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Where Are Central Banks When You Really Need Them
Submitted by Nic Lenoir of ICAP
Asian central banks have left unattended a bunch of pretty upset carry-traders... We had a well-established support line on EURUSD and on Friday when we tested it (for the 5th or 6th time) central banks came to the rescue. However, when we tried to break again this morning, the market awaited... in vain, and with no massive buyers it's a wave of stops that met the swing traders selling the break.
What now? Well it seems on the 180-minute chart that we stopped on the only decent support at 1.4846. As long a we don't break 1.4976 we are in a downtrend which would potentially take us all the way down to the 50-dma and the mediu-term channel support in the 1.4620/1.4660 area. That is the key medium term support.
Drawing a parallel with precious metals, it seems Gold has broken the recent low that was support at 1,043. In very short term trading we hit the support however of a potential sideways channel, and short term indicators are massively oversold, so we could well retrace to 1,052 in the near term. Bigger picture we have two supports at 1,025 and 986. The later is pretty much the key between retracing to 862 and making new highs past 1,100. Look at silver for guidance... Silver just rejected the top of a major channel, that's why medium term we think re-testing 986 seems the likely scenario. A hold there would be very bullish, but we would stay put until then. If we follow through a bit more here on the downside there will be some more stops being triggered.
Equities short-term look like they are supported as indicators are quite oversold on a 30-minute and 60-minute chart. We have good medium-term support in the 5,550/5,650 zone for the Dax, we would expect a bullish reaction near-term.
Good luck trading,
Nic
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Sooooo....The Central Banks aren't really there when We need them. They're definitely there when their Cronies need them. Moral of the story: We don't NEED them.
Equities short-term look like they are supported as indicators are quite oversold on a 30-minute and 60-minute chart.
Myopic much?
Great work Nic; keep 'em comin'...
I second that.
two problems:
1. EURUSD faces resistance, yet equities to move higher?
2. Oversold and overbought have little hold in the over night movements , more about whether europe/asia is happy or nervous
a watched pot never mean reverts.
a watched pot never mean reverts
A classic. This is one of the reasons I love ZH and the comments section. A wonderful mix of pop, cesspool and everything in between.
God, you can take me now, I'm ready.
and bidu gives weak guidance and.......down 11% AH's.
wow, i forgot momentum goes in both directions.
btw,all three(dax,ftse,sp)sold off at the exact moment(somwhere around 11:13 am). Coming almost after an hour from the first Euro sell off. For some reason, I feel that somebody was dumping large load of 10 y,and when the first wave of dollar repatriation didn't prop up the tb,big boys had to sell off some market gain to get some more liquidity for the tbs(just a though on my part). And will leave that scenario for TD to try and explain what happened beside the cbs not buying Euros theory presented here by nic.But the question going forward,where would the far end of the curve would be without qe?
At least Sweden's Riksbank didn't let the negative interest rate situation drag too long...
Perhaps the massive Bullion Bank Gold/silver shorts saw no other catalyst to exit there big losing positions before expiry and given the physical situation on COMEX, they worked with the PPT to sell equities to halt the dollar rally and create enough panic to push over the stops in gold and silver longs before expiration.
If not Bullion Banks, maybe China looking to hold the dollar up and get a chance at more cheap gold?
correction, halt the dollar slide/halt the dollar rally.
Good article by Doug Noland, you need to scroll way down to see the commentary.
http://www.prudentbear.com/index.php/creditbubblebulletinview?art_id=10301
"My view is that the Fed is paying too dearly for these mortgage securities and large losses are inevitable. And while Fed-induced price distortions are not having a big impact on U.S. housing, they exert enormous influence on finance and markets globally. I don’t expect the Federal Reserve’s MBS portfolio to be unwound anytime soon. Instead, the Fed will live with this exposure for years to come – and will likely expand the scope of mortgage exposure in future crisis periods. And I expect Washington’s conglomeration of mortgage risk will at some point make or break the dollar. "
Exactly as I myself predicted in March, after the fateful March 18th decisions. Zimbabwe Ben's MBS incursion will be his, and the dollars, undoing.
Every fool, Bernanke, sows the seeds of his own destruction. Bernanke, as schill for the powers that be, is expendable when he finally is discredited. He may not be welcome back into the halls of academia or the meeting rooms of PIMCO.
Slightly OT, Paul Volcker says he needs a fresh barrel of K-Y as well.
Volcker says he was used as "some kind of symbol of responsibility and prudence" by the administration during the campaign, and now speaks to Obama only occasionally.
http://www.newsweek.com/id/219376
That other 20% Volcker refers to in the article is why ZH exists. It's got a gamma that will take out the 80% in no time flat.
Its not the CBs, the Euroyen had failed twice to breach 138.4 previously since March, all the traders had left the room when 138 was quickly breached. And the vampire squids had asked their Asian and European teams to throttle back end of Asian trading to let during the $100b Timmy blowout. A little bit of checking around would have avoided blaming CBs and the like, who have already left the scene since last 2 weeks intervention by Asian CBs. I know of no eastern or western european names willing to take on any of the 3 asian CBs named in last weeks' intervention to prop up the dollar, so sell dollar at your own peril now.