This article was first published last Wednesday, Feb. 6. Since that time it has been updated with the addition of a series of fabulous currencies charts put together by contributor Darkestknight. Considering that he actually trades currencies while I don't, he therefore has a considerably better focus on them and a better handle on them than I do. This update happened quite by accident. Darkestknight had simply offered a set of 3 or 4 links to some of his charts in the comments section. Those charts were so good that I felt they deserved to be highlighted in the article itself... so I simply amended the article to display them more readily. Once DK saw that I had done that, he stepped up to the plate and offered even more charts that tied the whole set together. What is evolving here is a masterful set of currencies charts that I think deserve a whole lot more attention than simply being buried in links in a comments section of a blog. Whether the counts are right or wrong is irrelevant... we all understand that all markets are dynamic and constantly evolving. Fortunately DarkestKnight is very nimble with his counts, quick to recognize a meaningful turn of events and is very honest about making a fast change if he sees need to amend his counts. Personally, I love this set of charts and am more than happy to highlight great work like this. Therefore, this article is being republished with the addition of at least seven of DK's contributions. It may possibly be amended even further.
The original article began with this:
The action in the currency markets has been taking a major league turn as of late. There has been a lot of action on so many fronts recently but really, all that action has been in pretty much every currency in the world 'except' the American dollar. The only exception would be the Canadian currency since it is extremely tightly linked to the American dollar... approximately equally as much as it is correlated to the health of the American economy itself. Those two currencies also represent the ties between the two biggest trading blocks in the world and as such, it is critically important that that particular pair remain stable and that they be prevented from wandering too far from each other.
As a result, very close attention is paid to managing that pair and for that reason I have always maintained that investors who look at the USD:CAD pair for guidance on the equities markets are barking up the wrong tree. Only when there are extreme stresses in the American economy will the Loonie start to wander off as the Canadian economy begins to suffer as well. On the other hand, if the American dollar begins to tank relative to "real goods" like gold, the Canadian dollar will soar since the value of the majority of the commodities coming out of Canada would soar in value as well... regardless of demand for them. If they're rising in value, they're rising in value.
At present, the key currencies in the limelight other than the Euro (which fluctuates for entirely different reasons) have been the Yen and the Australian dollar. Without trying to predict the direction of the key currency pairs (the Aussie:Yen and the USD:Yen), let's take a look at the general story in the daily chart below which shows all 3... the USD, Yen and Aussie, along with the S&P. Speaking in general terms, the annotations discuss what's going on:
|Click here for a live and updating version|
DarkestKnight is one of a group of Australians who seem to have a real good grasp on wave counting. If I recall correctly I think he said he's British born, living in Australia. Another Aussie with talents like this is 'mars', another good guy and his haunt of preference is over on Pretzel's site. But we have the luxury of having DK drop in here from time to time with some great contributions. In any case, I don't know why Aussies seem to be so good at being able to see (and demonstrate) EW patterns and counts as clearly as they do, but I suspect it has something to do with the fact that in the land down under they must be looking at their charts upside down. Then they flip 'em over so we in the north can understand them. In any case, DarkestKnight has posted links in the comments section below [referring to the original article] to some really good charts. I'm going to insert some of them here for reference.
UPDATE: Once DK noticed that we were highlighting some of his charts here (I hadn't asked his permission but since he's been a friend of yours truly for quite a while and a friend of this blog since its inception I didn't think he'd mind), he suggested that we should probably start off with his weekly chart that would help put the others into proper context. So we've arranged the charts so they flow from longest to shortest in duration. And thanks DK for submitting more charts after seeing that I had posted your first 4 offerings. It's become a pretty impressive full kit now. With credit to DK and with thanks from this entire community, here are his excellent contributions:
HINT: Left click on any chart to open the 'lightbox' feature of Blogger and you can then toggle between all charts on a post. That capability works really well with DK's
DK's overall opinion about the path of the AUD:JPY pair is based on the first chart, which is a monthly that only goes back to 1980. It seems that to get data any earlier than that might be a bit of a challenge. Even StockCharts only offers data going back to that same date. So without benefit of a longer term view, and working with only the most recent 22 years worth of data... he begins:
|AUD:JPY Monthly - as you can see here, StockCharts' records also only go back to 1990|
|DarkestKnight's AUD:JPY Weekly - Click here for a larger version|
|DarkestKnight's AUD:JPY Daily - click here for a larger version|
|DarkestKnight's USD:JPY 4 hour - click here for a larger version|
|DarkestKnight's AUD:USD Weekly - click here for a larger version|
|DarkestKnight's AUD:USD Daily - Possible mutated H&S - click here for a larger version|
|DarkestKnight's AUD:USD 4 hour - click here for a larger version|
|AUD:USD - 30 Min - Click here for a larger version|
|DarkestKnight's British Pound:USD 4 hour - click here for a larger version|
While you're perusing DarkestKnight's great charts, please feel free to select the beverage of your choice. Not in the mood for a brew right now? Maybe this ad from Australia will change your mind. Turn your speakers up, the music is great in this one.