US debt ceiling fight

What’s the best trade for the US debt debacle?

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The US debt ceiling talks are in full flow so we take a look at how best to trade it

I’ve been thinking about which asset might be easiest to trade the US debt situation and I’m coming around to the conclusion that perhaps gold is the cleanest counter trade.

It’s good for trading both sides, the arguments and the resolution, because we’re close to a key level.

Gold technical analysis

We’ve got a potential massive triple top, and the driver of this latest rally is part of the market’s worry about whether the US will be defaulting in June. The fact we haven’t broken the 2075 level suggests the market is happy with its current pricing. Then we have the fact the players are beginning to get around a table is a positive note, even if that means days and days of posturing until the 11th hour. The record of 78 ‘can kicks’ of the debt drama in the last 70 years would favour yet another one but it’s the small risk of default that causing the market to worry.

The reason why gold might be the best option is partly down to the techs. If 2075 is the ceiling for risk pricing, a resolution will mark it as another significant top. If we do head into a default situation, the level will likely break. Therefore we have simple trades. 1 level, two ways of trading it.

I’m going to be looking at shorts into the level but with a buy reverse on a break. If we do get a break, it’s likely because of big negative news and will likely have some legs. After that I can look to the clock to gauge when to perhaps turn that to a short on a debt agreement. Conversely, if it doesn’t break but I’m short ino the level anyway, an agreement will likely give me a decent move down.

In all aspects, there’s no need to put much risk into the trade. Today’s US CPI might kick it up and through, and so maybe only a $15/20 stop is needed if that move is just a data move that reverses after.

At the end of the day, I love trades that have one clearly defined level to balance trades off of. It’s looks clean and that makes it easier to trade. Well, until the market decides to mess it all up that is..

All that remains now is timing. Do I go small now so I’ve got skin in the game, or do I wait for better levels and help from the data?

 

 

Analyzing the Potential Impact of CPI Data on SPX500 and DXY

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CPI y/y reflects the percentage change in consumer prices compared to the same month of the previous year.

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crude oil andre cardoso

Crude Oil Technical Analysis: Potential Bullish Alt-Bat Pattern

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In this technical analysis report, we will examine the current state of the crude oil market and identify potential bullish and bearish scenarios.

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O que esperar do mercado de ações brasileiro nos próximos meses: insights do índice Bovespa

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O índice Bovespa é um indicador-chave do mercado de ações brasileiro, com uma história marcada por altos e baixos.

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Non-farm payrolls competition – Can you become a legendary NFP champion?

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Our Non-farm payrolls competion is ready to rock

Here we go again folks! Nearly time for that all important US jobs number, which means nearly time for you to win a wonderful prize.

With no signs of the US jobs market wobbling, will this be the month it does (been saying that for a year-plus now), or will we see continued robustness? If you fancy making a guess about that, you can do so in our NFP competition. Pick a number for the NFP and you could be one of three lucky people to win a free month on the Forex Analytix platform.

How do you go about winning? All you have to do is guess closest to the NFP number on Friday.

The rules:

  • You pick a number as your guess for the Friday NFP number – 1 guess per person
  • First person who picks a number gets it (you can pick another number if your 1st guess is taken)
  • Closest to the number wins. In the case of a draw or split, the person who entered first by time gets it
  • Place your guesses in the replies on the tweet of this post (@forexanalytix)
  • Entries in by 12.29:59 GMT Friday

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Good luck!!

THE WINNERS

A closely fought contest this month with some very close guesses. We have a tie for first and second places.

Joint first is  @rudy56637433 (254k) and @JaidenDhaliwal (252k).

Joint second is @James_Groom (256k) and @PercyTerraceBnB (250k).

So, there’s 4 winners this month who will each recieve a free month on the Forex Analytix platform.

Well done you folks, and unlucky to the rest of us.  Thanks for playing and we’ll be back next month.

 

Bank of Japan

Trading the BOJ

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A new era begins for Japan’s BOJ

A new governor and a new direction for the BOJ? We’re about to find out so here’s some thoughts about trading it.

Just getting my (Ryan) ducks in a row ahead of the BOJ and I’m going to be watching a very wide area in USDJPY, which (give or take a few yens), we’re in the middle of (127-138). With events like this you have to know the sentiment on both sides of a pair so that you know how to react if something happens that moves the price the opposite way of that sentiment.

Right now, we know the market is less certain about the dollar, the Fed and the data, and the political stuff, hence why yields keep dropping and USD keeps a slightly bearish tone. So, if USDJPY rallies on the BOJ, and US yields remain under the cosh, as does USD vs other pairs, a rally here would look out of place, and then we ask how far does that go before a counter trade becomes too good to resist?

I’m positioned short already and happy to add up to that 138 if seen, and if only mainly driven from the JPY side. A sustained move over 138 and I’ll be reassessing that trade. On the otherside, a steep drop on the BOJ would mean they’ve signalled a change is coming and that’s going to lead to perhaps the start of a decent leg lower (120’s?).

The 127/128 will be where I’ll watch for an initial move becoming stretched. That will give me somewhere to look to take profit and also to add back (or add more) if it breaks. So, even if you aren’t already in a trade, these areas are where you may get an opportunity just based on the techs rather than the fundamentals.

USDJPY technical analysis chart

I also like my colleagues’ Kman’s view of AUDJPY as a BOJ trade. Again, matching off the fundamentals between the two, we’ve seen Aus inflation coming down more than expected, which pushes the RBA further towards less hikes, and Aus related commods haven’t been doing great either. So, again, any move that pushes AUD out of sync with its own issues potentially leads to a decent counter trade. I’m watching another zone in the pair.

AUDJPY technical analysis chart

Now, you may think that I’m taking it for granted that the BOJ are going to move away from easing, and thus JPY will definitely rally but that’s not the case. I’m just going on the signals I’m deciphering from the BOJ and the data, that they are as close to being able to end easing as they’ve ever been, plus I think inflation is going to stay toppy for them, as it is for everyone else. The evidence (IMO) is stacking up for them to be able to turn and I’m happy to trade that until something comes along that makes those thoughts invalid.

 

 

gold

Gold Eyeing New Supports For a Bounce – Elliott Wave Analysis

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Last week, the US CPI exceeded expectations with a reading of 5.0%, resulting in a weaker US dollar (USD) at the beginning of the week.

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The SPX500’s Technical Analysis: What You Need to Know Ahead of the FOMC Meeting Announcement

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A quick technical analysis look at the SPX500 ahead of today’s FOMC interest rate analysis.

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