Yellen The Chinese Puppet – Inter Market Analysis

Cartoon of the Day: Yellen & Screamin' - Yellen03.20.2014

Risk On

  • Dovish Yellen statement – no rate hike
  • China stocks higher though the rest of Asia mixed post FOMC
  • VIX sell off – gap filled and rebounded

Risk Off

  • FOMC statement clearly state concern about global growth, lack of inflation, China dependant
  • Concern on higher uncertainty on global growth remains – Fed need timing to assess employment, inflation and now China
  • Nikkei falls on – Fed concern spark growth worries
  • Greece Sunday election
  • Gold and Yen stronger with Euro – safe haven demand – Dollar expected to go lower in the short term
No hike has sent the dollar lower, VIX found support after gap fill, Yellen raised another notch regarding global growth uncertainty (how and when this will change no one knows) but it seems to discount out any chance of a rate hike in 2015. We advise to let the dust settle first – big money will be at work – dollar weakness in the short term – equities to retest low

Extra Stimulus has yet to kick in but wary of the build up to Santa rally

Multi Time Frame Analysis

USD index

Daily

4 hour

Weaker seasonality will be at play on the dollar index until the end of 2015. With a dovish Janet Yellen and no clear indication of a rate hike (China dependant) there is risk that we will not have any rate hike in 2015 at all. The dollar index may continue to ping pong within the ascending triangle pattern but we will not rule out a breach below (Yellen sound her concern about a strong dollar). Overall, this is a game changer and looks like the medium term scenario favour a lower dollar until rate hike fever comes back.

German Bund

Daily

4 hour

Bund was heavily bid 2 minutes before the FOMC release a no rate hike decision and it has not look back. Either it was a big bet that went right or it was just pure nonsense that there is a leak. The rush higher found resistance and the 4 hour price action suggest a lower high and higher low – prices converging and a break out is due soon.

Eur/Usd

Daily

4 hour

Price broke out of the bullish wedge after it found support at the 200 ma and with the FOMC statement that see the dollar lower, Euro spiked. The rest of its moving averages are rising higher, short term outlook remains a stronger Euro as traders look to rewind their expectation of a strong dollar. Resistance coming up and expect a pullback that could remain bought the dip mode.

German Dax

Daily

4 hour

Dax continue to range trade within the ascending bear flag. Either we find support at the lower end of 10080 for a bounce – otherwise we cannot rule out a retest lower. With strong Euro that has yet met resistance, this is a potential for lower Dax in the short term. Weaker dollar = stronger euro = stronger bunds = weaker Dax

Gold

Daily

4 hour

That daily chart inside day played out to perfection a reversal zone – also in line with the fake break lower that find no new seller at 1098, trapped bears and short covering has pushed prices much higher. The break of 1120 also gives much hope for higher prices and we have a close above 20 daily ma – which is an additional bonus to hold long going into the weekend. Any pullback is a buying opportunity for now.

Silver

Daily

4 hour

Well we have that explosive rally and the last few days of retesting 20 ma and fail was part of a scheme to trap bears. The fake break out of what look like a bear flag has thrown off many weak longs and the white metal stormed pass 20 ma has not allow buyers to step right back in on pullback. A retest of 20 ma remains a buy here and the white metal could head to 16.00 levels.

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