why did EUR/JPY drop during NFP? - Page 3
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Thread: why did EUR/JPY drop during NFP?

  1. #21
    Quote Originally Posted by ;
    And like I stated before if GU rise 10 pips and UJ drop the exact same 10 pips.... GY do not stay equal.... GY fall 9 pips.
    Ok, I see what I mean. I misunderstood your initial article. But, still 10 pips in UJ and GU are completely different things - 10 pips in UJ is about 0.09percent move, but 10 pips in GU is a 0.05percent move, so of course the 10 pips go in UJ affects GY longer, and GY drops by approximately 0.04%.

  2. #22
    Quote Originally Posted by ;
    hello ! I was trading the 5 minute charts of EJ, EU and GU, and believed that all three would go up according to a few of moving averages. How did you make assessments of the instructions of these pairs? What charts you looked at? And what time?
    Hi bluefox,

    for longer duration key levels and trendlines I use Monthly, Weekly, Daily charts.
    MY view is - if you're trading on the 5M chart, then you're asking for
    trouble.

    Especially when beginning.

    And I did not make any assessment on EJ or UJ. It was unclear for me at the time so I stayed away. I might have sold an s/r fracture or retest of a TL that was busted which GJ and UJ did, but since earlier efforts got murdered I let it be.
    I did not realize until later that the daily had an extremely clear bearish setup formed (double lower close inside bar =gt; bankrupt downwards)

    EURUSD was creating another interim bottom at 1.3550 using a Pin Bar or Hammer and then greater highs. So it moved upward. I use Price Action to trade, as seen in my signature.

    The meaning / effect of moving averages reduces together with the timeframe. Daily is pretty big, 4h is meh and 1h is catchy. Anything below that is pretty much leaping into the frying pan.


    Quote Originally Posted by ;
    I'm also learning how to spot key levels to aid my trading. However I've noticed that the majority of the times price chop around those levels and I've lost my faith in these levels. How do you deal with this? And, how do you determine your key levels?
    By looking for bits / reactions of price on the huge timeframes. Check out posts on the thread for examples.

    You do not trade s/r alone. You trade a price installation on s/r / regions of confluence (fibs s/r for example).

    I truly think you need to do a lot more studying and reading on some of the basics like trendlines, the meaning of s/r and s/r flipping and so forth. .

    The stuff is out there, just takes a while studying

    Take good care of

  3. #23
    Quote Originally Posted by ;
    Many ppl around here are saying, hmmm Europe and Britain depend on US market so. . EJ and GY will respond to this

    But again... I gave the case of US 2002 recession. EJ is not decreasing in that interval and negative each month by that times NFP came.

    Stocks were declining, UJ was declining.... So... with all the logic around EJ have to had fallen with US issues back then.

    However, it did not because Euro was climbing like a beast back then. Is not right to assume that everytime we view US issues the conveys beginning to unwind.
    Okay, looking at 2002 charts, I must concur with you that this is not always the case that US issues cause carry trade unwinding. Markets are never this simple, and requirements change, so it is best to not overgeneralise. But in 2002, relative interest rates were different, so maybe the understanding of market events by carry traders was distinct from what it is now, even though I might be completely confused.

  4. #24
    Quote Originally Posted by ;
    Ok, I see what I mean. Sorry I misunderstood your original article.
    The reason I said this was just to explain the original thread poster, to understand who drags who.

    He believed it was Eur/Usd that played a larger role on Eur/Jpy. I tried to say it is the way round.


    Anyway... I believe we're spending too much time on this lol.

    Once I talk something I love to believe, is this a vital thing in my future? Is this what will make the diference between the collapse and sucess?

    In this case I must say no, so... lets revise our potential trading to another week. Money is made by that.

  5. #25
    Quote Originally Posted by ;
    Ok, appearing at 2002 charts, I have to agree with you that this isn't necessarily the case that US problems cause carry trade unwinding. Markets are never this simple, and conditions always change, therefore it is best to not overgeneralise. But in 2002 interest rates were different, so perhaps the perception of market events by carry traders was different from what it is today, although I might be completely mistaken.
    I can't locate the Japan rates in 2002, but have an idea they were nearly the exact same.

    US rates fell drom 6.5 to 1.5 at the space of 1.5 year before 2002.

    Probably carries unwound because of the speed of the rates falling, but there were conveys back before the collapse.

    EU rates droped from 5 to 3.... In that EJ stalling period.

    This implies that in the end if we keep seing EU rates climbing or at UK, conveys in europe might not fall like us conveys.

    It'll be just correlation dragging ej and gy not economic motives, unless we see the signal Eu decreasing a little.

    However, as I said, I am not going to bother much with this. The market will tell me if it's important and I'm very patient.

  6. #26
    Hello, Mr. Warper. Thank you for taking time to reply my question. I've read your post several times since yesterday, and I am happy to report that each time I read it, it kind of makes more sense . However, there are still a few points I don't understand. I'll point them out and attempt to form my questions the best I could.

    Quote Originally Posted by ;
    Your question was why did EUR/JPY drop during the NFP? , or in other words yesterday.

    Me and tried to describe what happened yesterday,

    and I will use his words...



    Even thought, you prefered to listen to other awnsers that look pretty but are somewhat misleading if we consider all of the scenarios. .
    This particular line you quoted from did answer my question. However it had been an analysis, I had been more interested in understanding how to predict this type of occasion. And when accurate predictions aren't possible, how to recognise the signs when things like this might happen.

    Quote Originally Posted by ;
    I'll attempt to explain again with easy words:

    There are times when EJ is falling and carry trades are falling.
    There are times when EJ is falling and carry trades aren't falling.

    Yesterday was one of those days where the carry trades from US were falling but maybe not the Euros and Pounds carry trades.

    We know when Euro and Pounds carry trades are falling when EU and GU fall too or stall...
    I don't understand this part nicely. You said Yesterday was one of the days where the carry trades from US were falling although maybe not the Euros and Pounds carry trades., but EUR/JPY did drop a lot. Is this a typo? Or am I?

    Quote Originally Posted by ;
    When I spoke about pips I am sorry if I didn't explain well, however, is very easy...

    . .when we look at GY by way of example and watch all that volatility, we have to consider, hey what a busy pair, it must possess a lot of ppl trading it

    nevertheless it's among those less traded pairs in the majors group, do you think it? Low volume! ...
    I've been told that volume isn't known for any particular currency pair, since there is absolutely no centralised exchang for Currency Market. How do you decide the volume for this market?

    Quote Originally Posted by ;
    In different words in Currency Market the pairs worth aren't only determined by simple trading of it. They are ensured in correlations and GY by way of example is a product of this multipliion of GU using UJ

    GU*UJ = GY

    What I tried to describe isn't the pip value or lots value or anything like that.

    What I tryed to describe is that, since GY is more of a commodity of a multipliion than is own trading. Is right to admit that among those multipliors are going to have fantastic impact on his worth regardless of the trading and regardless of the Pound actual value.

    And as I stated before if GU rise 10 pips and UJ drop the exact same 10 pips.... GY don't remain equal.... GY drop 9 pips.
    If this is indeed the case, how can one decide that multior is the more powerful one? As an example, in accordance with your concept, EUR/CHF = EUR/USD * USD/CHF? Can I assume that euro is the more powerful multiplior, since EUR/USD has been in an uptrend?

    Quote Originally Posted by ;
    A great example might be this. Check out Usd/Cad and look at Eur/Cad.

    Everybody understands the reason of this Usd/Cad using a multi month bearish trend...

    Price of oil increases, CAD values against the dollar since Canada is the two largest producer of oil and US imports from them.

    However EurCad is also falling? Why? Because of the correlation... Since EU can not rise faster than US/Cad drops. .
    Ok, I understand a bit more now. Both euro and cad have been appreciating against the dollar. But because cad worth is increasing faster and more powerful drops, right? Is this to it? Does the economic connections between europe and canada play no role at all?


    Quote Originally Posted by ;
    What I am trying to say here is that, in your own trading life... you'll see lots and lots of occasions EJ and GY falling with US bad news, and is better for you to distinguish or else you'll have lots of occasions in mind that the fear is set up and isn't, which may afect your own trading.



    Many ppl around here are saying, hmmm Europe and Britain depend on US market accordingly. . EJ and GY will react to that

    But again... I gave the example of US 2002 recession. EJ isn't falling in that period and negative each month by that times NFP came.

    Stocks were declining, UJ was declining.... So... with the logic around EJ have to had fallen with US problems back then.

    However, it didn't because Euro was climbing like a monster back then. So, isn't appropriate to assume that everytime we view US problems the conveys beginning to unwind
    okay, I get your point. Bad news does not necessarily mean the carry trades will probably collapse. Their directions depend on the multiplior.




    Quote Originally Posted by ;
    I hope you understand, I am sorry if I chased you in the beggining. .

    If you don't understand something I said be specific.
    It is okay, I am a newcomer, you are a pro. Your criticise made me need to learn more, and understand more. Thank you for taking time to criticise me

  7. #27
    I may be wrong about this but one that I discovered was that there was a huge gap between the analyst estimation and the number which I presumed would activate the more intense and faster fall of this pair than normal on last Friday. It was my first time to observe a gap between those two numbers.

  8. #28
    Quote Originally Posted by ;
    Hi,

    for more term key amounts and trendlines I use Monthly, Weekly, Daily charts.
    MY opinion is - if you're trading on the 5M chart, then you're asking for
    trouble.

    Particularly when beginning.

    And I did not make any assessment on EJ or UJ. So I stayed away it was unclear to me at the time. I could have sold an s/r break or retest of a broken TL that both GJ and UJ failed, but since attempts got killed I let it be.
    I did not realize until afterwards that the daily had an extremely clear bearish installment formed (double lower close interior bar =gt; bankrupt downwards)

    EURUSD was creating another interim bottom at 1.3550 with a Pin Bar or Hammer and then greater highs. So it was moving up. I use Price Action to trade, as seen in my touch.

    The significance / effect of moving averages reduces together with the timeframe. Daily is big, 4h is meh and 1h is tricky. Anything below that is pretty much leaping into the skillet.



    By looking for bits / reactions of price on the huge timeframes. Check out articles on the ribbon for examples.

    You don't trade s/r alone. You trade a price installation on s/r / regions of confluence (fibs s/r for example).

    I truly think you want to do a lot more reading and studying on some of the principles like trendlines, the significance of s/r and s/r flipping and so forth. .

    The material is out there, just takes some reading

    Take good care of
    for the 1st period of my trading career, I attempted to keep away from the market and allow a program trade for me. It did not work out.

    Recently I have read a Superb book by Dr. Brett Steenbarger. He hammered home a point that in trading nothing beats on screen time. That means, systematically introduce oneself to the market as frequently as you can, and make as many transactions as possible, it's the only way an individual can find a sense of the market. Of course, he recommended that this needs to be completed in simulation and under the supervision of an experienced mentor.

    I don't have a mentor, nor do I trade in simulation. Instead, I trade real with small lot size, and I am experimenting with many ideas, hoping to finally produce sth like a method.

    I have to say the last few weeks' screen time and real trading has genuinely given me a much better understanding of myself and the market.

    But I still dont' have a strategy yet. I have picked up bits and pieces there and here, I believe some of them include truth about trading. If only I could make the connections. I hope the wisdom will come with expertise.

    I neglected to observe this dual high lower close interior bar =gt; broke downwards installation on EJ chart. Instead I noticed a pin pub had formed on 4 Sep. however the pin's tip was broken today, this has got to be bearish, right?

  9. #29
    To begin with, I have to tell you that I'm not a pro, you are able to listen for me, only in the event that you'd like.

    My humble understanding on this particular issues is based on information that I collect from my University and sites that I consider to be reliable, based on great past fundamental calls and much more important... based on coherence, which is the fact that they don't change opinion everyday. I trust them not just by chance and as they researched it deeply.

    But nobody can assure if I'm right or wrong.

    Quote Originally Posted by ;
    I had been interested in understanding how to forecast this kind of event. And when accurate predictions are not possible, the way to recognise the signs when things like this might occur.
    Well, thats why the saying risk aversion exists. Risk aversion is a sort of behavior from investors under doubt, that prevents them from investing in a risky game even if the expected yield is in their own favor.

    Since we have a positive yield vs the risk, its nearly impossible to antecipate if the panic might get installed because, its panic from the others not from the fundamentals of the investment.

    This means that carry trades are still quite great for them, the rates favor dolar vs yen investement, but they have fear of what others might do.

    That's why hundreds of news sites and analysts tried to call a reversal almost everyday on the last year, but not got it right.

    Thus... the best way to know when conveys might be unwound again is when the panic is around. There is the VIX it is a volatility index in the stock market. Carries work better so when a VIX is combined with a sideways sort of activity, that could spell trouble.

    Being high... combined with a bullish activity is poor because a bubble can form. High volatility in the stock market is poor.

    And as I mentioned, because panic instances, the main currencies tend to act in a counter-intuitive means into the news. For instance.... EU and GU dropped hundreds of pips in days after the earliest news of the funds. This is a signal. A pair responding oposite of what was supposed. Yesterday they were bullish, right as they should.

    So this is the best way to spot potential and further carrie unwind.

    -High Volatibility in stock market largely sideways, rising and droping everyday without any good reason
    -EU and GU acting bearish on bad news from US

    This is not a must unwind ABC, this just suggests that at this periods the bad news tend to have a 100x impact and decent news almost dismissed. Which contributes to unwind if we consider probability of the next new be bad.


    Quote Originally Posted by ;
    I don't know this part nicely. You said was one of those times where maybe the carry trades out of US were falling but not the Euros and Pounds carry trades., but EUR/JPY did fall a lot. Is it a typo? Or am I?
    No. I will give you an example of what I mean. Imagine that US carries unwind to the max. EJ will fall because of currency correlation but, what I mean is that we'll reach a point when UJ has nothing left to loose but EJ is with a value of becoming a carry trade pair.

    Quite simply, yes you can consider that each and every pip we see EJ droping is a mini carry trade unwind, but in the end what I'm saying is that UJ might end up completly dry but not EJ.



    Quote Originally Posted by ;
    I have been told that volume is not known for any specific currency pair, because there's absolutely no centralised exchang for forex. How can you decide the volume with this market?
    You are correct, but everything has estimates. The traders give a general estimate and can estimate their trading volume. But the way you can know what pair is less or more traded is looking for the disperse. The tighest the disperse, more traded that pair is. (Don't confuse with spreads during major events, I mean only daily average spreads)

    Quote Originally Posted by ;
    if that is indeed true, how can one decide which multior is the more powerful one? By way of instance, according to your concept, EUR/CHF = EUR/USD * USD/CHF? Can I assume that in this case euro is the multiplior, because EUR/USD was in an uptrend?
    Its not about trends its about average volatibility of each pair as well as the characteristics of the number.

    Look at UJ, 115. Xx for instance, and search for EU 1. Xxxx

    Are you discovering that UJ is a big number 115 and EU its only 1

    If Uj drops 100 pips it's going to pass from 115 to 114 losing one entire unity... EU will still be 1 unity.

    Uj rises 1000 pips from 115 to 125 gaining 10 unities (125-115=10).... EU rises 1000 pips and it is still 1 unity 1. Xxxx

    Thus in terms of the number UJ will impact more the real value. In the case of USD CHF the volatility and numbers are very near. However, I don't exchange them to have a good opinion.

    Quote Originally Posted by ;
    ok, I know a bit more today. Equally euro and cad are appreciating against the dollar. But because cad value is growing eur/cad drops, more powerful and faster, right? Is this all to it? Does the economic connections between europe and canada play with no role in any way?
    Everything has a relationship but this is just another case of correlation. It's US that imports Oil out of Canada and US is the biggest importer in the world I believe, so they endure the most against Canada.

    However, if EU can't grow faster than USD/Cad drops so Eur/Cad falls also.

    Its similar to water at a glass. It you put your finger the water appears to grow but its the water there. It merely moved.

    Or for example... its just like a championship. The winner is the best of them he did not beat for instance, the guy who played against the guy in the semi final he played in the closing. The guy who did it believed was beaten by him.

    Complied?

    Its exactly the same... Europe is not being beated by canada but canada is becoming more faster more powerful than America compared to Europe is becoming stronger from that same america.

    So CAD wins the championship, because it was the best but he just beated USD, Euro didnt won because had less things than Cad against precisely the same USD.

    Do the same thinking for jpy pairs rather than cad.


    Quote Originally Posted by ;
    ok, I get your point. Bad news does not mean the carry trades will collapse. Their directions rely on the multiplior.
    Appearance... this might not be super important but the important thing to keep in mind in this entire discussion is that, if you want to exchange an US new on UJ you might use EY or GY to create more pips at anytime, just since I've been doing.

    Quite simply you dont need to wonder... Hmm will conveys be unwind tomorrow with this new? Should I brief? Is the panic?

    If its poor for UJ and you brief the other jpy pairs, you'll always win or you dont lose nothing, regardless of what other reasons might exist.

    That will never change until xxx/usd pairs become all beasts and Uj turned into a normal value pair.

    We're far from that.


    Good trading for another week!

  10. #30
    Thx pips4uandme, HalifaxCB, FumaFuma, and Warper for Reacting....along with the rest of the contributors.

    I learned ALOT about the fundies at play here.

    Took me some time to read all of the posts and digest the info.

    Fxj

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