Jean-Pierre Burki
TVC:US10Y
by Ironman8848
3
The Bond Marekt Awaits Inflation DataBonds have continued their slow decline trough support at 130'07 and are hovering just above 130'00. We are starting to see support form in the middle of the vacuum zone between these two levels, confirmed by two green triangles forming on the KRI. Both Kovach momentum indicators have dropped precipitously, which might indicate that we are staring to become oversold and that 130'00 is a floor for now. If we see a relief rally, watch 130'07 or 130'19 for a target. If we continue to decline and break 130'00 then 129'26 is the next target. ZN is likely not to make any significant moves until CPI data comes out this morning.
CBOT:ZN1!Short
by quantguy
Why Is The BoE Interest Rate Decision On A Knife’s Edge?The Bank of England (BoE) has a difficult decision ahead of it. Next week, on December 16, 2021, it must release its decision regarding its benchmark interest rate. The two options on the table are for the Bank to increase its interest rate or leave it as is. Why is the BoE interest rate decision on a knife’s edge? Inflation in the UK is at a 10-year high Consumer prices in the UK have increased YoY by 4.2% up to October. Prices increased most in energy commodities such as gas and liquid fuels. The BoE is tasked to keep inflation ~2% per annum. However, the BoE view is that inflation will return below 3% on average by the second quarter of 2022, and further downside movement in Q3 and Q4. This all means any intervention right now could turn out to be unnecessary or heavy-handed. As it stands, the BoE’s benchmark interest rate is a historically low, 0.1%. How long will ‘transitory’ UK inflation last? The US Federal Reserve and the US Treasury figureheads have recently dumped the categorisation of inflation as “transitory”. However, the BoE hasn’t been pressured as much as the US institutions to drop the transitory line. The BoE continues to hold out hope that the major drivers of inflation, such as energy prices, will subside by mid next year. The transitory nature of inflation, as the BoE see it, is concerning, as it means they run the risk of hiking interest rate before it is necessary. Yet, no matter how transitory the high price of energy may turn out to be, the Bank of England’s hand may be forced by other matters, such as UK workers demanding much higher wages in response to the prolonged transitory inflation. How possible is a wage-price spiral? UK workers are feeling the pinch of rising energy and consumer product and have been asking for wage increases to help mitigate the decrease in their disposable income. Average weekly wages (including bonuses) in the UK have risen 5.8% YoY to September. The BoE has graded the wage growth for the UK as moderate and has dismissed the possibility of a “wage-price spiral”. Yet, if the major drivers of inflation do not abate in a reasonable amount of time, the BoE run the risk of inflation becoming entrenched as UK workers demand further pay rises. Further exacerbating the issue is the tight labour market in the UK, with unemployment and under-employment currently at pre-pandemic lows, helping driving wage growth.
by BlackBull_Markets
Gold Hits Our Target!! What's Next??Gold has broken through to higher levels, punching through the resistance in the 1780's and edging toward 1795. We are starting to see some red triangles form on the KRI suggesting we are encountering some resistance here. Unless some serious momentum comes through, 1795 should provide prohibitive resistance. The Kovach OBV has tapered upwards but does not seem to suggest that we have sufficient momentum at this point to achieve higher levels. If we do, then there is a vacuum zone above to 1815. If not, we anticipate gold to establish value back in the 1780's, with 1777 being the min lower bound for now.
COMEX:GC1!
by quantguy
Gold Establishes Value, Forms Narrow RangeGold has found stability in the exact range we identified: 1770 to 1775. We even discussed how it was likely to consolidate further between 1777 and the 1780's which is exactly what happened. In particular, 1777 and 1784 seem to be the lower and upper bounds respectively. Gold is likely to establish value further, but the range has narrowed significantly, and when this happens we are setting up for a breakout either way. Still, 1777 to 1795 should hold. Watch the vacuum zone above to 1815 and below to 1759. The Kovach OBV is still bearish but is starting to flatten a bit as momentum recedes.
COMEX:GC1!
by quantguy
Stocks hit by New Wave of FearStocks are edging lower in a zig zag pattern as every rally seems to get sold off. We have more risk off sentiment in the markets as Evergrande takes its turn as the center stage of fear stoking news. Evergande shares have tumbled as another debt payment deadline looms. We saw strong resistance from 4580, but rejected this, as confirmed by a red triangle on the KRI. We are roughly in the middle of a range between this as 4504. It could go either way, as we are still quite bearish and could see a relief rally. But we must definitively break 4580 in order to cross the vacuum zone above to 4632, which seems unlikely. From below, we should see support from 4504, then 4487 and 4462 would be the next targets.
FX:SPX500Short
by quantguy
1
US 30 YEARS - W1 - CLOUDS BROKEN !!!Last week price action triggered, as for the US 10 years, a long black candle which in this case also broke the weekly bottom clouds support level @ 1.85. The US 30 years is currently on an ongoing downtrend channel, very close to the 50 % Fibonacci retracement @ 1.6130 (0.71-2.5160); RSI below 50 @ 34.04. Watch closely price ongoing price action and monitor closely the Lagging line which for the time being, after having successively broken the Mid Bollinger Band and the Kijun-Sen is still above the clouds !!! A failure, for the Lagging line to close on the next weekly closing basis above the clouds would add further pressure to the downside in putting the focus for lower levels towards the next significant support area around 1.40% which is also the 61.8% Fibonacci retracement. CONCLUSION : As for the US 10 years, watch and monitor closely price action on a daily and intraday basis to detect early reversal signal (s) whihc for the time being should be seen as a corrective move in broad ongoing (yield) bearish trend. Ironman8848
TVC:US30Y
by Ironman8848
US 10 YEARS - W1 - WATCH THE CLOUDS !Last week price action triggered a long black candle which broke on a weekly closis basis, both the Mid Bollinger Band and the Kijun-Sen or Base line. Such kind of price action should be seen as a negative (yield ) signal, calling for lower levels. In addition, the former uptrend support line which stated at the beginning of August @ 1.1270 has also been broken which also should be seen as an additionnal warning signal calling for further downside move with the focus on the bottom of the weekly clouds, currently around 1.15% which also roughly coincides with the cluster of former bottom and the primary uptrend support line. Therefore, this 1.15%-1.10% next significant support area, on a weekly closing basis, should be seen as THE KEY PIVOT LEVEL !!! MONTHLY PICTURE : Looking briefly at this long term time frame, we can see that the cluster (Mid Bollinger Band and Kijun-Sen is also currently @ 1.1500 which corroborate my weekly view above mentioned. A failure to hold above this point, would open the door for lower level towards 1.0570 (50% Fib ret) ahead of 0.8870 (61.8% Fib ret) CONCLUSION : Watch and monitor closely price action on a daily and intraday basis to detect early reversal signal (s) which for the time being should be seen as a corrective move in a broad ongoing (yield) bearish trend. Ironman8848
TVC:US10Y
by Ironman8848
Bonds Consolidate, Breakout Soon??Bonds have consolidated as we have expected. We are seeing strong support at 130'19, and appear to be forming a flag pattern bounded by 130'07, and 131'02. The Kovach OBV is trending up slightly, suggesting a small bull bias. From here it could go either way. The Fed is discussing tightening, which would be bearish for bonds, but persistent risk off sentiment due to the Omicron strain could give ZN a lift, though it appears this may be priced in by now. We will see continued support from the upper and lower bounds of the range. Volatility has consolidated quite a bit so we expect a breakout either way potentially soon.
CBOT:ZN1!
by quantguy
1
EURNZD - another shortBased on the daily chart, the N100 stock index has grown today and the oil seems to be stabilizing preparing for growth. Both of the two assets are anti-correlating to the EURNZD pair which I explained several times in both educational articles and pair-delegated ideas. Furthermore, NZD did increase its interest rates. This would normally lead to NZD growth, hence EURNZD's drop. However, the drop has not started yet and although it never has to, it just doesn't have to work like that single time, I do believe that the recent rally was driven by a lot of fear in the commodity markets as the following chart explains. The commodity index CRB has just started dropping. Baltic Dry Index has been for some time, which is an average for shipping costs calculated every day. I will be opening another short in this market at some point. I am waiting for price action now.
Short
by OrcChieftain
1
US Dollar Digests RisksThe US dollar has stabilized, and 95.82 seems to be providing good support. We have a green triangle from the KRI confirming the support, even though yesterday, we dipped slightly lower in an attempt to crack it. Some volatility came through after that, and the rally was finally thwarted by 96.65, the final level in the 96 handle. A red triangle on the KRI confirms the resistance here. We are likely to range in a sideways correction after such a large rally that took us from the 92's all the way to the low 97's. We should be able to hold the range from 95.82 to 96.65, but beware of the vacuum zone down to 95.26.
TVC:DXY
by quantguy
1