BOJ will raise rates?

BOJ will raise rates?

FED will 'act as needed'

Do what must be done Commander Ben. Do not hesitate, show no mercy :)
The rate will be cut.

2007-08-31 15:04:15

JACKSON, Wyo. (AP) - Federal Reserve Chairman Ben Bernanke pledged Friday that the central bank will 'act as needed' to keep the credit crisis that has unhinged Wall Street from hurting the national economy.
In anxiously awaited remarks, Bernanke didn't specify what the Fed's next move will be but made clear policymakers are keeping close tabs on the problem, which has roiled investors in the United States and around the globe.
Even as Bernanke vowed Fed action, he sought to temper investors' expectations.
'It is not the responsibility of the Federal Reserve -- nor would it be appropriate -- to protect lenders and investors from the consequences of their financial decisions,' Bernanke said. 'But developments in financial markets can have broad economic effects felt by many outside the markets, and the Federal Reserve must take those effects into account when determining policy.'
Many believe the odds are growing that the Fed will cut its most important interest rate, now at 5.25 percent, by at least one-quarter percentage point on or before Sept. 18, its next regularly scheduled meeting. The Fed hasn't lowered this rate in four years.

EUR/USD channel and gap

The accending triangle is broken now, from the top.

Blue and brown channels acted like a clockwork. I needed not to trade today, just watched. There are a gap now. Gap must be filled (or not need to).

There are a long term channel - blue, and short term - brown (also shown here - http://nmmmnu.blogspot.com/2007/08/eurusd-bull-post.html).


AUD/JPY update

There could be a triangle - brown line - top, pink bottom.
If it gets broken from downside, say hello to 84 level.
However (low possibility) if is broken from upside, we may see 108 again.

EUR/USD - the bull post :-)

Besides Wing Commander Benjamin later today, here is what we have:
EUR/USD 4 hours chart - very bullish picture :-)

Blue line - parallel channel we watching - bullish.

Brown - the top of the accenting triangle @ 1.36.80. In fact this line is not horizontal, but little bit declining - bullish.

Pink - probably insignificant line. In case is significant, it makes a triangle, which may be (still) bullish for EUR/USD.


Different view

Accending triangle in EUR/USD 4hour chart? Probably...
Upper line is @ 1.36.80

Yahoo! Poll

What's your take on the subprime mortgage crisis?

1. The problem will get worse. 68%

2. The worst is behind us. 33%

(26472 Votes to date)

Fed could lose mortgage authority

I think, FED will lower the interest rate in September.

Fed could lose mortgage authority

Sub-prime problems have not hurt the wider economy, say analysts
A senior US lawmaker has called on the Federal Reserve to protect US home buyers from unfair home loans.
Barney Frank, a House Democrat from Massachusetts, said the lack of rules curbing deceptive mortgage practices was a "serious problem".

He also warned the Fed that if it did not use its authority in this area, it would be transferred to another agency.

The comments comes as late payments on high-risk mortgages rose to all-time highs in the year's first three months.

According to the Mortgage Bankers Association, late or missed payments on mortgages made to consumers with poor credit history from January to March soared to 15.75% - up from 14.44% in the prior quarter.

Not aware

People who have taken out sub-prime mortgages, which typically have a variable monthly rate, have suffered recently as rising interest rates and a weak housing market have made it tough for them to keep up with their repayments.

In many cases, the borrowers are not made properly aware of the financial burden they could face by greedy brokers, say market observers and consumer groups.

The Fed currently has the power to curb abusive banking practices under the Home Ownership and Equity Protection Act (HOEPA).

But Mr Frank, the chairman of the House of Representative's powerful Financial Services Committee, warned that these powers could be transferred to another federal body, such as the Treasury's Office of the Comptroller of the Currency (OCC), which regulates national banks.

The comments were made at a Federal Reserve hearing to discuss what it should do to address concerns about home mortgage loans "in a way that preserves incentives for responsible lenders to provide credit to borrowers", it said.


"This is a moment of great concern in our economy as to whether sub-prime is going to pull us all down," said Susan Wachter, a finance professor at the Wharton School of Business.

In separate news on Thursday, two major banks said earnings for the quarter had been hit by slowing mortgage businesses.

Bear Stearns saw its profits drop by a third.

Though Goldman Sachs saw overall second-quarter results climb - net earnings added 1% to $2.33bn - its mortgage operations slowed.

EUR/USD channel and support levels

EUR/USD, 4 hours chart.
parallel channel (blue) is in tact, even support is "moved" lower, in order to make it parallel.
old support level (brown) is still in tact too, and points to almost same level, just couple of pips lower.


AUD/JPY fail...

Latest AUD/JPY developments - resistance test, fail, down, not test #2 in progress :-)
Support level is unclear.
Stay aside.

Important resistance

EUR/USD 2 hours chart: Important resistance comming, was formal support.
I see it is broken, but I can not be sure.


Yen raise

What the hell?!?!?!
Stockcharts feed error :-)
UPDATE 29.AUG.2007: Stockchart are fixed the problem :-)

Channel in tact (still)

The EUR/USD channel is still in tact. We will see what will happen.
(EUR/USD 2 hours chart)

My thoughts indeed

Different method, same view for USD index.
A US$ rally: probably not now, but soon by Steve Saville


EUR/USD view for week AUG/27/2007

I. Important news from the week:

1. Most stocks, commodities and everything is rebound, from fall previous week.

2. First bank went bankrupt, because of sub-prime mess (not quite sure in this, may be they are in process to bankrupt)

3. USD fall sharply in Friday hitting 1.36.80

4. Many annalists believe that FED will cut rates in September. This is rumor, not a news.

5. RIP Aaron Russo, one of the few American Patriots, which even I admire. (I, who have nothing to do with USA)

II. The wedge in USD and EUR index:
USD index now heading down, and is 1/2 down the road to bottom (support) line of the wedge.

The target is below 80 (again). Note that even (for some reason) USD go down, only to the pink line, it still have some way down, so is safe to speculate as "dollar bear".

Before, I wrote following:

For first-time readers, and those who do not know, the wedges are reversal patterns. This wedge is bullish for USD index, no matter what people say for US economy, debt bubble etc. I am sure that at the end of the year, the USD will be lower, but wedge suggest we will have one bounce before that.
This is still valid, but probably we will first see USD index down to the support, and then another rise.

EUR index:
Because USD index is dominated from EUR-o currency, and EUR index is dominated from USD currency, the EUR index looks like mirror of USD index. Same wedge, same raise.

EUR index : USD index ratio:The ratio show same wedge, and once again suggest EUR will go up, USD - down.

III. Wedge in EUR/USD:

EUR/USD 3 days chart:
Our favorite chart. It is like the EUR/USD weekly chart. Wedge is shown once again, and EUR is half the way up. Target is somewhere about 1.40. I will calculate exact target later in the week. Once again, EUR - up, USD - down.

EUR/USD 1 hour chart:

This is speculative chart. It shows the upper channel of EUR/USD. We have 3 parallel lines. Currently, EUR may found support at what supposed to be resistance some time ago - brown line. Direction - either UP, or down to the support (blue) - 1.35.90, and then UP.

IV. Summary:

EUR continue to rise, USD to fall.

Continue to watch what the JPY will do in general, even I do not think it will affect EUR/USD.

Caution is warranted, since most of annalists are very bullish to USD right now!!!

Happy week and trade!!!

Rest in peace Aaron Russo!!!

III. Carry trade with AUD/JPY:
I did not followed this market for some time, but looks like, there are some exiting developments here. In case AUD break the bottom brown line, then there will be nothing to stop the AUD to raise at least to upper brown line, or even higher.

Wait, Passions is everything ;)


USD index and EUR/USD

EUR/USD channel is clearly shown on 30 min chart. Confirmation will be if we see drop from here to the support @ 1.35.65
USD index is down to about 50% of the projection, currently trying to pass what for some people supposed to be support level.

true brainwashing

If this is true advertisement, then this is true brainwashing.
Again we sold our positions too early (EUR/USD 1.35.67) like stupid amateurs... :)


A Safe Way to Own Gold and Silver

new article @ Mish's
A Safe Way to Own Gold and Silver
it's kind of advertisement on some CD's, but in general I like it.
Today is such a borring day... :)

Why my EUR/USD target is 1.40

EUR/USD 3 days chart.
Targeting upper wedge line, depends how fast/slow it will happen target may be 1.39, 1.40, or even more.

This is explanation, not a trading advice :-)


Trading range?

EUR/USD 1 hour chart.
We may have trading range (cow market). Prove will be, if we see one more drop to lower line.
However better stay aside for now.


Dangerous toys from Mattel

Since this is most readed blog of mines, read this important post.

Some kids toys from Mattel, Barbie, FisherPrice are dangerous.
Pls check your toys here:



M3 in Russia

Guess how what is M3 for Russia?

Answer: 51.60%

Молодец таварищ Путин :o)

(Congrats comrad Putin)


Yen index technicals

Yen index 1 week chart:
Resistance broken. Could but be a false break. We will see.

Yen index 1 day chart:
Huge gap still is un-filled. A bearish candlestick pattern forming, which may fill the gap later in the week. However, if this happen, JPY will be returned under the resistance line from weekly chart. Again - we will see.

EUR/USD view for week AUG/20/2007

Another interesting week. Yen carry traders are crashed up, exchanges are down at levels not seen from couple of months, Stocks and Bonds down, USD/JPY down, Gold and Silver down, everything down but yen.

Pls read my JPY view here - JPY view for week AUG/20/2007 , which I prepared 30 min ago. Now lets focus on EUR/USD only :-)

I. Important news from the week:

1. JPY rally hard, everything down. Again, see JPY view for week AUG/20/2007.

2. FED decided to cut the Discount Rate by 0.50%. It is now 5.75%.

The discount rate is different from the base interest rate ( 5.25% ), and is used when FED loan money to another bank. This rate cut is significant and important, because lot of banks and funds now will borrow money, and will inject them into stock market. However, for us - currency speculators, this means that:

FED sacrifice the dollar, in order to help the falling stock market.

Is done now. EUR rally about 1 cent imediately after the FED desition (respectively USD index fall). I believe the USD rally is over now.
II. The wedge in USD index:

USD index now heading down, and is 1/4 down the road to bottom (support) line of the wedge.

The target is below 80. Since may then will call "Dollar crash", I do not think this will be that strange, because then we will see a small dollar rally, similar the one from this (last) week.

Before, I wrote following:
For first-time readers, and those who do not know, the wedges are reversal patterns. This wedge is bullish for USD index, no matter what people say for US economy, debt bubble etc. I am sure that at the end of the year, the USD will be lower, but wedge suggest we will have one bounce before that.
This is still valid, but probably we will first see USD index down to the support, and then another rise.
III. Wedge in EUR/USD:

EUR/USD 3 days chart:
This chart is like weekly chart. The wedge is clearly seen. Also the raise of EUR is seen. The bottom was about 1.33.62 (or whatever it was 3-4 days ago). We may still see a drop, but I no longer think so after recent FED action.

EUR/USD 1 days chart:

Included only to be shown the reversal candle or as I called it Discount rate candle :)
IV. Summary:

EUR began to rise, USD to fall.

Watch what the JPY will do in general, even I do not think it will affect EUR/USD.

But once again don't get overexcited, situation is even more special than last week :-)

JPY view for week AUG/20/2007

Last week the Japanese Yen raised against most of the currencies. This was devastating for the markets world-wide, even Bulgarian stock market (BSE) was down.

As I already wrote in my post here , JPY is the fuel for carry traders, usually gigantic US hedge funds. And any substantial raise of JPY against USD or different currencies they use, go to big loses. That is why last couple days they selling like crazy. And because they are using big leverage, like 10:1, in order they to get out $ 1,000.00 out of the stock market, they need to sell stocks for $ 10,000.00 . And because they can not sell the "toxic" sub-prime bonds and stocks, they selling whatever they can - energy, gold, silver, technology etc.

However, there are lot of other sources where you can read about it. Here I write about currency speculations, so this is enough for the moment. (Even I will copy / paste same in my EUR/USD report later today :-) )

So lets take a look on JPY charts.
(Yen index chart not shown, but I think it not need to)
AUD/JPY 1 day chart:
Tragedy is full :) , a wedge, a fall from the wedge. Currently we have some support, but we will see.

EUR/JPY 1 day chart:
Wedge, fall from it, then a parallel channel from a while, then fall from the parallel channel.

USD/JPY 1 day chart (GBP/JPY is same):
Something like a wedge, but actually a rising parallel channel (brown). Then, parallel downtrend channel (pink). Finally a drop from downtrend channel.

Here, in USD/JPY, we still have hope that this is false break, and JPY can go back in the channel. But anyway, the channel in question is downtrend anyway.

Note all this is not a technical analysis, at least I do not look at it as it is, because I am checking just a 1 day chart.

From what I see, I believe this will have not negative, nor positive effect on EUR/USD trading.

the JPY - up = the other currencies - down
the JPY - up = carry trade - down
carry trade down = stock market - down

and if you add panic,
stock market panic = all derivatives, commodities, metals and energy down

Stay aside :-)


The Fed Cuts the Discount Rate

The Fed Cuts the Discount Rate by 0.50%.
Discount Rate now is 5.75%

Relevant charts (link)


Nice post, even I do not agree everything.

My recent post in one forum.

This is one my recent post in one forum which I believe is important,
the original post is altered a little bit.

I am not surprized that Yen rallied. What I am surprized is the speed of the rally. I expected the process to be looooong, about 2-3 weeks or so.

There were (technical) wedges on most currencies against JPY. So the soar of JPY was something that will happen for sure.

Yen - up, means carry trade - down.

Then the huge funds will began to sell, because of JPY. Then, because they also use leverage, they need to sell 10,000 $ in order to get 1,000 $ from their money (assuming leverage 10:1). And they selling everything - stocks, bonds, morgage back secrurities, gold stocks.

And because usualy the funds do not invest in Gold directly (at least this is what i believe), the gold is not that down.

From the other side, the USD is higher than EUR. I think the top was placed yesterday, but this does not change anything.

USD - up = Gold - down.

So we have gold down too, but as I said yesterday, is not that much down.

However I believe is time to add more. I will not add any, but this is only because I am out of money in my brokerage account.

Let me know your comments on this.


p.s. Pure speculation, but I believe BOJ (Bank of Japan) will do something stupid very soon, to help USD, which will elevate all currencies against JPY.

Some charts from yesterday:

1. AUD/JPY huge fall
2. Gap in Yen index
3. Yen index, weekly - break or False break?


Yen index is about 87.80

1 day chart:
Yen index is about 87.80!!!
Huge gap apearing on Yen index, the gap needs to be filled now. This means the JPY now may go down. In case the gap began to be filled, this means that the index will close lower, and we will have a reversed triangle - e.g. JPY will go to the support.

Note this is not technical analysis, we need to wait 2-3 days and see what will happen before any analysis can be done.

1 week chart:

Weekly chart is even more disturbing. Long time resistance line is broken. Is this a false break, or not, we can see in 2-3 days.

Bau! AUD crash...

AUD/JPY: The power of the wedge...
1 day VAPORIZE everything since March.2007.

USD like clockwork mechanism

USD like clockwork mechanism.
EUR/USD 1.34.00, the bottom probably is in.

Every single day, Bernanke takes my pay...

EUR/USD 1.34.30, target defenetly reached.


USD Index near the resistance of its wedge.
Nasty developments in GBP.
Wedge in GBP/USD is completed. Now up (next pass) or down (out of the wedge).
Actually, depends how we draw the support line, it may be *broken* !!!
Some extremely important charts...
(updated 15.AUG.2007, 17:00 GMT+2)

GBP/USD - 2 days:
GBP falling, probably there are a parallel channel, and we are near bottom.

EUR/USD - 3 days:
Wedge almost completed. If price fall to 1.34.50, I will consider the downtrend is complete.

Do not forget that this wedge is bearish pattern. This means, if wedge is "over", the USD may rally very hard to let say 1.28.00. If you think this is too much, think again. 2 weeks ago I said EUR/USD will be 1.34 soon, and nobody from friends believed :)

Some analysts (http://www.deltastock.bg/) suggest target is ~1.33.50. Looks like they believe the brown line is more important than long term support. We will see.

(and do not play EUR bull either)

AUD/JPY - 1 day:
AUD/JPY going down...

Probably, a bullish wedge is forming, but is too early to say.

We expect BOJ (Bank of Japan) to *cut* rates (yes, cut), or to do something else to stop the soaring of JPY, but we will see.

Happy (not) Trading :-)


This middle week update, probably is the most important post for this month!!!

USD Index:

USD index raised, and is almost on the wedge, caution!!!

GBP/USD 2 day chart:

I usualy do not use GBP to forecast EUR, but we clearly see, that the pound is on the wedge. I don't know, tomorrow crasy pound may be 100 pips up, but once again - caution!!!

EUR/USD 12 hours chart:

Support levels - currently EUR/USD gravitated around 1.35.40. Next level is about 1.34.50, which is very close to the wedge and to my target. Caution!!!


Caution, caution, caution and then caution again :)
Also do not play EUR/USD bull!!!


Important levels - @ 1.37.00, @ 1.36.80, @ 1.36.40, @ 1.36.05

Pink line shows upper target, if for some reason EUR/USD go up :(

The brown line is what we called "strange and mysterious" line.
It looks act as resistance, and is @ 1.37.30

We expecting bounce so we can enter short again. Actualy we do that all day... :)
Listen to the audio interview of Marc Faber - here
Today I donated nearly 1000 EUR to St.Kozma and Damian Monastery.


As last couple weeks, last one was very interesting. First here you are some

I. Important news from the week:

1. We have first non-sub-prime mortgage firm/institution filed for bankruptcy. The toxic problem is spreading indeed.

2. China is threatening with the
"nuclear" option - selling the US government bonds - I do not think they will do it, but if US government make restrictions to a nation which live to export 70% of its goods to US - what choice Chinese will have?

3. FED decided to keep rates unchanged. Some people believed FED will raise them, some commented they will lower the rates. I am amazed how educated people can think that? If FED cut rates, it will collapse the dollar, if they increase rates, the stock market will collapse. Bernanke playing very balanced, and actually he doing very good job keeping US economy at the edge. However, soon or later FED needs to choose between dollar and the market. Hopefully for currency speculators like me this will be not that soon (Analysts suggest October/November.2007).

4. Wing commander Bernanke preparing to "invest" 35 billion dollars in sub-prime mess. Where they will come from? Printing presses, because I do not think US government will raise taxes before elections.
As "free" media say, they no longer do helicopter drops. They use B52 aircraft instead. Who knows may be we need to invest in aircraft-industry :-)

II. The wedge in USD index:

For first-time readers (like Vasil), and those who do not know, the wedges are reversal patterns. This wedge is bullish for USD index, no matter what people say for US economy, debt bubble etc. I am sure that at the end of the year, the USD will be lower, but wedge suggest we will have one bounce before that.

All here is "normal" and proceeding as it must be. The double bottom has forming, is almost confirmed. The target is up - level of 82.

Then we will see, may be the wedge will be broken, or may be we will have one more turn down, then up. However since this is short-term speculative analysis, we will not cover this. I will only say, that if wedge is broken, we will see USD index 86-88-90.

III. Wedge in EUR/USD:

EUR/USD 4 days chart:

This chart is like weekly chart, but more compact. Because USD index is actually dominated by EUR, EUR/USD looks like mirror chart. We have almost same wedge, but this time is bearish for the EUR (lower EUR - higher USD). The target price (assuming the wedge will not be broken this time) is about 1.34.50 or little bit less.

EUR/USD 8 hours chart:

Here we can see two double tops - small one - orange, and big one - yellow. Every top, is lower than the previous one (lower highs) - once again a signal that EUR will drop.

IV. Summary:

EUR - down, USD - up, but don't get overexcited, situation is special, just see the crazy news at the beginning :-)

V. Carry trade using AUD/JPY [new]:

AUD/JPY 1 day chart.

Wedge is broken. There are some support ~ 100. Stay aside for now, until Japanese government do not cut rates or do something else to kill their own currency.