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Jay Norris
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Jay Norris is a 20-year CBOT floor veteran, author of the Best Seller "The Secret to Trading Forex, Futures, and ETFs: Risk Tolerance Threshold Theory", "Mastering the Currency Market", McGraw-Hill, 2009, and "Mastering Trade Selection and Management", McGraw-Hill,... More
My company:
Trading University
My blog:
Seeking Alpha
My book:
The Secret to Trading Forex, Futures, and ETF's: Risk Tolerance Threshold
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  • Mid-Week Forex & Futures Forecast For Wednesday, 1-23-13

    EURUSD continues its holding pattern between 1.3260 and 1.3400. What is most impressive about this pair is how it has only retraced the Jan 10 ECB Press Conference rally by barely 1/3rd. Such a shallow retracement, particularly in the face of a decidedly weaker GBPUSD last week, is definitely a sign of strength, as is Tuesday's much stronger than expected ZEW Economic Sentiment readings. It has been some time since German or European data has surprised on the upside. We still like the upside in Euro with a near-term target of 1.3500. The Risk Tolerance Threshold Ratio for EURUSD remains decidedly bullish - see Figure 1.


    Figure 1. EURUSD Threshold Ratio

    AUDUSD came to life on Tuesday after having rested up the previous week. The Aussie continues its repetitive pattern of a rally followed by sideways consolidation on its weekly, daily and 4-hour charts. This sturdy pattern often portends an upside break-out which we see as more likely given the absence of no pressing negative news on the macro front. While the Australian economy is not growing as much as the RBA would like higher interest rates and great demographics insure that sovereign funds and other institutions will continue to accumulate Aussie debt. The Risk Tolerance Threshold Ratio for AUDUSD remains solidly bullish.


    Figure 2. AUDUSD Threshold Ratio

    To see Jay Norris highlight trade set-ups and signals in live markets go to: Live Market Analysis

    Trading involves risk of loss and is not suitable for all investors

    Jan 22 6:09 PM | Link | Comment!
  • Gold Shifts Back Bullish

    Whatever it was that had been troubling gold prices in the 4th quarter of 2012 looks to have passed as gold shifted its longer-term micro pattern higher overnight to now shift the majority of its tradeable patterns higher - see Figure 1. Support from the secondary pattern just above 1620 held in early January and after a struggle here at the 1690 level gold has now given us 2 closes above that level on the 4-hour chart. Just because resistance at 1690 is breaking down does not mean we run out and buy gold, but it does make dip buying more attractive.


    Figure 1. Risk Tolerance Threshold Ratio for Gold

    We see resistance from the powerful Day to Day Pattern just above 1710 and again at 1740.

    The bottom line is we have the green light for buying dips and otherwise focusing on buy set-ups and signals in Gold.

    Subscribe to receive free e-mailed market updates at: Market Analysis by Trading-U.com

    Trading involves risk of loss and is not suitable for all investors!

    Jan 22 6:49 AM | Link | Comment!
  • Could GBPUSD Lead The Majors Lower?

    One of the smartest men I know, and a great trader and investor to boot, Dr. Bill Williams once told me that the smartest thing you could tell yourself was "I don't know". Implied in that sage advice is the equally valuable "never pretend to understand something you don't". I've been thinking of Bill's advice recently when considering the British Pound.

    We have been focused on GBPUSD recently because the majority of its tradeable patterns have been lower since January 9th -- see Figure 1 -- and it has been behaving very nicely from a fractal perspective - each counter-trend rally is scaled nicely to the last on the intraday charts and this pattern continues to repeat itself.

    While the pound has been sloping lower these past 7 trading days and took out the November low, its trip down has been a solo run. Both the Euro and the Aussie have been holding onto their January gains - we call this divergent behavior "negative interference". We know from experience that the largest moves in currencies occur when all the markets are pulling together, i.e.: the markets are correlated - we call this behavior positive interference. So the question is: is GBPUSD a leader on the way down, and does this weakness portend coming weakness for the majors? The correct answer for me is: "I don't know".


    Figure 1. Risk Tolerance Threshold Ratio in GBPUSD

    The price action in the pound has been great from our perspective. While we could see plainly that the Pound's run lower in the face of a steady Euro and Aussie was divergent behavior, that did not stop us from taking sell signals. When faced with divergence, or negative interference, we still take the trade, but initially manage it as a "counter-trend" trade, meaning we have a smaller profit target on the first portion of the position, and are quicker to go with a break-even stop. If the market cooperates and then accelerates in our direction, as the pound did, we switch to trending trade management on the balance of the position. But the question remains does the pounds recent weakness, which is divergent to the other majors, tell us anything about the overall market going forward? Yes it does, just as we initially treated sell signals in the pound as counter-trend trades because of the negative interference of the other majors, we also need to treat buy signals in the Euro and Aussie as counter-trend trades because of the interference created by the weaker pound.

    From a macro perspective we still see the alpha market being USDJPY, albeit vying with last years alpha, the S&P 500. Should we see the major currencies break away from the alphas, as GBPUSD appears to have, it would not affect whether or not we take trades, but will affect the management of the trade.

    To see Jay Norris highlight trade set-ups and signals in live markets for free go to: Live Market Analysis.

    Jan 21 3:53 PM | Link | 2 Comments
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