Forex Regime Change

This is going to be a relatively brief update as I’m still burning the candle on both ends in order to meet an internal deliverable. There are two major forex symbols I wanted you to look at today as they both are in the process of a regime change. Which effectively means that a long term inflection point has been breached which in turn leads to a new market phase with different dynamics.

Both charts actually look quite similar. First we have the EUR/USD which I proposed was about to switch into trending mode a few weeks earlier when it was approaching its tightly squeezed upper 100-week Bollinger. I would have loved to be wrong on this one but unfortunately that is exactly what happened. The current advance looks like it’s only getting warmed up and I don’t really see any type of resistance until about 1.26 at which point I’ll probably wind up moving back to the U.S. Anyone on the West Coast know a nice cabin in the woods with high speed Internet access? 😉

Next the AUD/USD which as you can see is a mere mirror of the EUR/USD. In case you were unaware, the AUD/USD is the fourth most liquid forex pair with the EUR/USD being the #1. So it’s fair to say that the old greenback is in the midst of a massive squeeze with no relief in sight, at least as of now. I guess the general assumption is that Europe is back on the EU’s track and that Merkel will be re-elected as chancellor next month. Or at least that’s the desired impression ahead of the German federal election.

The big hammer will most likely fall shortly thereafter. After all it was Mrs. Merkel herself who once said that ‘one simply cannot expect that whatever has been promised (said) ahead of election should be expected to be followed afterwards.’ And they always say that Germans have no sense of humor… Monty Python: eat your heart out!

Gold was an entry for my subs yesterday and I hope some of them managed to catch it red handed as I didn’t have a chance to remind them in the comment section. We basically were waiting for a deeper retracement followed by a bonafide spike low. I decided to live dangerously near 1246.5 and thus far have been been rewarded. Trailing stop goes to < 1255 and Bob’s your uncle.

The E-Mini campaign is on summer cruise control and I’ll advance my trailing stop to 2471 now.  Nothing really to be done here – it’s running above is 100-day upper BB and ’embedded’ conditions like these can prevail for quite a while. If you drop a stochastic or MACD on your chart you’ll probably see something similar and you never want to guess the length of a trend – simply ride it.

Crude is on my watch medium term watch list now. It just managed to pop its head above its 100-day SMA which is where it previously has turned and then crashed and burned. We may get a similar scenario and there will most likely be a binary entry opportunity here in the near future. I’m looking for either a last kiss goodbye (LKGB) touch and bounce near the 100-day or a drop straight through followed by a LKGB revisit of the SMA. In the former we’d be long and the latter of course short.

That’s it – got to run and the market is about to open. Have fun but keep it frosty!