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Australian Banks - Oh boy! Print
Written by Site admin   

It's gradually dawning on the Reserve Bank of Australia that they have a problem.

The big four Aussie banks are holding around 85% percent of all Aussie home mortages.

As worldwide interest rates were creeping up throughout 2018, repayment costs have increased at the same time as housing prices are falling back. No great problem for those who bought property a decade and more ago.

The problem is for those who invested in the last few years. Very soon a good many mortgages will be in negative equity. If, or when, mortgage defaults increase, bank capitalisations will tumble and it could become a spiral, starting slowly and then accelerating across the real estate, mortgage and banking sectors with the predictable effect on the Australian dollar.

 For a full assesment of the bind Ausralian banks are in, click and listen to this video from Chris at Casey Resaearch and Martin North of Digital Finance Analytics.

 
An excellent start to the New Year Print
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To say that confusion and division reign is something of an understatement!

Dare I mention the 'B' word? Very definitely not in polite company. It has the potential to reveal the rawest of emotional responses. Trump? Again, avoid anything other than the consensus view that he is most unlike any POTUS we have known before. Privately, we can perhaps attempt to debate with ourselves, if we have open minds, but these seem to be in short supply.

The markets are reflecting the mood with pundits taking their positions. Strong Dollar or weak Dollar? Collapsing stock market or no need to panic? Interest rates too high in the US or must they rise in the EU?

Certainty

The only thing we can be sure about is that the political and economic landscape has entered what may be a long period of major change. The certainty is most likely, ongoing uncertainty. Open minds are needed now more than ever.

A great start to the New Year

Despite the stock market tumble in December, Gold and Silver took off and stock markets are recovering for a great January so far. The US Dollar has now dropped back from the brink of plunging China into crisis. So, perhaps, armageddon and the 'everything' collapse will have to wait a while.

Consistency

TMEST also had a good start to the year. The chart of one of our favourite currency pairs, the CADCHF gave us a quick 126 pips and there could be more to come. It's not just currencies of course, we have also taken profits from the Gold and WTi Crude oil trend reversals.

This is one of TMEST's most consistent reversal patterns. The horizontal red lines picking out the entry and exit. The previous down trend ended with a break out, pull back and higher low, or BOPBHL pattern.

TMEST is a part of 'The KISS system of trading for life' that I will be presenting at the RTCT online summit, in February and at the Forex Show on Friday 22nd. No charge, sign up here.

 
Gold Silver Ratio Print
Written by Site admin   
Wednesday, 19 December 2018 18:15

Today is the Day & The Case for the Gold Silver Ratio

 

Will Christmas come early for the Donald? Will he get his demand of lower interest rates from Father Christmas Powell? Today is the day that could see a major reversal, or just the same old, same old.

A quick re-cap. The fed have made a couple of 0.25%, or 25 basis point, increases to the Fed funds interest rate this year. Signalled by the Fed, the market is fully expecting Wednesday the 19th December will bring the rate to 2.5%.

But. At his last announcement Fed chair Jerome Powell talked about rates which were just below the Neutral rate. Markets seem to have taken this to mean that today's rate increase, if it happens, will bring it to neutral, so no more rate increase will be signalled into 2019. Add in the Donald's insistence that any rate hike now is insane, we wait to see if it actually happens.

Either way, US dollar traders are in for some excitement and that just might include the precious metals and stock markets.

The case for Gold

This time last year all eyes were on BitCoin and the other 1400 or so Crypto's. These were the new Gold the hype merchants told us. Yes, the similarities were there all right. Gold has rocketed higher several times in a buyers frenzy to get in on the act. What makes it move?

Read more...
 
What's the Yield Curve Invertion? Print
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What's meant by the Inverting Yield Curve?

 

The blogosphere is full of the impending collapse of the Dow with some pundits talking of 14,000 in 2019, a modest 10,000 points lower. Right or wrong, the fuel that has kept stock markets forever bubbling, an endless wall of money and a strong economy, will eventually end. Is the yield curve telling us the economy is about to fall of a cliff?

Normality

Government and corporate bonds are issued with different maturities. The standard US bond is the 30 year, but there are many different maturities, typically 3, 5 and 10 year, etc. Some run for just a few months to maturity, whilst some whacky corporate bonds have been issued with maturities way out at 100 years!

Read more...
 
The UK's Crown Jewel Print
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The UK's Crown Jewel

The Jewel in the UK's crown is, and has been for the last four+ decades, the City of London. City bankers and banking can do no wrong, as we discovered in 2007/8. Banking and finance delivering the largest tax yield of any sector of British industry.

The City of London is a dominant centre in world and European finance. If Europe really wanted to cause a problem for the UK leaving the club of 27, quashing a deal on financial cross border services is where they could do most damage.

Last Thursday a rumour gathered momentum.

Leaks dripped out from the 'secret' meetings with Brussels. The City could continue to operate as before across the Eurozone. It was later denied, of course, but the rumour was enough to collapse the EURGBP, reversing two weeks of Euro gains in just four days.

Last Thursday was the time to reverse the a-b-c trade and ride the EURGBP down for another 150+ pips.

 
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From the blog

It's not Rocket Science

  Just some detective work as a discretionary trader. It's not slavishly following a 'cast in stone' algorithmic style, the type of system that only considers a never changing set of criteria that is much better traded by a computer than a human.

Detective work takes a look at the chart to find those clues that just might build a case to put on a trade.

One of our recent Traders Class trades was the New Zealand vs Japanese Yen. The evidence started with a classical charting pattern, a Double Top.

Read more...

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