Category Archives: U.S Dollar

“Risk-Off” – Overdone?

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Written by: Pauly @SPZ_Trader

Since last Friday’s bombshell announcement by FBI head Comey advising a further look into Hillary Clinton’s email issue the markets have been on a “Risk-Off” ride that has continued to gain momentum with nary a sign of slowing down.

How things change so quickly. Last week the dollar was riding high, and equities could not make up their mind whether to stand pat or rally into an expected Clinton victory.  I would argue at the time the dollar was way overdone to the upside and conversely the Euro extremely oversold due to new positioning. We all heard about Euro 105.   Gold was holding its own constantly flirting with the 200ma around 1265.

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EUR/USD on the Precipice of a Downside Move – Pauly @SPZ_Trader

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Written By: Pauly (Twitter: @SPZ_Trader)

Today, is FOMC (Federal Open Market Committee) day where the expected decision is a “Hold” (no rate hike).  The economy is not blazing ahead, but certainly one can make the case that a second rate hike since last December is warranted.  Job growth of the last three months 287k, 255k, & 151k provides a three-month average of 231k.  The issue has been wage gain growth which has encountered a tough time gaining traction. Thus a “hold” seems in the cards.

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Beginning of a Larger Move, or Already Overdone – Bonds ZB

Written By:  Pauly @SPZ_Trader

Friday’s continued sell-off in the bond market caught the attention of all traders no matter your trading vehicle of choice.  Yes, Virginia the bond market’s tentacles are quite lengthy.

The sell-off started about a week ago with the disappointing action following a weaker that expected Non-Farm payroll report (151k, coupled with .1 wage-gain growth).  The bonds spent the early part of this past week retracing NFP Friday losses, and briefly eclipsed those highs perhaps in anticipation of a little more juice (Quantitative Easing) from Mssr Draghi at Thursday’s European Central Bank meeting.  Well, Draghi did not provide what the market had hoped for; at the very least extension of QE beyond March 2017. Most realize the ECB is handcuffed when it comes to available assets to purchase, so the market was counting on a definitive extension of the program. Bunds felt the impact and summarily Bonds too.

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Strength in Dollar Leads to Opportunity in Gold and Pound

This morning I discussed in our member area and on Twitter how the Dollar remained as my primary focus. We watch the markets that are moving with or against the Dollar and then evaluate which markets to trade based off of those reactions.

I Tweeted out and told our members that the Pound has now firmed up against the Dollar. Meaning that the Pound has stopped selling off on Dollar strength…the Pound was actually rallying with the Dollar this morning.

The Gold market did something similar yesterday when the Gold market failed to go lower with Dollar strength and then rallied with the Dollar.

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Dollar and Euro Correlations Lead to Big Trade

Confirmation.

I say it in every webinar, all of my morning commentary, on twitter, in live events, and everywhere else I speak about trading.  I’ve said many times before that if you are just looking at your one market you are missing everything.  Today’s action was mostly driven by the Dollar.

The Dollar got weak and that pushed a lot of markets higher, including the Euro.  The Euro was on our radar for a short around 1.1130-1.1146 area.  Support in the Dollar was coming in around 96.05-95.93.  When we got to our resistance area in the Euro, we immediately looked at the Dollar.  The Dollar was the market leader because everyone was reacting off of their action.  So we look at the Dollar to see if they are at support the same time we’re at resistance in Euro for CONFIRMATION!

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Correlations Lead to High Probabilities

This morning I posted on Twitter & talked to our traders in our member area about the Dollar being the key to watch for potential leadership in Gold, Euro, and Crude.  The Dollar was hitting resistance at 97.50 at the same time we were testing support in Crude (43.44) and Gold (1314).

Both Crude and Gold had gotten just below our big picture support, but our short term levels were still in reasonable distance to our bigger picture levels.  The fact that the Dollar was hitting resistance and we saw a reaction to the downside, that gave us an indication to look at long opportunities in both Crude and Gold.

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Identifying Where Traders Could Be Wrong in Gold – Trade Setups 6.10.16

I talked (and tweeted) about Gold no longer correlating against the Dollar, and the fact that Gold rallied with the Dollar indicated a possible unwind of the recent correlation. Typically when markets correlate against each other and then suddenly reverse and work together, that causes a strong move by the market that has stopped correlating.

In this case, the Dollar popped, Gold down ticked slightly, then Gold turned higher.  Right at that moment I knew to either be on the long train in Gold, or don’t look at selling rallies until the 1278-1280.60 area (as seen in my tweet below).

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