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[idejan]

Well I was not "in the Zone"
The worst thing you can do, is not listening to your own advices.
This last 7-10 days being very busy, I was not actually checking my analysis, but was only relying on Support resistance levels. So I was missing direction.
The main reason for that, and I'm not saying this to justify my self but to give you advice that you could use, is that I had an opportunity to sneak peak at the analysis of a service that is run from a great authority, and I was kind of influenced by their view. OK you would probably say that's OK, but it is not.
I had a clear view my self, and it proved to me many times that it is confidence in your own view that is most important.
I was not listening to my own advices. In my Journal from 17 Aug I wrote precisely what I expect and in other posts here in the thread I suspected a possibility (#6), but then in the days that followed I was distracted and I did not followed my own view. (I believe that one of the first lessons one should learn is about discipline).
Now I'm still out of the zone, since I didn't had much time to follow news last week, and as I have written somewhere here on MoneyTec, I find economic reports very good for timing if you know the general direction.

So what I'll write below, take it with reserve.
________
I'm still not convinced in my post #6 scenario, and it would be confirmed with a break above recent high @ 1.2588 in such case EUR will most probably travel to 1.2730 to 1.2780.
With all the latest development in US, where cracks are starting to show not only in the economy (my personal view on the US economy is very negative, and I personally believe that the only thing expanding in US is Credit), and bearing in mind that the first possibly positive US data will arrive mid September, makes this very possible scenario. It is most probable however that we will see a small minute correction to 1.2487-1.2426 first (current support @ 1.2455) before continuation up to 1.27 levels.

The recent High @ 1.2588 however qualifies for a minor top and any move below 1.2300/1.2290 would argue this. In such a case 1.22 (current 1.2193)level could be tested.

________
USDCAD
I'm sorry I'm not able to look more carefully on CAD at the moment. Most probable finish of this move down could be around 1.1765/45 but we could first see a correction to 1.1920/30. Break below 1.1860/50 would argue the move down to 1.17 levels and above 1.1980 would argue a possible minor bottom (recent low @ 1.1805)

Look on the Economic Calendar would give you a more clearer view on the direction. Katrina aftermath remains a primary concern for all so we would experience shifts in pessimism and optimism in the following days, but it is now clear that the consequences will be felt in the months to come.
ID

[4X4X]

Hello Idejan,

I read your analysis with great interest, keep doing the good work. I got the feeling that dollar sentiment is getting weaker fundamentally on 05-08-2005 when NFP was announced, which I mentioned in my post Dollar sentiment is clearly negative now.

I too feel that dollar is getting bearish on the basis of various macro economic indicators, most important of them are stop to Fed rate hike, oil, trade deficit and job numbers.

The momentum with which dollar is subdued indicates that this will not stop here and has long way to go.

[idejan]

Originally Posted by 4X4X

Hello Idejan,

I read your analysis with great interest, keep doing the good work. I got the feeling that dollar sentiment is getting weaker fundamentally on 05-08-2005 when NFP was announced, which I mentioned in my post Dollar sentiment is clearly negative now.

I too feel that dollar is getting bearish on the basis of various macro economic indicators, most important of them are stop to Fed rate hike, oil, trade deficit and job numbers.

The momentum with which dollar is subdued indicates that this will not stop here and has long way to go.

Tnx 4X4X buddy,
I don't think that dollar sentiment will shift that much that soon, but that we will have shifts in the sentiment which will mean more sideways trading, and IMHO we could see the first long term juncture near or after march 2006 when I believe we could see continuation of the longer term EUR up trend.
I'm not convinced that the oil will have significant influence to the US & global economy, since it's not adding the same pressure to the economy as in the past.
US job numbers will show some catastrophic figures as a consequence of probably around 500,000 people temporarily or permanently losing their job in New Orleans and the Gulf, but on the other hand that is already tailored in the markets and the recovery and reconstruction of that region will add significant positive input to the economy which is not factored yet.
What is critical is the housing, since it was adding very significantly to US GDP in the past (last year 1.5pp and recently 2.25pp).
It is also a possible important psychological trigger.
So if you take out the housing, Us economy would have expanded roughly less 1pp since 2000, and last year, we even would have seen only a moderate increase of 2.5% instead of the strong +4.25%. In the first half of 2005, house prices contributed 2.25pp to overall growth of about 3.5%! Considering that this was all financed with borrowed money, the only thing that really expanded in US is credit. With Income not covering the borrowing, no savings, and with the very high dependence on foreign savings it is almost like if somebody could pull the plug and everything will stop.
Along side the private consumption, investment in residential construction was a strong contributor to US economy. With average of 10% y-o-y growth in previous two years, it contributed to nearly .5% of the GDP growth. And every 4-5 new job was created by the construction and real estate since the beginning of 2004.
The real question is will the housing crash be so strong to trigger a significant shift in sentiment, that will trigger depression.
All of the US depressions were set of by a deflation of credit.
The worst in the current situation is that mainly, the extension of credit was created with non self liquidating credit (people borrowed money to purchase cars, homes etc. things they usually can't afford to own)
The main driver for the expansion of credit is confidence (that debtors will be able to pay) and production (which makes it easier or harder for debtors to pay interests and principals).
Zero savings (below zero), income not covering the borrowing, first signs of contraction in the production, changing sentiment, could change the desire of creditors to sustain a trend of expansion of credit.
In my previous thread in Charting and TA here on MoneyTec I've tried to explain the driving forces behind the market, and I've explained there that one of the primal human urges is the urge of preservation (of life). If the general social mood changes toward pessimism, then both creditors and borrowers will shift from expansion to preservation. The consequence is obvious that also producers and consumers become more conservative, and hence producers will lower their expansion plans, and consumers will lower their consumption and increase their saving.
Reductions in lending, spending and production will make debtors earn less, so defaults will start rising and the downward spiral will begin.

About Fed rates, I believe it will most probably end @ 4%.

And this remind me of local story of a debtor who was owed a significant amount of cash to sharks, and was not being able to repay even the principal. One of the creditors that borrowed him the smallest amount of money get so pissed decided to default the debt but to make the life of the debtor miserable by constant everyday fear and stress, even a physical pain. After a period of time debtor was so distressed and getting ill, that he called other creditors to complain that if the creditor that is making his life miserable continues doing so, he suspect that he will end dead (there by not being able to pay his debts). All other creditors agreed to pay his debt to the harasser just to keep their debtor alive in hope he will be able to repay his debt, someday.

But with most of the central banks diversifying their holdings I can't see a bright future for US long term.
Us government was successfully shifting the focus from domestic problems for years by entertaining US citizens with constant War campaigns all around the world, and draining their tax money into just a few pockets at the same time (very expensive entertainment I'd say - in human lives and in money). It is just a mater of time when all those internal problems will surface, making some very serious shifts in the US society and world in general.
What worries my most is an old saying which I'm not sure if I could translate properly or if it is a same in english and goes: "The drowning man will reach for the straw", - the one that is drowning in his desperation to save himself will even try holding the straw. When US is in question, in such a scenario on a way down, it could drown down more then half of the world economy and nations. Other part is already at the bottom. And it is the only reason why it not falling apart. The sad fact that the once bigest producer (and creditor) became the bigest consumer (and debtor).
Best to all
ID

[roter]

Idejan,
i agree with every word!!!
the big question is: when?
and this situation, i fear, can go on for many years still.
Mario

[idejan]

Originally Posted by roter

Idejan,

Originally Posted by roter

i agree with every word!!!
the big question is: when?
and this situation, i fear, can go on for many years still.
Mario

Hi Mario
We all hope it would go for years and it will for some time probably. Longer the smother the transition.
I'm just concerned with the fact that global paradigm has changed, and that worldwide we experience a change in most fundamental human values.
It happened as a consequence of incapable politicians using the most effective ruling instrument - FEAR.
They shed fear of this and that trough the years, feeding the animal inside us. Fear is that emotion connected with our primal instinct to preserve life (to survive) an is the emotion on which pessimism breathe and grows. It is also the emotion which turns out rational thinking, hope, dreams, plans. Man that fears for his life has no plans for the future. He is concerned only with the present.
However I'm not pessimistic at all.
I'm just worried of crazy lured and incapable leaders, that lost their touch with reality. But I have great great faith in people, ordinary working man all around the world.
Man is not inherently bad, but is not a rational being too.

__________________________________________________ _____

My long term outlook is:



Monetary adjustments, US housing market, ongoing global asset diversification and oil shock, will influence foreign exchange markets.

I've explained my view in previous post so now what market will look at:

The USD will regain a weaker tone with the signs of economic deceleration, the negative implications from Hurricane Katrina, uncertainties regarding the FOMC rates tightening and persistent twin deficits.

The CAD will remain strong supported by oil and natural gas, economic strength, monetary tightening and foreign demand for Canadian securities.
I'm very very bullish on CAD$. Targets below 1.00

The EUR will benefit from USD weakness (not his own strength) and global asset diversification, despite negative interest rate spreads and stagnating to modest economic performances. Positive yield differentials will continue to support the GBP.
I expect more sideway trading in the 1.19-1.26 (but more probably 1.20/21 - 1.26/27) before a continuation of a Long term EUR bull trend.

I'm also bullish on JPY but unlike the CAD, I expect more JPY sideways trading until the end of year before a resumption of down trend to below 100.00

Best regards,
ID

[idejan]

Originally Posted by idejan

USDCAD
I'm sorry I'm not able to look more carefully on CAD at the moment. Most probable finish of this move down could be around 1.1765/45 but we could first see a correction to 1.1920/30. Break below 1.1860/50 would argue the move down to 1.17 levels and above 1.1980 would argue a possible minor bottom (recent low @ 1.1805)
ID

It found resistance @ 1.1940 to dip down right on target @ 1.1724
Taking from the decisive retracement on the chart, this will most probably be the minor botom and the end of the second leg of this intermediate correction. We would most probably see this third leg which could be in play as of now to end around 1.26/27.
Below 1.1715 will argue previous statement.
I'll wait market to produce more clues and will be back with update.
ID

[idejan]

Originally Posted by idejan

It found resistance @ 1.1940 to dip down right on target @ 1.1724
Taking from the decisive retracement on the chart, this will most probably be the minor bottom and the end of the second leg of this intermediate correction. We would most probably see this third leg which could be in play as of now to end around 1.26/27.
Below 1.1715 will argue previous statement.
I'll wait market to produce more clues and will be back with update.
ID

CAD$ plays very nice. This first move up right on target and being an impulsive move argues this as a possible reversal. However first indication of recent low being a minor bottom is around 1.1930/50 to open way to 1.2050/80/2110 and to 1.2230/50 (possible first minute up top).
If this is in play target as in prev post and wider target range is 1.24 to 1.29
More accurate projection on confirmation and after some price development which will provide more indications.
Confidence: very high.
Below recent low @ 1.1715 could invalidate above view.
--------------------------------------------
EURUSD unusual play(if there is such thing in the markets ), very direction-less.
However an interesting play, since the latest development created a pattern which could it self qualify to end the second leg (minor wave (B) of the intermediate wave b. If not it will end the first leg of the ((C)) of (B) most probably near 1.2260 making ((C)) and thus minor wave (B) to end around 1.2220 to 1.2047
Above 1.2527 we will see 1.2730 and probably 1.31
--------------------------------------------
USDJPY
Longer term USDJPY is in down trend to 105/102/99.5 target zone.
Taking a closer look USDJPY is also in downtrend to finish near 108.50 and possibly below to 107.50/00
--------------------------------------------
Long term outlook on EUR, CAD and JPY remains unchanged (as previously posted).

ID

[idejan]

Originally Posted by idejan

EURUSD unusual play(if there is such thing in the markets ), very direction-less.
However an interesting play, since the latest development created a pattern which could it self qualify to end the second leg (minor wave (B) of the intermediate wave b. If not it will end the first leg of the ((C)) of (B) most probably near 1.2260 making ((C)) and thus minor wave (B) to end around 1.2220 to 1.2047
Above 1.2527 we will see 1.2730 and probably 1.31

Little alteration on above view.

Minor wave (B) to finish 1.2068/47 on 14 Sept.

This will finish second leg of the larger degree wave b (or x) of the correction wave II of the larger degree EUR uptrend.
This wave could however extend lower to 1.1995 to 1.1864
Break above 1.2350/90 could indicate minor wave (B) finished but we will need a break above 1.2527/45 to confirm that. In such case targets are as posted before 1.26/27/31 (more precise targets up, after confirmation of minor bottom)
ID

[idejan]

Originally Posted by idejan

Little alteration on above view.

Minor wave (B) to finish 1.2068/47 on 14 Sept.

This will finish second leg of the larger degree wave b (or x) of the correction wave II of the larger degree EUR uptrend.
This wave could however extend lower to 1.1995 to 1.1864
Break above 1.2350/90 could indicate minor wave (B) finished but we will need a break above 1.2527/45 to confirm that. In such case targets are as posted before 1.26/27/31 (more precise targets up, after confirmation of minor bottom)
ID

Well we are on target and this could be a critical level.
With lot of data today I'll watch for immediate signals of a bottom and reversal .
However I expect more decline before any bottom and reversal.
ID

(I'll be posting intraday comments in my journal)

[idejan]

USDCAD
needs to break above 1.1930 to confirm larger corection is in progress.
Res @ 1.1870/1930/2020
above 1.1930 increases probability for 1.2230/50 and to 1.25/26

below 1.1820 free fall continues to probably 1.15 and 1.13
-----------
JPY
in downtrend but needs to break below 110.20 to head to
109.98/108.5/107 levels

on the other side break above res @110.9 to invalidate view.
-----------
GBPUSD
down to 1.8005/1.7995 before possible reversal up.
on the above side res @ 1.8250/8290 and 1.8365
-----------
ID

[idejan]

Latest development reinforced possibility of my previous view about 1.2068/47 and even more for the next level down @ 1.1996
EUR is now siting at important fib @ 1.2102 (price) and just between two important time fibs (100% time extension of 12 Aug high on 18 sept and fib time sequence on 20 sept.) indicating possibility of minor low, but just with a break above 1.2240 and then 1.2270/2300 could indicate such low and with that a possible reversal.
Looking at the charts and the price pattern, I still hold my view of this move down ending at least @ 1.2068/47 and now I'm ready to consider even little lower to 1.1996.
Tomorrow news includes two important data releases Housing starts and FOMC announcement, with housing starts being the important one, since I believe that FOMC expected .25 points hike is already tailored in the price.
Bad housing data could prove critical for a strong reversal and that could be boosted more with even slight change in FED rhetoric suggesting possible end or pause of rate hike.
On the other hand we have the German election results. Market tends to see this as not very good for the EUR but this was already tailored in the market price with this latest move down, so I would not expect any significant pressure on the EUR from that side, even that there is a possibility which derives from the possible days (or weeks) of political horse-trading before any clear outcome.
By the end of this week EIA Petroleum Status Report
Jobless Claims and Leading Indicators data are to be released, all dollar negative in my opinion. Next week data release also does not bring anything promising for the dollar (my humble opinion). Oil on the other hand could give some ease on the dollar short term too if it proves to be in a larger correction before a continuation up.
But as I have stated much earlier in my Journal mid September will see some dollar positive sentiment shift (short term) and with the latest development, even breaks below 1.19 are possible, but not very likely.
I believe shortly after this strong reversal will occur since the cracks will start showing visible bear eyes.
However one must not include his own expectation and must have a clear view at all times.
So,

the levels to watch:
above
1.2150/80
1.2210
as possible corrections and as a first indication of possible reversal
and
1.2230 to 1.2270 as a possible reversal sign
1.2530 will confirm reversal to 1.26/27/31 levels

on the downside
there is a longer term (weekly chart) support now around 1.2059
1.1997 important fib
1.1864 July low (2005 low)
1.175 April 2004 low

ID

while writing this EURUSD reached 1.2147 closing to 1.2151 level

[idejan]

Originally Posted by idejan

USDCAD
needs to break above 1.1930 to confirm larger corection is in progress.
Res @ 1.1870/1930/2020
above 1.1930 increases probability for 1.2230/50 and to 1.25/26

below 1.1820 free fall continues to probably 1.15 and 1.13
-----------
JPY
in downtrend but needs to break below 110.20 to head to
109.98/108.5/107 levels

on the other side break above res @110.9 to invalidate view.
-----------
GBPUSD
down to 1.8005/1.7995 before possible reversal up.
on the above side res @ 1.8250/8290 and 1.8365
-----------
ID

USDCAD
Found res @ 1.1894 to dip @ 1.1778
above 1.1820/50 and 1.1910 to confirm possible uptrend (on all time frames CAD is still in downtrend)
break of 1.1786 trend line first and then the recent low @ 1.1719 to indicate possible continuation of the downtrend to as low as 1.15/13
-------------
JPY
On small time frames JPY is probably heading to 111.00/110.95/80
Brak below 110.50 is the first indication of that and occured while I was rechecking my analysis. It still has room to finish up @ 111.70/80 and probably 112.25/50 before continuing down.
support @ 111.00 / 110.80 / 110.50 / 110.30
first confirmation of minor down trend is break of first 110.00 and then 108.60
to 107.00 targets

ID

[idejan]

Originally Posted by idejan

USDCAD
Found res @ 1.1894 to dip @ 1.1778
above 1.1820/50 and 1.1910 to confirm possible uptrend (on all time frames CAD is still in downtrend)
break of 1.1786 trend line first and then the recent low @ 1.1719 to indicate possible continuation of the downtrend to as low as 1.15/13
-------------
JPY
On small time frames JPY is probably heading to 111.00/110.95/80
Break below 110.50 is the first indication of that and occurred while I was rechecking my analysis. It still has room to finish up @ 111.70/80 and probably 112.25/50 before continuing down.
support @ 111.00 / 110.80 / 110.50 / 110.30
first confirmation of minor down trend is break of first 110.00 and then 108.60
to 107.00 targets

ID

CAD rallied strong against dollar. It broke down to new low and it's approaching to Nov 1991 low @ 1.1190 with steady pace.
I must admit that even I was open to possibility, as I mentioned above that on all time frames CAD was in healthy downtrend, I was not anticipating such a strong fall. Especially with dollar being "strong" across boards this days. It fell down right of that trend line @ 1.1786 to 1.1658 and looking at the chart it seem to me that it is heading for 1.15 and probably even lower (but less likely).
Possible levels down are:
1.1635
1.1515/05
1.1308

On the other side correction to 1.1700 to 1.1740 is possible and above 1.1760/80 will indicate possible bottom.
-----------
JPY
Most probably toped @111.67 but still needs to break below 110.20 to signal such possibility. Breaking above 111.67 would signal this move up to finish @ 111.70/80 and probably 112.25/50 before continuing down.

ID

[idejan]

Originally Posted by idejan

the levels to watch:
above
1.2150/80
1.2210
as possible corrections and as a first indication of possible reversal
and
1.2230 to 1.2270 as a possible reversal sign
1.2530 will confirm reversal to 1.26/27/31 levels

on the downside
there is a longer term (weekly chart) support now around 1.2059
1.1997 important fib
1.1864 July low (2005 low)
1.175 April 2004 low

ID

while writing this EURUSD reached 1.2147 closing to 1.2151 level

Originally Posted by idejan

CAD
Possible levels down are:
1.1635
1.1515/05
1.1308

On the other side correction to 1.1700 to 1.1740 is possible and above 1.1760/80 will indicate possible bottom.
-----------
JPY
Most probably toped @111.67 but still needs to break below 110.20 to signal such possibility. Breaking above 111.67 would signal this move up to finish @ 111.70/80 and probably 112.25/50 before continuing down.

ID

EUR correction was within mentioned levels to 1.2180
Development since my last post could indicate that we will most probably have a limited spike down before a strong reversal.

CAD
I'll add only one level to previously posted @ 1.1560/65

JPY
Would most probably go to upper levels once again before possible reversal down. (111.80 to 112.25/50)

ID

[idejan]

Originally Posted by idejan

CAD
I'll add only one level to previously posted @ 1.1560/65

ID

1.1700 gave strong resistance.
Now first resistance on the intraday charts is 1.1680/90
On the 1H first resistance above 1.168 is around 1.1730/50 and 1.1770/80 which is the first to indicate ease of the downward pressure. But just above 1.18 first then 1.19 above 1.2200/50 and will confirm that larger consolidation corection to 1.25/27 is in progress.
A possible divergence is building on the 1H chart but we still need a move above mentioned res, and until then there is still possiblility of new lows below 1.16
ID