The day trade: Supports, resistance, entries and targets
|As daily interest rates change, supports, resistance, entries and targets must adjust to align not only to day trades but to follow, know and maintain trades with central banks and sophisticated traders programmed to interest rate trade systems. View the pre 2016 ECB Fix at 8:30 am to understand how fast and sophisticated trade systems moved prices under perfect price knowledge.
The Fed Funds rate has been locked into 0.06 for the past 6 trade days then 0.05 to 0.07. At 0.06 to market prices is neutral t0 0.05 and 0.07. This means the best market moves will be seen at 0.05 and 0.07 Fed Funds.
As a 2000 year old instrument, the currency price is the oldest financial instrument on the planet and invented before interest rates, stocks and commodities. The individual currency per nation transformed from Gold, silver and metals then given a name and price.
As stocks, interest rates and commodities materialized to form markets, those prices were based on the currency price. The currency price per nation then became a prediction to all market prices within each nation and remains so to this very day. The difference is a decimal point.
The day trade is by far the most complicated trade to master and perfect.
From the article Fed Funds 0.05 to 0.07 last week, here's EUR/USD downside supports since May 4.
Supports today run 55 and 39 pips
Yesterday 47 vs 39 pips
May 7 = 55 and 39 pips
May 6 = 57 and 42 pips.
May 5 = 56 and 40 pips.
Here's your lessons direct from central banks.
Downside supports remain usually for 24 hours then an adjustment is required. A big price move may require an additional price adjustment.
Upside and downside prices are factored completely different. Each is a separate computation.
Daily NZD/USD upside normally contains within its price path an exchange rate ending in 5. Today's NZD/USD upside target is located at 0.7270 and 0.7265. Downside prices lack a 5 number due to separate calculations.
Ranges hardly ever change but its the structure within the day trade price path that changes. Now calculations are done by hand.
AUD/USD for example, subtract 19 pips and a support price is known. EUR/JPY subtract 33 pips. Everyday is the same old thing to support calculations.
A central bank may issue the same currency price under the same set of interest rates which means no changes to supports. The same price issued under a new set of interest rates requires re calculation to know new supports. EUR/USD is the example.
Sometimes supports are close together and other days, supports are far and wide. GBP/JPY is the best example.
Entries and targets change with central bank prices. Currently, at least 15 central bank price changes exist. This doesn't include the individual central bank price for those central banks kind enough to offer a price. Not all central banks are transparent.
As new prices are offered by central banks, new calculations are required for entries and targets. Previous entries and targets become completely irrelevant.
Today's EUR/USD contains only 5 values pertinent to the day trade as follows: 1.2067, 1.2073, 1.2089, 1.2158 and 1.2189. All other values are minor and for the most part, irrelevant.
When 10:am EST hits then a total re calculation is required for new entries and targets. Note the times prices move or not move.
Yields are classified as an interest rate but holds no value to the day trade. USD/JPY up and yields up maybe a true statement but which yields are actually correlated as USD/JPY price drivers. Not all yields are the same but rather completely different and operate as separate entities to the currency price.
Yields are seen as traded instruments whie interest rates are unseen and not known.
Forward Exchange rates for the day trade are factored by FX Points as the differential between two nation interest rates. Currently, USD/CAD at 0.1800 and Fed Funds at 0.06 factors are Forward exchange rates to 0.0013 and 0.0012 pips by Spot + FX Points divide by 1000.
A good assessment is to impart exchange rate intervals are running today at 12 and 13 pips.
Only 5 points are vital to today's USD/CAD: 1.2047, 1.2053, 1.2069, 1.2138 and 1.2169.
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