Chula Chihuahua

400228—27:55—30:00 Burns & Allen

Chula Chihuahua (2:05) by Gracie Allen in Feb 1940

Agua caliente, I’ll never forget,
Agua caliente. That is where I bought a pet.
A little toy, Oh boy oh boy,
My Chihuahua he is my pride and joy.

How I looked in Chula as I was walking my Chihuahua,
I get looks from everywhere when I’m walking my Chihuahua.
All the dogs are jealous, because Stellas keep staring at my Chihuahua.
Though he is not much protection that is why the women show their affection for me.

He goes woof woof woof.
Chula Chula.
Bow wow wow.
Bonita bonita.
Woof woof woof.
Segerita, segerita.
In Mexico is why I love you.

With the moon above and with my stick, I love walking my Chihuahua.
If you’re lonely, there is only one thing to do, get a Chihuahua.

Walk with the way.
Hip hip hooray.
Chula Chihuahua. Chihuahua hua hua. Hua hua hua hua.
Chula Chihuahua. Si si.

Mamacita come to mia come to see my Chihuahua.
She come to me and likes to see me and my Chihuahua.
Dogs and their pedigree are jealous of me and my Chihuahua.
But I prefer him to a Scotty because he is just a little naughty.
I’m glad he’s not a terrier because he makes my life merrier.
He’s better than a setter, because he’s such a great go-getter.
He’s smarter than a poodle, he knows how to use his noodle.
That’s my wonderful Chihuahua.

GBP/USD

Last week, cable peaked at 1.6741, and has given up 500 points since. This should mark the beginning of the drop I promised in my earlier posts. 1.5443 is on the radar. 1.5272 should be the next stop beyond that. Afterwards, we should see even a further drop than that.

USD/CHF

A nice and predictable development happened with this pair today. I alluded to the reference points on March 7th with regards to my yearly S&R's. The pair made a move to a low of 1.0365, which is just 10 points above my 50% mark of the YP--YS1, and it also consisted of a 2-reference point drop from the peak at 1.1967. This year's distance between the reference points is 806. Multiply that by 2 and you get 1612. Subtract that from 1.1967, and it is 1.0355. All this implies that the correction could be over. It also would not be out of the question to see a futher drop to 1.0098. Regardless of the outcome, like many of the majors, berady for an explosive return to the LT trend, which in this case is UP.

EUR/USD

Things are happening about as scheduled for this pair. 6 months ago I said to look for 1.4892 to be containment for this pair. This is increasingly looking like the case. There is also strong R at 1,5433. The monthly chart is not ready, yet, but when the move back in the DOWN will be BIG. The tenken on the monthly is comfortably under the kijun. The stochastics is currently at 92/67. Add that reading to what is seen on the tenken--kijun combo, and you have the makings for something really big that is about to happen on the monthly.
Like its cousin, cable, be ready for this one!

GBP/USD

I was wrong as far as the exact turning point of cable is concerned. Still, the pair is getting ready for an explosive reversal. The weekly chart remains as the dead giveaway. Top of the cloud R is currently at 1.6826 with a slight rise in the future to 1.6949. The more favorable giveaway is that the tenken is encamped at the bottom of the cloud and on a divergent path from the kijun. The momentum is spiralling downward with sharp divergence on the stochastics. Be ready!

GBP/USD

Tommorrow, I'm looking for a bear day for this pair. This pair is at a point on the daily that has to mark containment for it or it will be on its way to 1.6887 or beyond. The weekly chart is also indicating that it is ready for a key reversal as momentum is still on the sdie of the bears.

NZD/JPY

Look for 70.95 to be containment for this pair before a strong move back in the DOWN.

CAD/JPY

Over the next few days, 85.76 should be containment. MT, the correction should not be finished. Ideally, a move to 96.51, or even 98.30 would make a real nice reversal back into the LT trend. I'll even say that 96.51 is on the radar. If it hits 98.30, don't think of staying long.

CHF/JPY

This pair gives me fits, which is answers partly why it's been about 3 years since I lasted traded it. The recent high that was created at 91.50 could be the end of the retracement. There is substantial R in that area. OTOH, it seems premature to say that. There is also no strong momentum on any of the time frames that would imply that we are ready for a rturn to the DOWN. The picture would clear up if that R area is taken out. Sights could clearly be set on 93.48, and then 95.22.
Will I trade it? Only if you see a bear with wings, and Tucker says he does not like me at the same time.

AUD/JPY

Provided we did not get a false break out of the weekly cloud, then this pair is headed higher. The top of the cloud is 79.68, but as soon as it cleared the cloud, it met up with strong R at 81.31. It seems favorable this pair is headed towards 87.54 before we see a monster reversal. Like many of the pairs, this is only a MT correction in a LT trend.
Also, if it clears 81.31,comfortably, then there is not a whole lot preventing this pair from making it the rest of the way towards the stated target. Once we're back in the DOWN 68.77 will easily be back on the radar, and it should challenge the low at 54.91

Forex mathematics

I guess we can go back to high school algebra for a little lesson on forex mathematics. All you have to do is apply the numbers if you don't think this is real, but it is just algebraic law. You can take a combination of events and make it equal the whole or one currency pair or even a combination. I'll even get into how this can be helpful in applying this to trading.
Here's one example:
EUR/AUD x GBP/EUR x AUD/USD = GBP/USD. Take the former 3 pairs, multiply them together, and they will equal the current rate on the GBP/USD. Also, the EUR/GBP is inverted, so you need to multiply the reciporcal of that pair.
Here's another:
EUR/CHF x AUD/NZD x CHF/GBP x NZD/USD = EUR/GBP x AUD/USD = EUR/USD x AUD/GBP.
Algebraically, it's simple. Using the former example as this example. The EUR's and the AUD's correspond one each in the numerator and the denominator. Therefore, they equal 1 and cancel each other out, and you are left with the GBP/USD.
This can be helpful in analyzing a trade. The cliche (IT is only a cliche, because everything in forex is interrelated.) says do not put all your eggs in one basket. As per my forecast, I have a good handle on the fact the GBP/USD is headed further DOWN, at least MT. Let's say I do not want to place just one position on the GBP/USD, but I want to spread it around. Well, if I am counting on it to go DOWN, that means the combination of the EUR/AUD, GBP/EUR, and the AUD/USD is also going DOWN, by virtue of them being equal. Therefore, I would short the EUR/AUD and the AUD/USD and go long (It's the reciporcal.) the EUR/GBP.
There are some advantages here. If I'm wrong concerning the GBP/USD, then my losses are not going to be as great, because I have it spread with 3 different pairs. One of those is bound to be a winner, while 2 would lose. If the GBP/USD is a loser, and all 3 of those pairs lose, then they are all small losers.
Conversely, if cable wins, then the 3 mentioned would be 3 small winners or 2 semi-big winners and one small loser.

GBP/AUD note

As it turned out, the pair did bounce at exactly 1.9410, and then climbed to 1.9478, and then met with strong R on the hourly chart, then splashed down for another ST leg DOWN. I did say if the 1.9410 S area doen not hold then it will get bumpy to the 1.9735 MT target area. Not only does it look bumpy, but more consolidation should prevail before anything of a corrective nature takes place. Do look for the pair to make a run to 1.9318, and possibly 1.9340 to start the week. Those points are on the ST radar. OTT, this pair is wait-and-see.
I said I am getting away from my ST projections. But then, I have no steadfast rules, either. That view on the ST on the GBP/AUD correlates perfectly with the AUD/USD. It should make a move DOWN to start the week to .8465. The obviation is not there quite as much as the view on the GBP/AUD. If I were to trade the aussie, I'd be ready to get out with some quick pips. Overall, it seems poised to make another move UP for the week. BTW, that is not a distraction from the LT view. This is still a MT correction of the LT DOWN. It is getting ready for the BIG move DOWN that will imminently happen in the near future.

Carry trades + interest

The pairs that pay interest on carry trades is anything long on the AUD or NZD (not against each other), and the GBP/JPY and the GBP/CHF in going long on those repsective repairs.
As far as the aussie and kiwi are concerned, you would go long if they are listed first, or go short if they are listed last. Another words, go long on the AUD/USD or the NZD/JPY or go short the GBP/NZD or the EUR/AUD. Those are just examples. It applies to every pair on the majors.

EUR/AUD

As long as it was not a false break into the monthly cloud, then we have 1.6430 on the radar. It could be at that point. All though it is not confirmed yet, it could be we have a sharp reversal at that point. The DOWN has been huge for this pair. There is going to be a lot of R on its way back UP. If 1.6430 does not hold up, this DOWN could get ugly, as we could head back to 1.5474. Keep in mind. That view has come from the monthly chart, so more concessions will be needed. I.e--In a month's time, it could break to 1.6200, and it not even be a false break. If it ends the month at that point, that is where the trouble begins.
At least at this point, I maintain the likely scenario is that the monthly chart will act as containment, and several weeks from now, we will begin a new UP for the pair.

GBP/USD

It is very iteresting watchnig this pair. I already gave my analysis concerning it in a previous post, but this is what is going on. Momentum on the daily suggests that it is going to take off heading UP. The problem is on the daily chart, it is running into R in the 1.6387--1.6404 area which is where the kijun and the top of the cloud is at. The other reason it i having trouble breaking through that point is because of the overriding implications on the weekly chart. Strong momentum on the weekly suggests a sharp break to the downside because of strong bearish divergence and the fact it bounced perfectly off the top of the cloud at the recent peak at 1.7042. This is why it is favorable the previous mentioned circa area should remain as containment, and even more so, 1.5358 is clearly on the radar. Another thing is that when it does break to the downside, it should get to 1.5934 support in a hurry. Once that is broken, then it should be off to the target in a quick hurry.

USD/CHF

This pair is sideways to very bearish. It seems poised to challenge .9411, but it will not get that low. Once that last run down the hill is complete, then it will be ready for a LT reversal that will take it back above the monthly cloud, which is currently 1.1500. It has not been baove the monthly cloud since June 2002. Even though it reached new lows at .9411, the pair was not ready to make its LT reversal, because the monthly chart lacked the conviction or the poise, which meant not enough momentum to carry it all the way through. Give it several weeks, but then it will be ready to go UP.
Even though I have not begun the decade's S&R's yet, I will go on a limb right now and say this pair is going to hit the decade's R2, which is going to be circa 1.5706. Don't take that exact number to the bank. I still have to do the exact numbers for it, and don't forget, that is a projection for the decade.

EUR/CHF

The weekly kijun at 1.5011 will act as support, but once that is broken, it could be a furious drop for this pair. Once that happens, it will be safely encmped under both the weekly and daily clouds along with both the kijun and tenken. The monthly is already bearish. 1.5192 should act as resistance during the interim period.

Comment concerning GBP/AUD

As mentioned in the previous post concerning the ST outlook, the pair was supposed to drop to 1.9410. It actually hit 1.9411. On the way back up, the pair may have a hard time around 1.9505Once it gets around that, it should be smooth sailing towards 1.9735.

CHF/JPY

Anyday it is going to happen. It will be a strong move DOWN that will see the 84.00 level challenged.

EUR/JPY

Ideally, I'd like to see this pair spike up to 146.67, then it will be an excellent short entry. OTT, there is no definite ascertainment for this pair.

AUD/NZD

This pair has only been undergoing a minor recovery of late. It has currently been camping at R which is the Daily kijun and weekly tenken at 1.2413. It is possible to see a move to the weekly kijun at 1.2477. If price makes it past that point, then look for the bottom of the daily kumo at 1.2537. That is the circa area for a potential explosive reversal.

USD/JPY and August

The USD/JPY was true to form last month. In 11 of the last 13 Augusts, the pair had a loosing month. The exceptions are in '06 and '08. In '08, it was a virtual breakeven month for it.

GBP/AUD

This pair could be getting ready for a MT correction, but probably will not be ready this week. For this week, 1.9620 and 1.9735 will serve as formiddable resistances. By next week, it cold be ready for a climb towards 2.0094. A strong finish near those 2 R's would be needed to confirn this view.
Here's something shorter term. Look for a move to 1.9410. That would also need to be containment or the road could get bumpy towards at least the initial target.

Another GBP/NZD comment

My initial projection of 2.4047 was hit on the GBP/NZD shortly before the London open. The 2nd one at 2.3964 was not. MT, this is taking on the appearance as a very strong move UP towards my initial projection of 2.4557. For now, it is viewed as only a MT correction and not a LT reversal.