US Bonds = Source of Currency Trends?
THE SOURCE OF MAJOR CURRENCY TRENDS
As I often advocate here, one should stand back and assess the sources of trends and their direction.
One of the ways that it is easy to become confused is by looking at a single market ( the Japanese Yen index for example) or even a single group (like the Currencies, for example) too intently.
One should, instead, perhaps, ask some fundamental questions like, “What are we measuring in this market or group”?
In the case of currency indexes overall, the answer is:
We’re measuring MONEY supply & valuation.
The next question is:
“WHAT IS THE SOURCE OF THIS MONEY”?
The surprising answer that I propose is shown on the chart below for US BONDS . . .
Normally, we’ve been trained to view two different markets to be as different as Apples (Bonds) and Oranges (Currencies).
Today, I’ll show you how Apples have become Oranges.
THE SECRET OF THE US BOND MARKET:
This single market has become the spigot for the unending stream of money called Quantitative Easing (QE).
From this market, hundreds of billions and even trillions of US DOLLARS overflow into the US STOCK MARKET (pumping it ever upwards) and influence all major foreign currencies whose economies are tightly connected to that of the US.
The proof of this is shown below in the free and private Member’s section. Please join now to be able to view them immediately in the private section just below here.
Only members will be able to view these unique charts that tie together and solve the mysterious connection between the currency markets and bonds. JOIN HERE.
WELCOME MEMBERS . . .
Now, we’ll take a look at what most have never considered before; the source of a trend in a set of major currencies OUTSIDE OF THE CURRENCIES THEMSELVES.
We’re going to use a derivative of the 45 degree angle of WD GANN to set the initial pattern we’ll be looking at.
In this case, we’re looking for a rate of price decline that’ closely approximates a derivative of the 45 degree line of descent.
At the chart above shows, starting with US BONDS, we note the decline matches the rate of the descending red line which is a derivative of a 45 degree angle.
Let’s look at the bonds and shorter-term notes together to see how they have established the pattern.
Now, compare the angles of the above markets; the largest wealth-holding ones in the World, with the currency indices shown on the below charts . . .
Yes, that’s right. They all share the same angle of decline!
Following the adage that ‘the Greater Rules the Lesser‘, we’re drawn to the conclusion that the World Reserve Currency, the US DOLLAR and dollar-denominated assets (US STOCKS & BONDS) are directly controlling these currency markets and nations and forcing a depreciation of value in all of them that’s tied to the angle of interest rates in US BONDS & NOTES.
Note that you won’t see this pattern using only forex charts as they’re charts showing comparisons between a pair of currencies (usually one of them is the USD) and that alters the chart’s pattern in ways that can easily mislead.
Let’s see what the US DOLLAR INDEX shows relative to a derivative of this very important 45 degree angle . . .
The US DOLLAR has broken upwards and is on a 45 degree rising line and is on a steep upwards trend that exceeds the decline rate of the other currencies by a good margin. This steeper rate of momentum is what alters actual forex charts to show pairs that seem to be moving upwards when, in actuality, the core currency may be in decline.
Take the GBP/JPY forex pair for example.Although the US DOLLAR is not involved in this pair, it’s a good example of forex charts giving the wrong overall impression of a currency’s true value.
The forex pair chart looks like it’s in a strong upwards move. But, if you look at the two charts above for the two separate indices for the GBP and the JPY you can plainly see that BOTH currencies are in decline.
So, forex charts measure the relative movement between two currencies which may BOTH be in decline but at different rates for each.
Clearly, the currency indices are a better guide to a currency’s health than any forex chart could ever be.
Forex charts are an adventure in a fantasy world of Relativism which is ok for very short-term trading purposes but their use is ill-advised for determining the state of a nation’s economy. - George
DISCLAIMER AND RISK DISCLOSURE
The content on this site and articles are provided as general information only and should not be taken as investment advice. All information on this site is given for educational purposes only.
The content on this site is provided without any warranty, express or implied. All opinions expressed on this site are those of the author and may contain errors or omissions.
NO MATERIAL HERE CONSTITUTES “INVESTMENT ADVICE” NOR IS IT A RECOMMENDATION TO BUY OR SELL ANY FINANCIAL INSTRUMENT, INCLUDING BUT NOT LIMITED TO STOCKS, BINARY OPTIONS, OPTIONS, FOREX, BONDS OR FUTURES.
WD Gann Lost Secrets.com & GR Harrison © 2013
U.S. Government Required Disclaimer – Commodity Futures Trading Commission Futures, Currency and Options trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the futures and options markets. Don’t trade with money you can’t afford to lose. This is neither a solicitation nor an offer to Buy/Sell futures or options. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this web site. The past performance of any trading system or methodology is not necessarily indicative of future results.
CFTC RULE 4.41 – HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN.
All information on this website or any manual, course, module, e-book or software purchased from this website is for educational purposes only and is not intended to provide financial advise. Any statements about profits or income, expressed or implied, does not represent a guarantee. Your actual trading may result in losses as no trading system is guaranteed. You accept full responsibilities for your actions, trades, profit or loss, and agree to hold www.money-tigers.com, the money tiger’s group and any authorized distributors of this information harmless in any and all ways. Any data and information is provided ‘as is’ solely for informational purposes, and is not intended for trading purposes or advice.