The Fed Funds rate at 4.33 and 31-year monthly average at 2.6303 reveals 170 missing points. The nearest average to 4.33 on speculation is the 50-year monthly average. DXY at 96.00’s is located at the 50-year monthly average.
WTI written June 2021 at 68.00 was located at the 23-year monthly average. WTI then traded to 130.00’s or the 50-year monthly average.
WTI was located dead center to trade the 25 to 50-year monthly average or drop substantially to break monthly averages at the 14, 10, and 5 years. WTI decided to follow DXY and Fed Interest rates higher on a pure speculative rampage.
WTI began its rise from 29.00’s in 2016 and 6 years later achieved 130.00’s at the 50-year monthly average.
Stock markets, Gold and Silver, yields are unaffected traditionally by such lofty levels at 50-year monthly averages; however, speculation exists about Agricultural commodities and the current location for Corn and Wheat, particularly as the most vital to world commodities.
Current markets for all financial instruments trade at extraordinary and rarely seen levels and crucial economic and political junctures.
While Inflation and interest rates trade excessively, political systems worldwide are moving towards authoritarianism. The political system must rectify for better economic times, or the economic system will stagnate for years.
USD/JPY and the Lost Price
Ass I term this phenomenon, the lost price materializes every 2 – 3 years. A lost price may go missing up to 800 and 1000 pips for currencies and 500 to 700 points for stock markets.
The last time the lost price traded perfectly was in 2020 and 2018. And now 2022 and the USD/JPY and JPY cross-pair examples were demonstrated.
USD/JPY to achieve another Lost Price, maybe in 2024. Never dismiss EM currencies as this avenue to lost prices is a treasure of easy and profitable trades due to far wider ranges than our 28 currency pairs usually traded.
The Week Ahead
Not only did USD/JPY achieve +700 pips on the downside, but 134.00’s concluded yesterday for an additional +400 pips from 130.00’s and 1100-ish total pips.
USD/JPY ranges from 125.64 to 136.39 and 136.91. For USD/JPY to go missing again as a Lost Price, count 600 pips from 136.00s to factor 142.00s. Shorts would begin at 142.00’s and higher.
USD/JPY’s target remains at 129.24. USD/JPY is neutral at 133.82. The above top price and overbought is 135.34, ranging from 133.82 to 135.34. Below 133.82 to deeply oversold at 132.30 or the range from 132.30 – 133.82. A short strategy is the best move.
EUR/USD trades from 1.0390 and 1.0408 to 1.0847. Higher must break 1.0689. Above 1.0847 targets 1.1001. EUR/USD at 1.0710 is deeply overbought and targets 1.0609 and then 1.0509. No dramatic moves are expected for EUR/USD except for range trade.
GBP/AUD traded from the top at 1.8200s to 1.7700s as written. To move significantly higher, GBP/AUD must break 1.7988, 1.8011, 1.8082, and 1.8152. Longs begin at 1.7792 and 1.7755.
GBP/AUD above 1.7825 targets easily 1.7927 and caution at 1.7988. Below 1.7825 targets 1.7700’s and long. As the comprehensive range function is severely underperforming, nothing special exists in GBP/AUD as a wide-range currency pair.
The 500 pip move for GBP/AUD was nothing compared to 1000 pips as a regular trade. GBP/AUD lacks the ability for a 1000 pip trade as the new 2016 currency market arrangements limited GBP/AUD’s comprehensive range status.
GBP/USD trades from 1.1987 and 1.1959 to 1.2535. The longer-term target is located at 1.2324. Both 1.1987 and 1.1959 are dropping lines, and inform GBP/USD lower is correcting from 1.2400 highs. GBP/USD below 1.1959 becomes lost, yet targets are at 1.1916 and 1.1873. The following week's targets are located at 1.2132. Above 1.2132 becomes overbought.
AUD vital line is located at 0.6710 while AUD targets 0.6779 or 0.6641. Last week, the AUD/USD vital line was 0.6712, and AUD/USD closed at 0.6711.
NZD trades safely above 0.6212. Overbought begins at 0.6362.
GBP/JPY trades from 156.35 to 163.25 and 163.54. Targets are located at 159.57, 159.25, and 157.59. GBP/JPY trades deeply oversold, and targets next week are found at 161.67 and 162.60.
Watch EUR/JPY higher at 142.31 while CAD/JPY targets easily 99.40 then 100.14. The big 3 JPY cross pairs to trade are GBP/JPY, EUR/JPY, and CAD/JPY.
The same story as the last report to overbought at 1.5900’s and oversold achieves below 1.5812. Tops for EUR/NZD and overbought at 1.6900s are the same story as last week. GBP/NZD at 1.9068 trades massive oversold and targets 1.9129 quickly. Much divergence exists between oversold GBP/NZD and neutral EUR/NZD.