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Yen and US Dollar ... etf's vs forex
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I've been talking about currency markets since I've been writing in this blog, but I have not been talking about them the way that most commentators do. Most currency market folks talk about the currency pairs - the forex market. I do not. I focus on the currency etf's. Why do I do this?
Because I do not trade the forex market. I may do this at some point in the future, but this is not something I do right now. It is a much more specialized sort of trading. I'll be honest - it's intimidating. Not that setting up an Etrade or Ameritrade account isn't intimidating in its own right. But going to Forex.com or FXCM.com and plopping down money that will surely be a donation to the forex gods is not something I want to do at the moment.
But does that mean that you should not listen to people talking about these markets? of course not. If you want to trade or invest in the currency etf's, you must know what is happening in the major currency pairs. Why? Because they trade very similar to them. I have not included currency pair charts in my writings, because stockcharts.com does not offer them - or at least not to me as a freebie! (I could certainly be wrong on that and if so, please let me know!). I've included the currency pair charts thanks to Google finance and snagit software.
Case in point - the FXY and the UUP. The Japanese Yen etf and the US Dollar bull etf have been favorites of mine. They are liquid and they behave as I think they should given the news and technicals. But do they behave like their currency pairs? Well, that all depends on the pair.
I am certainly going to upset some real currency traders by limiting my focus. This topic clearly deserves a more complete analysis among all the currency pairs because it might offer insight. However, for now I will have a limted view.
See the gallery below for the charts ... images 1 thru 5
FXY - the Japanese Yen etf appears to follow closely to its JPY/USD currency pair. Much of the news is discussed about this pair in the inverse- with the USD/JPY (also included in the gallery) - so you will have to take that into account.
UUP - the US dollar etf certainly does not follow the USD/JPY pair - the charts are very different. However, the USD/EUR chart does appear to have a similar price action to the UUP.
So what does that tell us? When trading the FXY, pay attention to the USD/JPY news and when trading the UUP, it pays to listen to how it is performing relative to the Euro.
That's all great, but what can you tell us about these etf's now? buy, sell hold?
I thought you'd never ask.
see gallery below - images 6 & 7
FXY - this one is looking ominous - the 50 dma is about to cross over the 200 dma in a bearish fashion. This happened last year with minor consequences, but this time it has farther to fall. I'd stay away
UUP - I like the looks of this chart. Rising triangles have served me well in the past. They have also failed - I need to see a break out above 26 to the top resistance level before I really get on board but I like this in general. Don't buy it yet, but keep an eye on it. Of course, if it does fail it might be an opportunity to buy the FXE, but I'm not ready to say that without more research.
Hmmm ... so I've gotten back into commodities and currencies to go with my stocks ... looks like I'll have to look at Bonds tonight!
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