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UNEMPLOYMENT / FED FUNDS RATE - PLAY BOOKUNEMPLOYMENT / FED FUNDS RATE - PLAY BOOK This post I intend to explore with you the cyclic relationship we can observer between: 1) US Unemployment Rate (BLUE), 2) 21D SMA (Orange) based in unemployment data, and 3) Resultant Recessions (Gray Bars) Historically, the general play book / sequence of events suggest once we break the 21 Day SMA (orange line), it is the start of unemployment unwinding and we lead into a recession. As the 'FED FUNDs RATE' is the artificial tool used to 'Guide' the credit market (politically correct explination), the obvious question then is; "What is the relationship / behavior of interest rates historically with this trend? Are we experiencing similar behaviour to the last 30 - 40 years?" The Red line show the FED funds rate on the chart. The below sequence of events show how these variable play with each other: The story goes: the FED increases the 'FED FUNDS RATE' (aka interest rates) because low periods of interest rates is resulting in a 'HOT' economy and causing inflation (i.e. market forces the FEDs hand to raise interest rates as the return for lending money to credit markets does not match the current risks). At some point during interest rate rises: 1) FED rise in interest rates is held constant (the lagging effect of higher rates start to hit the economy resulting in slowing down economic activity - i.e. spending) 2) Record low unemployment starts to rise (Cross of 21D SMA historically has signaled a point of no return) 3) Fed start to drop rates due to employment increase, deflationary market disruption 4) Unemployment begins to rapidly increase 5) Recession WHERE ARE WE NOW? According to this play book, we are in currently in step 2 and approaching point 3 . If you find this post interesting, you may find my discussion around the 2 Year Treasury Bond Yield vs FED Funds Rate interesting. This relationship is what I was using to speculate interest rate rises before they happened, and that they would be higher than people were expecting when there was talk of rates rising... The Market in all cases will eventually win...
FRED:UNEMPLOY
by Brodie
1
XAU/USD(GOLD) in anticipation of a price correctionInterest rates in the United States do not fall easily and are accepted by the Federal Reserve when inflation is in equilibrium. It is possible that with the reduction of international tensions, the global price of gold(xau/usd) will decrease, and if we go along with the reduction of interest rates, the increase in demand can be seen in the global price of gold. There are two scenarios for the price movement, which are highlighted in the full picture
FX:XAUUSDShort
by DanialShahbaziii
Interest Rate Hikes & Bank Collapse: How to Protect Your TradingThe Federal Reserve has been increasing interest rates for the past 9 months, causing a ripple effect throughout the financial world. In recent week, we have seen 3 major banks collapse as a direct result of the interest rate hikes, which has caused trouble in the financial world as well. As a trader, it's essential to understand how these events can affect your trading decisions and how to navigate the current situation. The Impact of Interest Rate Hikes on the Financial World Interest rate hikes have a direct impact on the financial world, including the stock market, bond market, and the housing market. As the Federal Reserve increases interest rates, borrowing becomes more expensive, which can lead to a slowdown in economic growth. It can also lead to increased volatility in the stock market, as investors react to the news and make changes to their portfolios. The Collapse of Banks and the IT Sector The recent collapse of two banks has caused trouble in the stock market specially IT sector, as many IT companies & startups have provided services to these banks. The collapse of these banks has caused a ripple effect throughout the financial world, leading to concerns about the stability of the financial system. Navigating Trading During the Current Situation As a trader, it's important to stay informed about the current situation and how it can affect your trading decisions. Here are some tips for navigating trading during the current situation: Stay informed: Keep up-to-date with the latest news and developments related to the interest rate hikes and the banking collapse. This can help you make informed decisions about your trades. Diversify your portfolio: Diversification is always important in trading, but it's especially crucial during times of economic uncertainty. Consider spreading your investments across different sectors to minimize your risk. Monitor volatility: As interest rates continue to rise, volatility in the markets may increase. Keep an eye on market volatility and adjust your trading strategies accordingly. Be patient: It's important to be patient and avoid making impulsive trading decisions based on emotions. Take the time to analyze the market and make informed decisions based on your trading plan. Use stop-loss orders: Consider using stop-loss orders to minimize your risk and protect your investments. Stop-loss orders automatically trigger a sale when a stock falls to a certain price, which can prevent you from incurring significant losses. Stay disciplined: It's important to stay disciplined and stick to your trading plan, even during times of economic uncertainty. Avoid making impulsive decisions based on emotions, and focus on your long-term trading goals. Take advantage of opportunities: While economic turbulence can be challenging for traders, it can also create opportunities for profit. Keep an eye out for undervalued stocks or assets that may be poised for growth in the future, and consider taking advantage of these opportunities if they align with your trading goals and strategy. Avoid overtrading: During times of economic uncertainty, it's important to avoid overtrading and taking on too much risk. Stick to your trading plan and avoid making impulsive decisions based on emotions or short-term market movements. In conclusion, the current situation of interest rate hikes and banking collapse can have a significant impact on the financial world and your trading decisions. By staying informed, diversifying your portfolio, monitoring volatility, and being patient, you can navigate this challenging environment and make informed trading decisions. Remember to always prioritize risk management and stay focused on your long-term trading goals.
SP:SPXEducation
by AfnanTAjuddin
ArmanShabanTrading |🔴 XAUUSD - Heavy Correction is Coming ?An Important TA of $GOLD : As you can see, since yesterday the price faced buying pressure after reaching 1900.870 and was able to grow strongly to the level of 1931$, now the price is trading in the range of 1924$ and according to the today's news , I give the probability of the price falling from this range , I have specified 2 scenarios on the chart, which are accurately and detailed , the targets are $1920, $1918, and $1906, respectively! Follow me for more analysis & Feel free to ask any questions you have, I'm here to help. ⚠️ This Analysis will be updated ... 👤 Arman Shaban : @ArmanShabanTrading 📅 02. 01 .2023 ⚠️(DYOR) ❤️ If you apperciate my work , Please like and comment , It Keeps me motivated to do better ❤️
OANDA:XAUUSDShort
by ArmanShabanTrading
32
USDJPY -4hYesterday Fed has released the interest rate once again with 0.5 % and closed the year by 4.5 % overall but in conference once again we observe dawish speech during the conference and the most important thing for the Fed and US is to decrease the inflation and come back again to 2 percent CPI data showed that FED did a great job during the dawish policy i do expect that USDJPY achieve to 140 before ending the year after that we have to observe what is happening during the technical channel if it broke above we could expect another bull run to the onside to the supply zone which i've already mentioned
Long
by FaRiDamooS
InvestMate|DXY Dollar in retreat💲DXY Dollar in retreat. 💲Last week the event everyone was waiting for was the interest rate decision, which rose to 4%. 💲This was followed by a press conference in which Jerome Powell spooked the markets with a hawkish tone, which first triggered a sharp wave of dollar weakness, and Powell's words were followed by a speculative attack to strengthen the dollar. 💲The next day already brought a cooling off and the market returned to discounting the scenario of a weakening dollar in the future and a slowdown in interest rate hikes. 💲4 November Non Farm Payrolls performed very well with 261k new jobs created compared to the 200k the market was expecting. 💲After which the rate from the data we found out unemployment rose to 3.7% 💲All this data could have a positive impact on future inflation readings. Which has been falling for over 4 months. 💲Looking at the dollar index we were still last at levels seen in 2002. 💲Looking at the big picture, the bottom on the dollar took place during the 2008 crisis and since then the dollar has gradually strengthened. 💲But the real wave of appreciation has only come since inflation rose and the Fed began raising interest rates. 💲Looking ahead and combining the facts, it does not look like the FED will be raising interest rates as sharply in the future as it has done in recent months. 💲Turning to the chart. On 3 November we saw an attempt to attack the 0.618 level of the last downward wave from where the sell-off rally started. 💲Measuring the upward momentum that has been going on since the discounting of interest rate hikes in America 💲The key places will be 2 levels. The first 0.236 and the second 0.382 💲In the long term we are likely to be at the 102 level which has been set by measuring from the last peak in 2001 to the 2008 low. Where price has repeatedly found resistance 💲If we would maintain the downward trend the levels to see this week are 108.5 and 107.300 which are the outer fibo levels of the last upward impuls 🚀If you appreciate my work and effort put into this post I encourage you to leave a like and give a follow on my profile.🚀
TVC:DXYShort
by InvestMate
7
💶💴EUR/JPY The rally is not over yet💶💴EUR/JPY The rally is not over yet. 💶Euro is showing signs of strength in the current week. 💶 Looking at the Unemployment rate in the Eurozone, it stands at 6.6%, the lowest on record. 💶Inflation is already close to 10% and on the 31st when the flash year-on-year reading is forecast to be 10.1% 💶Interest rates have been raised by 75 basis points and the market is betting on another 75 point hike to 2%. The decision will be made on Thursday 27 October. 💶The consumer sentiment indicator which is off its lowest levels in years has started to rise slowly and the market expects the positive trend to continue in the coming months. There will be another reading on 28 October. 💶💴On the other side of the globe. 💴In Japan, no change. 💴Unemployment Rate low at 2.5% 💴Inflation low 3%. Japan is one of those countries that has not been hit by Inflation as much as Europe and the USA. 💴Interest rates at -0.1%. Still negative from 2016. Hence these falls in the Yen. When other countries raise rates causing their currencies to strengthen, their strength against the Yen increases. 💴For now, there are no increases on the horizon. The Bank of Japan says it has no intention of changing its monetary policy. 💴But the government doesn't want the Japanese Yen so cheap either, hence in recent days we have seen sharp falls which were interventions to stop the Yen weakening sharply against other currencies. 💴I don't think this will stop investors from pushing prices up again. Turning to the chart. 📈It probably doesn't need to be told to everyone that we have been in an uptrend since 2000. 📈In the last few days, after the interventions and the attempt to dump the price which was momentarily pushed upwards. This took place at support levels zoned between 143 and 145. 📈 We do not see any signs that the price is going to make any correction in the coming days seeing such big pullbacks on the 1D candles. 📈In order to determine the target we move to the 1M chart. 📈Where after measuring the 2 biggest downward waves using fibo. We come out with a cluster at levels of 160 which seems a very likely scenario if the policy of the central bank of Japan remains unchanged and we enter a time of growths on the Euro. 📈Entering at the current moment and setting a stop below the recent price pullbacks after the interventions with a take profit at the 160 level brings out our best profit/risk ratio so far since I've been posting at. 🚀If you appreciate my work and effort put into this post I encourage you to leave a like and give a follow on my profile.🚀
Long
by InvestMate
S&P 500 Daily Chart Analysis For September 30, 2022 Technical Analysis and Outlook Repeated dead-cat moves around completed Inner Index Dip 3760 were in order throughout the week, along with the partial completion of our interim rebound target to Mean Res 3775. On Friday, the index penetrated the Inner Index Dip 3760 and is on its way to our next specified target Outer index Dip 3530 - Possible short-term moves are leading to Mean Res 3720. Next Outer Index Dip 3450 is in the making.
SP:SPX
by TradeSelecter
2
2 Year Treasury Bond Yield vs FED Funds RateThis post is intended to show the current gap between the market for the 2 year US treasury yield on bonds and the official funds rate, and why the market is forcing central banks hands into raising interest rates when the market is in such a fragile state in ability to support and maintain debt at heighten interest rate levels. Simply put, bond market are crashing (i.e. no one wants to hold onto treasure bonds at present because they are yielding very little / people are losing faith in governments ability to uphold their debt obligations / competition in the market for credit is rising etc. etc). All these factors play into buying selling behavior and is repriced in the market. As a bond or lone has a fixed bond or repayment structure ($amount), if the capital price the bond changes hand in the secondary market is lowered, the effective yield from the bond goes up. For example if a bond is made for $10,000 and requires a 10% interest rate (i.e. $1,000) per specified period, then if this loan / contract / bond (same thinking) is changed hands in the secondary market and sold for $5,000, the new own still receivers the conditions of the prior arrangement. Hence $1000 per period. As the price was $5,000, then the interest or Yield on that bond is now 20% (i.e. $1000 / $5000 x100 = 20%). As new credit is competing against the secondary market (i.e. you could loan your money out to a new loan or you could buy an existing loan (Bond) on the secondary market), this is how the bond market drives interest rates. Complicated but hope this makes sense. in summary, falling bond prices cases rising yields or interest rates. Raising bond prices causes lower interest rates. Central Banks play in this market as a market participant with an unlimited check book (this is how new base currency or M1 enters the market ( QE - Quantitative Easing) or is removed from the currency supply (QT - Quantitative Tightening ). If Central Banks want interest rates to rise, they flood the market with bonds, dropping the market prices with excess supply and causing yields to rise. If they want interest rates to drop, they soak up supply in the market of bonds, causing prices to rice and yields (interest rates to drop). This process is called 'Open Market Manipulation'. AKA planned market manipulation at it's best. www.federalreserve.gov The 'official funds rate' is just a forecast which shows how the Central Bank plans to manipulate the bond market until it's next meeting. Interest rates on loans / bonds etc should be viewed as a measure of risk of default. High interest rates reflect the reward on offer for lending your currency out and the risk you will not get it back. In short, Market conditions (such as inflation ) changes investors view on risk. When Central Bank manipulation of the bond market goes our of whack with the risk to lending in the market, we see large gaps between the yield curves on bonds between the official funds rates issued by the Central Bank . This gap is clearly shown this chart, comparing the 2 year yield against the Official FED Funds rate (the interest rate you hear about on the TV). History shows the 2 year is a good leading indicator on what Central Banks will do with interest rates. Make no mistake, the market and inflation is forcing Central Banks to raise interest rates. I very much question the robustness of 'the economy' to handle higher interest rates at present.
TVC:US02Y
by Brodie
3
XAUUSD 2nd TP Reached : +170 Pips ✅✅ TP1 Reached ✅ ~ $ 1831 ✅ TP2 Reached ✅ ~ $ 1842 Last analysis : As you can see, after collecting liquidity below $ 1807, the price faced demand and increased by $ 20, now trading in the range of $ 1827, the first scenario is to rise to the levels indicated on the chart, respectively: $ 1831, 1842, $ 1851, $ 1857 and $ 1863 ...! The second scenario is rejecting from $ 1824 to $ 1831 zone and moving to the $ 1804 and $ 1787 targets. Follow us for more analysis & Feel free to ask any questions you have, we are here to help. ⚠️ This Analysis will be updated ... 👤 Arman Shaban : @ArmanShabanTrading 📅 06.16.2022 ⚠️(DYOR) ❤️ If you apperciate my work , Please like and comment , It Keeps me motivated to do better ❤️
OANDA:XAUUSDLong
by ArmanShabanTrading
2