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Less Liquidity In Summer Months Could Lead To More VolatilityThe Memorial Day weekend is the start of the summer season. In many markets, seasonal factors can impact prices. The old saying, “sell in May and go away,” may not be applicable in the stock market as stocks have been on a rocky path lower in 2022. In commodities, gasoline, meats, grains, and other raw material prices often increase as demand peaks. Heating oil and other winter commodities often move to the downside. However, 2022 is anything but an ordinary year in markets. Thin markets are more volatile than liquid markets Market participants are tired and frustrated in 2022 Lockdowns over the past years could lead to extended summer vacations Lots of head-fake moves on the horizon Expect the unexpected- Volatility leads to opportunity Over the past two years, the global pandemic distorted prices. Stocks rose as artificially low interest rates made the stock market the only alternative with fixed income yields at historical lows. Rates are rising in 2022, with a hawkish Fed and falling bond market. Supply chain bottlenecks continue to plague commodities, and the war in Ukraine has only exacerbated pricing and availability issues. Mid-term elections in the US, and a Presidential contest in Brazil, a leading commodity-producing country, are on the horizon later this year. The geopolitical bifurcation between nuclear powers is another issue facing markets that reflect the economic and geopolitical landscapes. Market participants are exhausted as 2022 has brought a new set of concerns. We could see liquidity in markets dry up over the coming weeks and months as the summer has arrived, and vacations will limit participation in markets across all asset classes. Thin markets are more volatile than liquid markets Liquidity is a critical ingredient for smooth-running markets. Liquidity tends to reduce price variance as more market participants increase buying and selling interests at various levels. Commodities tend to be more volatile than other assets, sans cryptocurrencies, but some raw material markets experience far more volatility than others. Lumber and crude oil are two highly volatile commodities, but one has minimal liquidity while the other experiences far more participation. The daily chart of CME lumber futures shows that daily volume tends to be well below 500 contracts. Open interest at 2,293 contracts makes lumber an illiquid market. Daily historical volatility at over 62% is a function of the lack of volume and open interest, leading to price gaps and limit-up and limit-down price moves where buying disappears during bearish periods and selling evaporates when the price moves higher. Meanwhile, on a typical trading session, NYMEX crude oil futures trade well over 400,000 contracts, with open interest at above 1.81 million contracts on June 2. Daily historical volatility at below 20% reflects that the highly liquid oil market has buyers and sellers at all price levels. The bid-offer spreads in liquid markets are far tighter than in illiquid markets. As liquidity declines, markets tend to experience far more price variance. Market participants are tired and frustrated in 2022 In early 2022, market participants were breathing sighs of relief as the global pandemic was beginning to fade in the rearview mirror. Health concerns may have declined, but financial woes increased with prices. Monetary and fiscal policies planted inflationary seeds that have caused prices to explode higher, while supply chain bottlenecks continue to exacerbate inflationary pressures. Meanwhile, the Russian invasion of Ukraine is another crisis following on the heels of two years of pandemic panic. Sanctions and Russian retaliation exacerbate inflation. Moreover, Russia’s “no-limits” cooperation with China creates a geopolitical bifurcation of the world’s nuclear powers. We live in interesting and exhausting times, with people tired and frustrated with the events since 2020. Lockdowns over the past years could lead to extended summer vacations Lockdowns ended in the US as vaccines went into arms. People have returned to work and school. In China, the COVID-19 restrictions appear to be easing. In early June 2022, the coming summer months offer the opportunity to rest, relax and recharge internal batteries for the second half of 2022. The demand for travel, hotel rooms, and other vacation-related consumer products has soared. Inflation and supply chain bottlenecks have only increased prices, but the demand is robust. As market participants take a few weeks off over the coming months, they are likely to turn off their screens and ignore the market action that could interfere with good times with friends and family. Increased vacations may bolster earnings for travel-related businesses, but it will reduce market liquidity as a vacation for many includes a rest period from watching or participating in markets across all asset classes. Lots of head-fake moves on the horizon As liquidity declines because of a lack of participation, markets will likely become a lot bumpier over the coming weeks and months. Selling could lead to downdrafts and buying may create rip-your-face-off rallies. These events cause head-fake moves that can cause even the most experienced traders and investors more than a bit of indigestion. A decline in liquidity could dramatically increase price variance. The geopolitical and economic landscapes will not take any vacation during the summer of 2022. Expect the unexpected- Volatility leads to opportunity Expecting the unexpected will reduce the stress-related with sudden market volatility. Moreover, higher price variance increases opportunities for nimble traders and investors with their fingers on the pulse of markets. Approach markets with a sold risk-reward plan that avoids open-ended risks. Even though declining liquidity can cause markets to rise or fall to irrational price levels, always remember the current price is always the correct price because it is the level where buyers and sellers meet in a transparent environment, the marketplace. Do not be afraid to take small losses and remember to take those profits or adjust risk levels to protect them when markets reach targets. Trading or investing with a plan and sticking to it avoids the ego-related mistakes that cause us to believe we are always right, and the market is wrong. The market price is never wrong. Meanwhile, combinations of put and call options can protect the downside, hedging portfolios while allowing for upside participation that will enable you to enjoy your time off from the daily grind. Enjoy the summer but keep your eyes open for opportunities. Adjust your mindset to expect the unexpected and embrace the higher volatility that comes alongside lower liquidity. Price variance is a nightmare for the passive, but it creates a world of opportunity for the dynamic. -- Trading advice given in this communication, if any, is based on information taken from trades and statistical services and other sources that we believe are reliable. The author does not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects the author’s good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice the author provides will result in profitable trades. There is risk of loss in all futures and options trading. Any investment involves substantial risks, including, but not limited to, pricing volatility, inadequate liquidity, and the potential complete loss of principal. This article does not in any way constitute an offer or solicitation of an offer to buy or sell any investment, security, or commodity discussed herein, or any security in any jurisdiction in which such an offer would be unlawful under the securities laws of such jurisdiction.
LEducation
by Andy_Hecht
1
Cup and Handle Trading Pattern 📉📉📉✅ A cup and handle is a technical chart pattern that resembles a cup and handle where the cup is in the shape of a "u" and the handle has a slight downward drift. A cup and handle is considered a bullish signal extending an uptrend, and it is used to spot opportunities to go long. 🎯 Cup Handle Pattern William O'Neil's Cup with Handle is a bullish continuation pattern that marks a consolidation period followed by a breakout. ... The cup forms after an advance and looks like a bowl or rounding bottom. As the cup is completed, a trading range develops on the right-hand side and the handle is formed 🎯 What happens after cup and handle pattern? If a cup and handle pattern is confirmed, it will be followed by a bullish price move upward. You can pick a price target based on the size of the cup, but it becomes much less clear what will happen after the initial breakout from the cup and handle pattern. 🎯 How reliable is cup and handle pattern? The accuracy rate for cup and handle pattern for forex and stock on Daily timeframe are 65% and 68% respectively.
OANDA:XAUUSDEducation
by AnonimFXRO
📊 What is Market Seasonality ? 🎯 Seasonality refers to particular time frames when stocks/sectors/indices are subjected to and influenced by recurring tendencies that produce patterns that are apparent in the investment valuation. 🎯 Seasonality is a characteristic of a time series in which the data experiences regular and predictable changes that recur every calendar year. Any predictable fluctuation or pattern that recurs or repeats over a one-year period is said to be seasonal. 📊 What is a Seasonality Forecast? In time series data, seasonality refers to the presence of variations which occur at certain regular intervals either on a weekly basis, monthly basis, or even quarterly (but never up to a year). Various factors may cause seasonality - like a vacation, weather, and holidays - ✅ You can use the Market Seasonality as an extra fundamental confluence for the price, we have 2 market seasonalities bullish and bearish. If a price has bullish seasonality it means the pariticular asset will tend to rise during that cycle and viceversa. Market Seasonality (MS) is a good tool to have in your arsenal but only if you are trading on a mid-long term perspective. You can't trade using the market seasonality on a scalping or a intra-day basis because it makes no sense. Was this a valuable information ?
Education
by AnonimFXRO
2
Charts can really help during periods of uncertaintyRussia invades Ukraine is the headline and every market in the world it feels like is moving and it is very easy to feel overwhelmed almost to the point of panic, a very quick glance around the markets can see that gold is up, stocks down, the US Dollar is up, and oil looks to be heading above 100. It's hard to know where to focus one’s attention or even where to start and it really helps to be able to just look at some charts and put some of these moves in context. Yes, the price of Crude Oil is high, but it’s been higher – back in 2011 and 2012 it was regularly above 110 and in 2008 we were a lot nearer to 150. The stock markets are down a lot, take a look at a chart and see where the support is – I wrote about this recently. For the S+P, the base of the cloud is nearer to 3875…the 200-week ma is down at 3387. By the way a good thing to note is that during periods of uncertainty that markets tend to mean revert to their long-term moving averages and in particular I like to watch to 55 and 200- week moving averages – if you are not a sophisticated chart watcher – no bother, if you just know where these 2 moving averages are you can use these as a proxy for a target zone. The 2020 high on gold was nearer to 2030 BUT we know that gold is in a long term up move and the chances are we are going to make a new high. What do we use if we are in all-time highs for targets, there are many techniques - Fibonacci extensions, point and figure (probably my favourite), channels, and patterns to name but a few are all ways to give you upside targets. I have a Fibonacci extension on the topside at 2110 ish, but I also have another more important target nearer to 2150. So, my advice is do not panic – LOOK AT A CHART!! Disclaimer: The information posted on Trading View is for informative purposes and is not intended to constitute advice in any form, including but not limited to investment, accounting, tax, legal or regulatory advice. The information therefore has no regard to the specific investment objectives, financial situation or particular needs of any specific recipient. Opinions expressed are our current opinions as of the date appearing on Trading View only. All illustrations, forecasts or hypothetical data are for illustrative purposes only. The Society of Technical Analysts Ltd does not make representation that the information provided is appropriate for use in all jurisdictions or by all Investors or other potential Investors. Parties are therefore responsible for compliance with applicable local laws and regulations. The Society of Technical Analysts will not be held liable for any loss or damage resulting directly or indirectly from the use of any information on this site.
SP:SPXEducation
by The_STA
32
My Trading Strategy in 4 simple steps.Today I will explain step by step the process I use to develop setups. This is how my strategy works. And this can be applied to any asset and using any technical tools. This is as close as I can get to using an empiric approach to define my trading opportunities. Let's start. My trading strategy is composed of 4 steps: 1) Whats the context of the price? Here, I want to understand all the characteristics of the current situation I'm observing. Mainly I will try to define this in the Daily chart. Examples: * Are we making a new ATH? * Are we inside a 300 days correction? * Is the price above or below a Daily trendline? * Are we inside a small correction or a 50%+ decline? 2) Now that I understand my context. Can I look for similar situations in the historical data of this asset? I only work with assets with enough historical data to conduct this type of analysis. If I'm able to find at least 2 previous situations with similar characteristics to what I'm looking for, I proceed with the next step. Here I use the Weekly and logarithmic chart to identify these situations. 3) Do I see a consistent pattern that I can use to trade in those similar situations in the past? Here I will use lower timeframes like the 4HS chart, and I will look into more details in those similar situations. I will try to find something objective, like "The first retest after the breakout of the most external line of the corrections. If I see consistent behavior and a good risk to reward ratio, I will proceed with the final element of my strategy. 4)Define the pattern I'm waiting for and the execution process in advance. At this stage, I want to say, "I'm waiting for this," and this is how I will trade it. This includes: *Entry level *Stop level *Break-even level *Take profit level. *Risk. And this is it. At this stage, my setup can be executed or canceled depending on the price behavior, but in a nutshell, this is the system I have been using for the last 3 years, and I can say that this has, on average, a win rate of 50% and an average risk to reward ratio of 2. I hope this information was useful. Feel free to share your view in the comments or any doubt you may have. Thanks.
BITSTAMP:BTCUSDEducation
by ThinkingAntsOk
101
Complete Macro AnalysisHello everybody! This is a follow up on my 6-part traditional and crypto market analysis, yet everyone that reads this one will benefit greatly, regardless of whether they've read any of the previous analyses or not. Over the last week I provided some updates on each part, however it currently makes more sense for me to make a brand-new holistic analysis, rather than provide small updates on each part. This one will be focused entirely on traditional markets, while the next one will be focused entirely on crypto. In order for anyone to have a better idea of where markets might be headed next, it is best to start with the bond market. Bond yields have been rising across the world and across the entire curve, with the big distinction that lower duration bond yields have been rising significantly faster than long term ones. The main reason that this is happening is that bond markets are expecting Central banks to raise rates a few times in the next 1-2 years, but don't believe they can do anything more than that. Essentially the market sees inflation being transitory, that the global economy is in a bad shape and that Central banks are in such a terrible spot, that by the time they raise rates a few times, they will be forced to start cutting them again. Based on the charts below, it is clear that bond yields are still in a massive downtrend. The 10y yields have started hitting resistance, while yesterday we got the first rejection at resistance due to the Russia/Ukraine news. It is pretty normal for people to seek safety at times like this, by buying bonds (bond yields and bonds are inversely correlated). So, as you can see on the third chart, the minute bonds got to support and the news started coming out, the bond market bounced. Although I wish that war between Russia and Ukraine doesn't happen, and actually believe it won't happen, in case that it does happens, the Fed gets some room to not raise rates. For many reasons that I mentioned in the previous analysis, it is clear that inflation will come down significantly in 2022 and there is very little the Fed could do about it anyways. Therefore, any excuse they might be able to use to not raise, they will probably use it. Having said all that, bonds are still in a short to medium term bear market, and could fall another 5-10% before they put in a final bottom (yields going up by 0.5-1% from here). Now the situation between Russia and Ukraine doesn't affect markets just because it affects the psychology of people or because governments print money to cover expenses of war. There are several severe implications around trade and resources, as a lot of trade especially between Europe and Russia could stop, while Russia is a major exporter of commodities, primarily of Oil and Natural Gas. Europe and the entire world were already facing serious problems around energy, and this could make things even worse. Again, for many reasons mentioned in the previous analysis, there isn't enough oil above ground or oil production to cover the needs of the world at reasonable prices. OPEC isn't even able to meet its production increase goals, let alone be able to handle Russia not giving oil to the rest of the world. Oil is already pretty expensive relative to where it should be given the current state of the global economy, and based on the charts it could go significantly higher. So far, the market has behaved as I had expected, with a rise up to 92-93$, a pullback and now another push higher. It's not yet clear if the current situation will boost oil prices above 100$, but it is certainly possible. In the short term it is easy to see a mini 'speculative shock', that could send crude up to 115-120$, only for it to then come all the way down to 75$ and find support there. What is interesting to note is how Gold has been able to hold its ground for so long, despite bond yields going higher. Not only that, but it currently sits above all major moving averages and pivots, while it has also broken above its key diagonal resistance. The truth is that the breakout isn't as decisive as one might have expected based on the news that came out on Friday, hence it might be a trap. It’s clear that the breakout was heavily affected by the the Russia/Ukraine news and that could be the catalyst for a gold bull market, but it’s still prudent to be cautious. What is even more interesting is that Gold has gone up, while most Central banks are raising or plan to raise rates, and while the USD has been going up since early 2021. In my previous analysis, I mentioned how I thought gold going up or down is more like a coin toss, as there is a strong case to be made in either direction. Some people took that as me being bearish on Gold, while what I had said was that above 1930-1940 gold might be tremendous for going long. Personally I prefer to buy strength and simply sacrifice some gains, in order to avoid being stuck in a trade that doesn't do well. A few weeks ago, the ECB hadn't even talked about raising rates, but now they have. Right after the Fed meeting the EURUSD pair had a major reversal that accelerated when the ECB started turning hawkish. My initial thought was to watch Gold closely, as now 3 of the 5 major Central banks are raising or talking about raising rates, yet gold remains strong. At the moment EURUSD has been rejected at resistance with an SFP, yet it still has some room to the upside. It's above the 50 DMA and the diagonal, so if everything goes well and tensions get resolved peacefully, the pair could easily get to 1.15-1.17 by the next Fed meeting. The USD seems to already been losing steam as the yield curve is flattening and there are already 7 rate hikes being priced in. Hence the ‘real’ news isn’t that the Fed will raise rates by 0.25% in an emergency meeting or that it will raise rates by 0.5%, but that the ECB might raise rates after an entire decade, as well as that all Central banks will be forced to cut rates relatively soon. Therefore, this gold strength could also be an indication that many investors are betting on a policy error by Central banks, which might be forced to reverse course faster than people expect. What people need to know, is that gold doesn't behave like most people think it does. Gold in our age, is more like an error/catastrophe hedge, that tends to follow real rates. For example, today Gold could benefit from two things: 1. A war is definitely a big boost for gold, as people might want to own it because it is of limited supply and has no counterparty risk, and it can easily be owned anywhere. Countries that go to war tend to devalue their currency or even seize assets, or that country itself could be excluded from the global financial system, like being kicked out of the SWIFT system. In such a situation gold tends to offer tremendous certainty, while nothing else really does, not even US treasuries. 2. When Central banks are cornered or have no real control over a certain situation. Currently it is obvious that Central banks are trapped, and that there is another major 'catastrophe' lying ahead. The world is stuck in an environment of low growth and too much debt, with markets being significantly overleveraged. None of the problems over the last 20-30 years have been solved, only papered over, hoping that the system magically heals, with the last 13 years alone being full of examples of them always acting late. Finally, the key reasons why gold hasn't done well during a situation of deeply negative interest rates, is that 1. Gold had rallied significantly since 2018, 2. There were lots of different, more compelling opportunities out there, 3. Everyone was already prepared (nobody else to buy + people had to sell gold as inflation increased to covered other costs, essentially using their insurance), 4. Most of the inflation wasn't caused by the Fed / Central bank actions. After having gone through all of the above, it is definitely time to talk about stocks. Once again I’ll focus on the top 3 US indices, SPX, NDX and RUT, as they can give us a pretty good idea of where stocks are headed globally. In my previous analysis I mentioned how I expected a bounce, a dip and then another bounce, which all pretty much played out based on my technical analysis, with one exception. The last move up was shorter than initially expected, however even based on my tools I was probably 'too optimistic'. Starting with the S&P 500, we can see how the bullish channel was broken and significant downside followed. Then the market had a strong bounce off the 300 DMA + horizontal support. After the bounce it got rejected on the 100 DMA + diagonal resistance + horizontal resistance, and fell down to the 200 DMA where it bounced. What is odd to me is that the bounce ended with a double top, rather than getting up to the 50 DMA and test the diagonal, while forming an SFP. A double top there is somewhat bullish in the short term, as it is an area that the market will probably break before making new lows. At the moment the market is sitting right at the Yearly Pivot but has broken below the 200 DMA, a situation that is neither very bullish or bearish. As a whole the momentum is indeed pointing lower and this isn't a great picture. In turn the Nasdaq 100 is actually looking much worse than the S&P 500, as a lot of the big tech behemoths have been taking several big hits recently. Slow growth, higher inflation and higher interest rates, are definitely not beneficial for these companies. For example, we saw a massive gap down for Facebook after a disappointing earnings report, a gap similar to what happened in June 2018, with the NDX going down 19% from that point in the next 6 months. Tech stocks have massively outperformed everything else since 2009, and pretty much everything compared to where they were in Feb 2020, so it is normal to get some extra weakness in this index. At the same time several parts of the stock market started peaking throughout 2021, with mid Feb 2021 being a major inflection point. At that time many unprofitable tech related companies had reached bubble territory and started reversing, but the effects of their valuation getting crushed started having an impact on NDX three months ago. The third index and final index is the Russell 2000, which looks like it was in distribution for about 10 months, while a few days ago it had a throw back into resistance. The RUT had a really strong breakout in Nov 2020 and by March 2021 it was up 35%. Then in September it formed a clear bull trap that led to the major leg down. Once the 2100 support that was tested multiple times for about a year was broken, it became clear that more downside would soon follow. At the time of my previous analysis, I mentioned that we'd probably see the Russell retest that support and flip it into resistance, which happened as expected. Now the index is below all major moving averages and Pivots, and is still looking bearish, even though in the short term it has shown a decent amount of strength. Until it reclaims 2250, it remains in bearish territory and it is probably best to avoid going long, Based on all the above, things overall aren't looking great. At least not in the short to medium term, for the economy and the stock market. Central banks are trapped and most investors are aware of that, and now there is an extra variable, that of the conflict. So the question then becomes, if everyone is aware of all of this, couldn't the market simply go up from here? Aren't lots of these things priced in? Aren't wars said to be good for the stock market? Well, like I mentioned above all of these are correct. It is true that due to the conflict we might see bond yields roll over and we get more stimulus from central banks and governments, both of which could push stocks higher. However, in the short term there is a lot of uncertainty due to the way many things will get disrupted in the world. Because of that gold and oil could go ballistic, hence they are the best bets at the moment. It is probably best to stay away from stocks for now, as their potential downside is substantial, while their potential upside is limited as they need some time to recover. Nothing in the charts really suggest that they are ready to go up hard any time soon. Let's also not forget that stocks would have eventually deflated to an extend, regardless of what the Fed or what happens in the world, as the 2020-2021 frenzy couldn't last forever. Of course this doesn't mean that I believe a major bear market is in play right now, just that the SPX could eventually get to 3900-4000 in the next year, that the NDX will test its major log diagonal and that the RUT will its 2018 highs. Although I don't know how or when we get there, to me the most likely scenario is that within the next 2 years bond yields will collapse and the government will be forced to spend a lot, while the Fed is forced to cut rates and do QE. Even if the yields don't collapse and inflation goes rampant, the US government will still be forced to print and spend a lot, something that would make the problems worse. In conclusion, despite the fact that I was mostly bullish on stocks and oil through 2020-2021 and neutral-bearish on gold, my stance now remains bullish on oil (buying dips anywhere from 55-75$), neutral-bullish on gold and neutral-bearish on stocks. For me to turn bullish on stocks again, I'd either need to see certain levels get to the downside or reclaim certain levels to the upside, or some extreme action by central banks or governments. In terms of US bonds and the US Dollar, the picture is not as clear. In early 2021 I was bearish on bonds, but after that I was bullish as I didn't really expect the Fed to raise rates and thought bonds were significantly oversold. Even if I wasn't expecting the Fed to raise rates, the USD was also extremely oversold and none of the issues of the financial system had been solved. The world was still short on dollars, what the Fed and the government did was too little and at the same time everyone printed. In the current environment, on the one hand bonds are in major downtrend and the USD is in a major uptrend, and on the other hand both might have reversed after hitting major inflection points. Hence it is probably better to either go with the trend or simply wait a bit until the market gives us a clearer picture as to where it wants to go next. Thanks a lot for reading and good luck with your trading! :)
FX:NAS100Education
by BitcoinMacro
BOS - BREAK OF STRUCUTRE ✅✅✅🎯 WHAT IS BOS ? BOS - break of strucuture. I will use market strucutre bullish or bearish to understand if the institutions are buying or selling a financial asset. To spot a bullish/bearish market strucutre we should see a higher highs and higher lows and viceversa, to spot the continuation of the bullish market strucuture we should see bullish price action above the last old high in the strucutre this is the BOS. 🎯 BOS for me is a confirmation that price will go higher after the retracement and we are still in a bullish move Kindly see attached photos
BINANCE:BTCUSDEducation
by AnonimFXRO
HTF intention with LTF execution 📉📉📉🎯 I will try to explain how do i use HTF in order with LTF. ✅ HTF - higher time frame usually those are timeframes that are higher then H4 like D1,MN1. ✅ LTF - lower time frame usually those are timeframes that are lower then H1 like M30,MAT,M5 When i take trades i wait for price to approach a HTF POI and then zoom out on LTF to find a better risk-reward entry like the photo says HTF intent LTF execution helps you to get a better risk-reward ratio and a higher probability trade, this is working on every financial asset from crypto to forex to commodities and stock market ✅ POI - POINT OF INTERES an area in the market where price have a higher probability to go bullish then bearish lets say 70/30 % probability. Example price come into a ,,support,, area this means we have a BULLISH POI we have a better probability to go higher then lowe
BINANCE:BTCUSDEducation
by AnonimFXRO
HOW-TO: Cosmic Cloud #1📡 INDICATOR Cosmic Cloud 👩‍🏫 HOW-TO CONTENT This how-to shows that even price movement during major events like global market crashes adhere to the indicator levels. ✅ POINTS the price drop starts after reaching a resistance level (top-left chart) or the price drop is confirmed by a downward breakout from one of the support levels the 2020 stock market crash (👑) reaches its lows at various Cosmic Cloud supporting levels 🔔 USEFUL ALERTS Resistance Channel Re-entry ↓ Basis Test ↓↑ Support Channel Entry ↓
TVC:DJIEducation
by cosmic_indicators
Correlation of Different Markets with Forex: CheatsheetOne of the biggest things you should understand as a trader is prices don’t just go up and down (well, maybe on a really small timeframe they’re more chaotic). They’re usually backed by some actions, data and things happening in other markets. This all creates general economic tendencies. But how do we know what affects dollar/currency pair and how? Well, here is a quick cheat sheet for that case. More importantly with an explanation of why. 😊 USD and Gold (negative) Investors prefer to abandon the dollar in favor of gold during times of economic uncertainty. Gold, unlike other assets, retains its inherent worth. Gold and NZD/USD (positive) New Zealand (number 25) is a major gold producer. Gold and AUD/USD (positive) Australia is the world's third-largest gold producer, exporting around $5 billion worth of gold each year. Gold and USD/CAD (negative) Canada is the world's fifth-largest gold producer. When the price of gold rises, the pair tends to fall (CAD is bought). Gold and USD/CHF (negative) Gold backs up more than a quarter of Switzerland's reserves. As gold prices rise, the pair falls (CHF is bought). Oil and USD/CAD (negative) Canada is one of the world's top five oil producers. It exports 5..5 million barrels of oil per day to the United States. As oil prices rise, the pair falls. Bond Yields and USD (positive) Higher bond returns attract greater investment to a country's economy. This makes its native currency more appealing than the currency of another economy, resulting in lower bond yields. Here it’s more about looking out for bond differences between countries. For instance, if bond difference between UK and United States goes down, this will cause GBPUSD fall as well. Gold and EURUSD (positive) Because gold and the euro are both considered "anti-dollars," if gold prices rise, the EUR/USD may rise as well. USD and Stock Market (depends on the market situation, mostly positive) So, here is a little weird one. Strong stock market is an indicator of a strong economy. So as company gets stronger -> stock price goes up -> attracting more international investors to step in, who have to get local currency in order to buy a local stock -> this cases dump of other currency in favor of the currency we’re intending to buy the stocks with (in our case USD). Seems easy? On the other side, people from the local economy dump their dollar/bond holdings to acquire more stocks weaking the currency itself. That’s why it’s a complicated love story. This correlation is quite different depending on the volumes for both cases. Enjoy, family! But keep in mind that these tendencies change to some extent as the world economy shifts/develops. Make sure to always stay updated and observe on your own.
TVC:DXYEducation
by Investroy
13
Commodities - What are they and how do they work?This article is continuation to the series of educational articles on basic fundamentals in regards to particular asset classes. If you have not read our previous article on stocks, feel welcome to do so: In order to read the article click on the chart above. Commodities are basic goods used in commerce that are interchangeable with other goods of the same type. They are usually refined or used for production of other goods. Commodities can be traded privately or on public market exchange where they must meet specified minimum standards like quality, weight, type, etc. They are great speculative investments which tend to be ruled by cycles and interaction between supply and demand. Classification of commodities In order to distinguish between particular characteristics of each group, commodities can be categorized according to their type and origin. Commodities that are mined or extracted are called hard commodities (oil, gold, silver, etc.) while commodities that are grown are called soft commodities (wheat, rice, livestock, etc.). Though, commodities can be sorted even further into smaller sub-categories. For example, metals can be divided into industrial metals (copper, nickel, iron, etc.) and precious metals (silver, gold and platinum). Additionally, the agricultural sector can be divided into livestock and grains; and the energy sector can be divided into oil, coal and natural gas. Other commodity sectors can be subcategorized in the similar fashion. Raw materials Primary commodities which are unprocessed and serve as input for production of other goods are also called raw materials. Raw materials involve, for example, crude oil, copper, iron, wheat and corn. Commodities exchanges include: Asia Pacific Exchange (APEX) - Singapore Chicago Board of Trade (CBOT) - United States Chicago Mercantile Exchange (CME) - United States Dalian Commodity Exchange (DCE) - China London Metal Exchange (LME) - United Kingdom National Commodity Exchange Limited (NCEL) - United States New York Mercantile Exchange (NYMEX) - United States Shanghai Gold Exchange (SGEX) - China Correlation Some commodities tend to show correlation with other assets. Such correlation can be positive or negative. Positive correlation means that two assets behave in a similar way. For example, when gold rises then mining stocks rise as well. Contrary to that, negative correlation describes such behavior in which assets move in the opposite direction to each other. For example, when USD/EUR rises then gold in USD tends to decline. Illustration 1.01 Illustration above shows the monthly chart of USOIL. It also shows USDEUR (orange line). Negative correlation between these two assets is observable. When USDEUR falls then USOIL tends to rise. Participants, spot market and derivatives market Commodities are great anti-inflationary assets which are often sought by producers and speculators alike. Producers tend to use commodities with purpose to hedge their risk; furthermore, they often demand delivery of physical goods. Speculators, instead, try to exploit volatile price movements in commodities with the goal to profit from it. Commodities can be bought and sold through the spot market or derivatives market. Spot market simply means buying or selling cash positions while derivatives market involves investing in futures, options, ETFs, etc. Seasonality Some commodities are prone to seasonal cycles which means that they tend to show the same or very similar behavior based on a particular calendar season. For example, in some countries, production of a certain crop may vary during the wet season and drought season. Similarly, heating prices tend to increase during the harsh winter as opposed to during the hot summer. Concept of seasonality is also applicable to commercial and industrial trends. DISCLAIMER: This content serves solely educational purposes.
OANDA:XAUUSDEducation
by Tradersweekly
7
What you trade is just as important as how you trade!Hey Traders! WOW! What a Monday! Excellent moves in the markets today at the US open, I don't want to sound like I am bragging, but we kinda prepared ourselves very well for today by working our asses off on creating our watchlist, we knew what could be moving and we made sure that they focused on the best setups, setups that had the highest rewards and the lowest risks! Aside from a big miss on WTI, we aced EURUSD, NASDAQ, DAX and EURJPY. Preparation of a watchlist is vital for us day traders and we make sure to invest time into creating our day trading watchlists! This video explains a little better what we did to make today a BIG SUCCESS for ourselves and our members!
OANDA:WTICOUSDEducation
by PrimedGroup
2
My rules for Reversal Watch CriteriaA couple of weeks ago I noticed the front page of the Economist publication, which had a front-page title – ‘The energy shock’ and it reminded me that market psychology plays a huge part as one of my reversal watch criteria. After all once a market starts moving a lot and grabbing more headlines, more and more people jump on that trend and once it gets to the front page of newspapers or publications, like The Economist, it is generally a good indication that a move is either at or very near the end of its move. I have for many years worked on the trading floor of several large banks and have always found this to be a good indication of market in general. A few years ago I had a strong view on the fixed income markets as I had noted that the US 10Y yield had reached my long term downside target. I duly went off to tell the traders that the market had got to its target and they might like to think about covering their long positions on Fixed Income futures and not only was NO-ONE interested in hearing my view they simply told me to get lost – they had made money all year being long fixed income futures. So, I went and sat back down and thought hang on if all these guys are already long, who is left to buy? Within a couple of days the market had turned lower very quickly with absolutely no new news or any fundamental reason that I could determine. This is something I have observed over the many years in the business. But it does kind of makes sense as well, for a market to go up aggressively it takes a lot of buying and if most people have already bought who is there left to buy? For a market to go down, it does not have to be a change in fundamentals, it can just be a lack of buying…. So, if one of my reversal watch criteria is market psychology what are the other criteria? 1. The market is approaching a significant target area 2. The market is over-stretched or runaway ahead of target 3. We have heightened intraday volatility 4. We have Newspaper articles 5. All dealers/articles/people you speak to have the same view We saw these conditions met recently on the Oil market. It is always extremely hard to cut a position that you are making money in and it helps when you have a list of criteria that you can watch. Once these criteria start to be met, it is a good idea to tighten up stops and think about lightening a position. Disclaimer: The information posted on Trading View is for informative purposes and is not intended to constitute advice in any form, including but not limited to investment, accounting, tax, legal or regulatory advice. The information therefore has no regard to the specific investment objectives, financial situation or particular needs of any specific recipient. Opinions expressed are our current opinions as of the date appearing on Trading View only. All illustrations, forecasts or hypothetical data are for illustrative purposes only. The Society of Technical Analysts Ltd does not make representation that the information provided is appropriate for use in all jurisdictions or by all Investors or other potential Investors. Parties are therefore responsible for compliance with applicable local laws and regulations. The Society of Technical Analysts will not be held liable for any loss or damage resulting directly or indirectly from the use of any information on this site.
NYMEX:CL1!Education
by The_STA
Pivot Points StrategyPivot points can be used as entry points for new trades or as a close signal for the existing ones. There are different types of pivot points with a different mathematical formula or simply using previous highs and lows. HOW TO TRADE PIVOT POINTS The following scenarios work with the Traditional Pivot Points For the Camarilla version normally R and S are closer to the price and we use a different setup. Trading setup #1 (Not so strong trend): Open price is between R1 and S1 Long when the price moves back above S1 after going below S1. Target will be P, R1, R2, .. levels. Place Stop loss at the S2 level Wait for the price to go above R1 and then when it moves back below R1 again, go short. Profit target will be P, S1, S2 S3 levels and stop-loss above R2 Trading setup #2 (Normally very trendy bullish markets): Open price is between R1 and R2 Buy or go long when the price moves back above R1 again after going below R1. Target will be R2, Place stop loss at R1 Wait for the price to go above S1 and then when it moves back below S1 again, sell or go short. Target will be S2 levels, and the stop loss will be above P. Trading setup #3 ( Very trendy bearish market ): Open price is between S1 and S2 Wait for the price to go above S1 and then when it moves back above S1 again, then go long. Target will be P, R1, R2 levels, and stop-loss below S2. Wait for the price to go below S4 and then when it moves below S2, go short. Place stop loss above S1. Trading setup #4 (High probability for a trend reversal or correction): Open price is above R2 Buying can be risky at this level. Wait for the price to go below R2. As soon as the price moves below R1. go short. Place stop loss above R3. Target S1, S2, or P Scenario #5 (High probability for a trend reversal or correction): Open price is below S2 Selling could be risky at this level as the price has opened with a big gap down. Wait for the price to go above S1. When the price moves above S1, buy Place a stop loss of S2. Target R1, R2, and P.
UEducation
by apadanaforex
Learn To Trade Technical Analysis Hammer & Shooting StarHey Traders today I wanted to go over what I believe is one of the best ways to trade any market with Japanese Candlesticks using hammers and shooting stars. Normally you want the wick of the candle to be at least twice the size of the body of the candle. Alot of times they can lead to explosive moves in the markets. So lets dive in and see how to use this powerful technique in your trading arsenal. Enjoy! Trade Well, Clifford
Education
by TradetheFuturesCharts
5
If you think technical analysis does not work, look at this!I published this analysis on October 18, 2021. Today, you can see it hit the target zone! If you have no time to learn different tools in technical analysis, at least do yourself a favor and learn how to use regression channels! However, Regression channels are not pure technical analysis! It is actually a statistical tool..! Most quant funds use statistical models to open and close their position..! The most famous model is mean reversion! What Is Regression? Regression is a statistical method used in finance, investing, and other disciplines that attempt to determine the strength and character of the relationship between one dependent variable (usually denoted by Y) and a series of other variables (known as independent variables). Now, let's consider Y=Price and X=Time! Now, you should do the math..! But do not forget we have different types of regression models: Quadratic, Qubic, Sinusoidal, and logistic...etc. Look at these examples: Bitcoin: Solana: NFLX: USOIL:
NASDAQ:MSFTEducation
by Moshkelgosha
2