Currency market: USD/JPY and Fed funds long term averages

USD/JPY weekly trade as posted Tuesday: Short 114.22 and 114.37 to target 113.46 then 113.31.

Highs 113.94, lows 113.26 and +57 Pips.

Sad sad week for USD/JPY. Note the past 4 weeks to posted USD/JPY trades. Targets were the exact same in the 113.31 vicinity. Only difference was entries. The best was 2 weeks ago when USD/JPY missed entry by 95 pips to 115.00's as the opportunity existed to demonstrate the repair trade and profit from many extra pips.

Rare day to miss entry so far away. 20 and 30 ish pips maybe but never 95. Then comes trade target to target. USD/JPY achieved a target at 113.31. The course of action is immediately traded long at 113.31 for more extra pips. USD/JPY from 113.26 traded to 113.60.

Never get greedy on the quick reverse because, with Brian Twomey trades, traders will earn many many pips. Strategy is grab extra profit pips and exit.

USD/JPY on 4 trades this month profited 500 ish pips. The past 2 monthly candles ranged from 115.52 to 112.60 for 292 pips. The 500 pips profit derived from a range of 292 pips. Only USD/JPY trades were short.

If we traded long to target then reversed, profits were much higher. Profits were earned by trading 2 times the range. Only 1 trade required add 1 lot.

Weekly trades for the past 4 weeks included day trades for extra profit pips. Last note, nothing changed since the 2012 target trades except to adjust the trade methodology to trade easier by simpler calculations, to trade more profitably and never use charts, indicators or stops. A trade still begins at entry and ends at target. The word target to trading proliferated among traders.

Fed funds

Fed Funds long term averages were last posted in August 2016 and March 2017. The market question in 2017 was the Neutral rate of interest. Knut Wicksell from Sweden and the Stockholm School of Economics in the 1890s offered the Neutral rate of interest in the must-read book Interest and Prices.

Wicksell suggested then subtracting the long-term interest rate from Inflation to determine if an economy was over or underperforming and where was a determination to the proper level of the interest rate.

The Neutral rate of interest in August 2016 from the 20-year monthly average was 1.64 and 1.07 in March 2017. Today's Neutral rate from the 20-year monthly average is negative 4.919, from the 25-year monthly average at negative 4.1424 and 30-year monthly average at negative 3.7595. If Inflation was lower then the Neutral would record higher.

GDP last reported +2.1% and 1.9% for Q4 2016 and around 2.3% in 2017. Besides a few good quarters from 2016, GDP hasn't changed. GDP in 2016 and in billions began at 18,425.30 and rose today to 23,187.04. The economy in 5 years added 4761.74 billion. Our political and economic leaders failed the United States miserably.

The Fed's course of action long ago was raise and today, the Fed must raise to not only drop Inflation but to prevent an economic depression. A severe United States downturn would add contagion effects to many world economies.

In March 2017, the Fed raised to 0.66 and 0.66 was located from the 10 to 12 year monthly averages from 0.69 to 1.32. Today's 10 to 12 year monthly averages are located at 0.6315 to 0.5493. The 15 year in 2017 was 1.34 Vs today at 0.9132.

Normality for market prices and interest rates is trade within 1 to 10 year monthly averages. Fed Funds at 0.66 was not only overbought but raise at the 10 to 12-year average was an insane mistake from overbought averages and the Neutral Rate.

WTI for example written months ago traded at '70s and '80s at the 23-year monthly average. Not only was the WTI price high from averages alone and longs impossible but downside shorts gained more downside speed than upside prices.

Fed Funds monthly averages from 1 to 9 years in 2017 ranged from 0.16 to 0.41 while today's 1 to 9 year is located from 0.0816 to 0.6862 however the 4 and 5 year monthly averages are located at 1.1122 and 1.0901. From 1.1122 minus 0.08 then equates to 1.0306 and 1.0085 from 1.0901.

Medians from 1 to 9 years trading in 2017 from 0.12 to 0.39 and today 0.08 to 1.46. Overbought at 0.66 in 2017 included overbought to averages and Medians.

A Median average is the same principle as the Fed speaks to central tendency. Central tendency in Fed Statements is the same as a Median Average. Fed Dot plots are 5-year Median averages and an insult to good intelligence as simple averages reveal a far different story.

The 10 year average in 2017 was 1.02 and today 0.6315. Averages from 12 to 25 years in 2017 ranged from 1.32 to 2.67. Today, from 0.51 to 2.0774.

The 20 year average in 2016 was 2.44 and 2.24 in 2017. Today's 20-year average is located at 1.301.

Overbought targets in 2017 were 0.71 and 0.26. Fed Funds dropped to 0.08.

Fed Funds today trades from a normalized 1 to 3 year monthly averages at 0.0816 to 1.1122 at the 4 years and 1.09 at the 5 years. Fed Fund's position is correct and perfect for a raise especially when Fed funds is not oversold. Fed Funds oversold begins at the 26 years monthly average to the 30 years.

Targets for averages 26 to 30 year are located at 0.0275, 0.0948, 0.17, 0.2274 and 0.2908.

A 25 point raise to 0.50 places Fed Funds averages from 0.2291 to 1.0901 and 1.1122. Fed funds would trade daily from 0.08 +12 to 0.20. Raise to 0.75 places Fed Funds within the same averages and Fed Funds daily trading then trades at 0.32.

Overall difference to Fed Funds averages in 5 and 6 years from 2016 and 2017 is all averages severely dropped and due from non-movements. Without a raise, Fed Funds averages will continue to drop. Markets remain dead and done to raise or no raise.

The 10 year minus 2 = 0.4024 while 10 minus 5 is negative 0.4586. The 20 minus 10 = 0.6695.