Inside the Currency Market: Cross Pair Matrices and Evaluation

   The common theme for currency prices over the past 6 years are two points. The first intonation  occurred about 52 months ago, February 2010 for all pairs and the second inflection point occurred 18 months ago, December 2012. Points mean not only significant breaks occurred but relationships changed between USD and non USD pairs to its cross pair counterparts. "About 52 months ago" means most pairs I viewed, 35 to be exact, saw significant breaks while a few pairs were in catch up phase but were firmly on the way to their breaks. 

  For the EUR 52 months ago, the break at 1.3000, 1.3300 allowed the EURO to travel to its 1.1881 lows. The import is both point breaks above were responsible for the recent move to 1.3980's and is again now vital to the break below to see EUR/USD prices travel further down. The actual levels today are 1.3491 and 1.3335. 

  GBP/USD. The break above at 1.5463 was vital for continued gains but the level at 1.5980 -1.6000 sealed GBP/USD's fate that offered massive support and allowed GBP to continue its trend. The level at 1.6000 is still vital today as a significant point but GBP/USD now finds itself stuck between 1.6677 - 1.7143 range. 

                                                     Cross Pairs

  Significant changes occurred among cross pairs. The Japanese own all cross pairs except for a shared relationship between AUD/JPY and NZD/JPY and the reason for that shared relationship is AUD and NZD pairs were erroneously hit hard when the crisis occurred. Both weren't responsible but both suffered the effects. The aftermath is AUD and NZD still own their cross pairs and that includes NZD/CAD, AUD/CAD, NZD/CHF, AUD/CHF, AUD/CAD will see significant changes in the months and years ahead because it must lose its AUD connection and that is occurring as I write. Any wonder the recent statements by the BOJ that they were happy with USD/JPY present levels. 

  Some cross pairs were hit so hard, they lost control and connections to counterpart pairs: EUR/NZD, EUR/AUD, GBP/NZD, GBP/AUD. All are now not just vastly oversold but they are years oversold, EUR/NZD is by far the most oversold pair among my 35 pairs I viewed. Next comes GBP/AUD followed by GBP/NZD and EUR/AUD. 

  EUR/GBP and AUD/NZD are two more "floater pairs" that holds no relationship nor any explanation to its price movements. Some pairs move in sympathy "just because" and that fits EUR/GBP and AUD/NZD. A long time friend with 41 straight years in this business tells me both hold value in pricing as export and imports. 

 USD/ZAR and CAD/ZAR still retain its Risk off, Rsk on determination because that relationship is solid. 

 The import to the cross pair scenario is cross pairs since the crisis retains a massive massive Risk off posture. Anybody now questions the SNB's next possible move due to the ECB's rate decrease is not following CHF pairs. The SNB are quite happy with their cross pairs since they own them therefore USD/CHF prices and tight ranges over the last few years are quite satisfying to the SNB. 

 No mention of CAD? CAD is a lost soul in this mix and we may very well see USD/CAD far far higher. Its a pure ugly situation for CAD no matter how its viewed. 

  If JPY cross pairs are heading far higher as I so far believe and EUR/NZD, GBP/NZD, EUR/AUD, GBP/AUD also head higher then our world is still heading towards Risk off prices for a long time in the future. 

  Brian Twomey, Inside the Currency Market, btwomey.com

Views: 671

Comment by Brian Twomey on June 15, 2014 at 12:44am

EUR/USD  Extreme price buy points 1.3473, 1.3451, 1.3480, Above 1.3635, 1.3714, 1.3715. Levels 1.3597, 1.3609, 1.3639, 1.3640, 1.3698,  Crucial levels below 1.3491, 1.3482, 1.3335, 1.3372. Oversold, must break 1.3491 or we risk bounce, 1.3654 should contain

Comment by Brian Twomey on June 15, 2014 at 1:02am

GBP/CAD Shorts below 1.8396, never fall in love with this pair, target on break 1.8283, failed break target 1.8510, NZD/CHF nicely overbought, target 0.7678, 0.7689 from 0.7792, watch closely 0.7794, break here, we go higher longer term. GBP/CHF Big break at 1.5156, must break 1.5251 below, overbought all around, targets 1.5089, 1.5004, More on the way

Comment by nader on June 15, 2014 at 8:42am
Thanks for your insight
Comment by Kiramat on June 15, 2014 at 12:00pm

Hi Sir, Wht about GU

Comment by Brian Twomey on June 15, 2014 at 12:21pm

GBP/USD is highly oversold long term, overbought short term, same old story. Short intraday targets: 1.6850, 1.6847, Need breaks at 1.6954, 1.6885, , Above 1.6987, 1.7072, 1.7172, 1.7143, 1.7166, 1.7173, 1.7244, 1.7248, all big breaks,  Far below 1.6677, 1.6653, 1.6654, 1.6595, Short with caution until big breaks occur, Long term targets are 1.8400's, If EU breaks 1.3491 and 1.3480's, GU should follow short

Comment by Brian Twomey on June 16, 2014 at 2:17am

GBP/USD Update. Focus on 1.6677 is correct as a crucial break point but incorrect to view in the  averages. From this average, 1.8400's is the target. The 1.6677 average is a long term average and severely out of line. What;s driving GBP/USD's price are shorter averages from 1383 - 1500 days with base prices located at 1.5895, 1.5877, 1.5845. All are overbought particularly the average at 1.5895 and all call for targets back to 1.6500 and 1.6400's. Extreme targets and I mean extreme regarding these averages are 1.7410, 1.7945, 1.8181. The 1.6500 target coincides with my last post regarding price should be back to the beginning range at 1.6555. What is interesting regarding the 1.6555 range is averages dating back to 1998, 1999 and 2000 all contain averages at 1.6550's. Should this set of average ever break, Look out below GBP

 Current prices are approaching something like a 2000 day average at 1.7041 and maybe the perfect sell point. Intraday, we're overbought and as price travels higher, we remain that much more overbought. The wild card is the 1.7144, 1.7142 levels. If those levels break, now we have targets at 1.8456 and 1.8872, the pre crisis high. I would sell rallies, cautious shorts all the way until significant breaks occur

Comment by Brian Twomey on June 16, 2014 at 11:37am

new common pricing theme is the amount of pairs operating where longer term averages crossed shorter. This situation explains our no volatility, no price movement, no trends or weak at best conundrum because many of our pairs are operating at lower bases and don't have ability to move yet longer term averages are holding as support, GBP/USD qualifies, EUR/JPY, GBP/JPY, CHF/JPY is just fine and should be the traded JPY cross pair. EUR/USD is fine, AUD/CAD is working on all cylinders, AUD/USD is wacked, NZD/USD is fine, USD/CAD is wacked out. This story fits in line with my above words, CHF pairs and cross are fine, USD/JPY is fine but its cross pairs are not. EUR/GBP and AUD/NZD is fine, its their counterparts that are wacked. We have a fragile situation on our hands. If certain pairs like GBP/USD, ever lose its support, we will see selloffs quicker than we know what hit us. 

Comment by Brian Twomey on June 17, 2014 at 11:33am

EUR/NZD Dor or Die 1.5648, AUD/USD 0.9320, USD/JPY 102.12, 102.21, 

Comment by Brian Twomey on June 17, 2014 at 11:48am

USD/CAD Do or Die 1.0869, 1.0891, 1.0986, CAD screams range break. GBP/CHF overbought intraday, 1.5154 Do or Die, GBP/CAD 1.8393, GBP/NZD 1.9552, 1.9615

Comment by Kiramat on June 17, 2014 at 11:49am

Hi sir wht abt GU?

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