AUDJPY Closes Gap With ES As "Risk On" Fizzles

Tyler Durden's picture

The irrational exuberance of the last 24 hours has evaporated following the Meredith Whitney downgrade of Goldman 2010 EPS, but mostly after reports that some European banks are so busted they managed to fail an exquisitely doctored test designed so that no banks would fail. The market is once again wondering if someone can fail this farce, what would the test of reality look like? The result: the traditional carry-risk correlation has once again recoupled and with countless such occurrences continues to be the most routinely profitable intraday trade available.

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John Law's picture

If you look at the 4H chart, AUDJPY has formed a H/S. Its at the top of the right shoulder right now. Target of 65.27 if it breaks.

Abiggs's picture

Very cool observation. If this plays out the way it is supposed to, say la vie to Mr ES and all of his cousins... This HS might have a chance to its job since it's not as blatantly obvious as on the S&P...

hbjork1's picture

It makes not a whit what you call it so long as it is used effectively but Edwards and Magee called the "neckline" the line across the shoulders (with the head on top).

I don't remember but would assume, the lower line was the base line that would serve as some sort of short term (at least) reversal level.  

John Law's picture

To trade a H/S pattern, you find the difference from the neckline to the top of the head and subtract it from the neckline to find where it should go if it breaks the neckline. The top red trend line I drew yesterday just to try to project where the right shoulder would form. I've since adjusted it, but was only 15 pips off from my original projection.

BeerGoggles's picture

3:2 ratio for ES: AUDJPY - adjust trades accordingly

IrrationalMan's picture

how are you getting the 3:2 ratio?  i am looking at the scale on the right and left side of the plot and seeing it at 1:1 approximately in percentage terms

KTAISA's picture

Sorry to be such a newbie but would someone mind pointing out what the ES or ESUO index is? I have been googling like a madman and never get any answers.

my trading platform isn't helping me either

IrrationalMan's picture

ES is the S&P 500 future traded on the CME.  the U0 is the expiration, which is sept (U) 2010 (0). 

KTAISA's picture

jesus you just made my week


BeerGoggles's picture

ES is the S&P500 futures contract. You will probably need an ECN broker to trade it.

jkruffin's picture

My account is thru transworldfutures, can trade everything

KTAISA's picture



i seem to be getting real time data but for some reason its symbol in TS is SPU10 traded on CME

is this the same one?

-1Delta's picture

NO SP is regular futures, the liquid one is the E-MINI ES... some platforms = @ES@C

KTAISA's picture

thank you, huge help

SpeedSixx's picture

Sorry, I'm a newbie as well, but since ZH started posting this correlation, I've been following it.   Wasn't the ES supposed to follow the AUD/JPY?  In that chart, it seems it was the other way around.

Thank you guys!

traderjoe's picture

Look at that correlation. As I sit here listening to the boobs (guys and gals) on CNBS talking about fundamentals, etc. - it just amazes me. ZH = red pill. 

Abiggs's picture

Check out the sweet trend line on the AUD/JPY formed after yesterday's close. A breach of 77 or 76.85 precisely would tip this market back in the other direction.

BTW, nothing against TD but yesterday's post suggested shorting the ES for 10 "free points" rather than going long AUD/JPY. Obviously the right play is short ES and long AUD/JPY but simply long AUD/JPY was the real money maker here.

Either way - long AUD/JPY above 77 is a high probability play...

DavidC's picture

Looks as though we're into HFT time again...


firstdivision's picture

Odd move there on the SPX to pure verticle takeoff for 1070.  Feds trying to tell us something?

1070 or Bust!

Eric Cartman's picture

The fuck? Makes no sense. 

herry's picture

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Eric Cartman's picture

The fuck? You say this on every post posted on ZH.