Imagine having enough savings in the bank to effortlessly retire.

Then, six months later, that same money can’t even buy a coffee.

That’s what happens during hyperinflation – and in today’s infographic, we examine the events leading up to the most famous hyperinflation in history.

(Just two calendar years after the end of the war, the Papiermark was worth 10% of its original value. By the end of 1923, it took 1 trillion Papiermarks to buy a single Goldmark.

All cash savings had lost their value, and the prudent German middleclass savers were inexplicably punished….continue reading and viewing a much longer and larger image HERE

…continue reading and viewing a much longer image HERE

Forex Trading Alert originally sent to subscribers on January 5, 2016, 7:47 AM.

Earlier today, official data showed that the annual rate of inflation in the euro zone increased by 0.2% in Dec, missing forecasts for an increase of 0.3%. Additionally, core inflation (without food and energy costs) rose 0.9% in the previous month, also below forecasts for 1.0%. Thanks to these disappointing numbers, EUR/USD extended losses and broke below important support zone. How low could the exchange rate go in the coming days?

In our opinion the following forex trading positions are justified – summary:

• EUR/USD: short (stop-loss order at 1.1363; initial downside target at 1.0462)
• GBP/USD: none
• USD/JPY: none
• USD/CAD: none
• USD/CHF: none
• AUD/USD: none

EUR/USD

Larger Chart

Larger Chart

Quoting our yesterday’s alert:

(…) the exchange rate is consolidating under the solid resistance zone (created by the previously-broken green resistance line, the barrier of 1.1000, the orange resistance zone and the long-term red declining resistance line). In previous weeks, this area was strong enough to stop currency bulls and trigger pullbacks, which suggests that we’ll likely see similar price action in near future. If this is the case, and the pair breaks under the lower line of the formation, the initial downside target would be around 1.0552, where the size of the downward move will correspond to the height of the consolidation (please note that slightly below this price target is the Nov low, which serves as the nearest medium-term support).

Looking at the weekly chart, we see that the situation developed in tune with the above scenario and EUR/USD broke below the lower border of the consolidation. With this move, the pair also declined under the green support zone (marked on the daily char), which means that the head and shoulders pattern is underway and a drop to around 1.0563 is more likely than not (in this area the size of the move will correspond to the height of the bearish pattern).

Very short-term outlook: bearish
Short-term outlook: bearish
MT outlook: bearish
LT outlook: mixed

Trading position (short-term; our opinion): Short positions (with a stop-loss order at 1.1363 and the initial downside target at 1.0462) are justified from the risk/reward perspective. We will keep you informed should anything change, or should we see a confirmation/invalidation of the above.

USD/CHF

Larger Chart

In our previous commentary on this currency pair, we wrote:

(…) a potential reverse head and shoulders formation is underway (…) the formation will be more reliable if USD/CHF breaks above the orange resistance line (the neck line of the formation) based on the previous highs. (…) the Stochastic Oscillator generated a buy signal, which increases the probability that currency bulls will start to act in the coming days.

From today’s point of view, we see that USD/CHF broke not only above the orange resistance line, but also the Dec 7 high, which suggests further improvement. How high could the pair go? In our opinion, the initial upside target will be around 1.0144, where the size of the move will correspond to the height of the reverse head and shoulders formation.

But will USD/CHF climb higher in the coming weeks? Let’s examine the weekly char and find out what can we infer from it.

Larger Chart

From this perspective, we see that USD/CHF broke above the upper border of the consolidation, which suggests an increase to around 1.0196.

Very short-term outlook: bullish
Short-term outlook: mixed with bullish bias
MT outlook: mixed
LT outlook: mixed

Trading position (short-term; our opinion): No positions are justified from the risk/reward perspective. We will keep you informed should anything change, or should we see a confirmation/invalidation of the above.

AUD/USD

Larger Chart

The first thing that catches the eye on the weekly chart is an invalidation of the breakout above the upper border of the consolidation. This bearish signal encouraged currency bears to act and pushed the exchange rate sharply lower.

What impact did this move have on the very short-term picture? Let’s check.

Larger Chart

Quoting our Forex Trading Alert posted on Dec 30:

(…) the pair reached the orange resistance zone (created by the 76.4% and 78.6% Fibonacci retracements). As you see on the daily chart, the proximity to this resistance area was enough to encourage currency bears to act in the previous week and also in mid-Dec. Taking this fact into account, and combining it with the current position of the indictors (they are very close to generating sell signals), we think that further deterioration is just around the corner.

Looking at the daily chart, we see that currency bears showed their claws and pushed the pair sharply lower yesterday. Taking this fact into account, we believe that our downside target from the above-mentioned alert would be in play in the coming day(s):

If (…) AUD/USD declines from here, we’ll see a test of the previously-broken upper line of the blue declining trend channel in the coming days.

Very short-term outlook: bearish
Short-term outlook: mixed with bearish bias
MT outlook: mixed
LT outlook: mixed

Trading position (short-term; our opinion): No positions are justified from the risk/reward perspective. We will keep you informed should anything change, or should we see a confirmation/invalidation of the above.

Thank you.

Nadia Simmons
Forex & Oil Trading Strategist
Przemyslaw Radomski, CFA
Founder, Editor-in-chief

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Forex Trading Alert originally sent to subscribers on December 31, 2015, 5:35 AM.

Yesterday, EUR/USD moved little lower as Tuesday’s solid consumer confidence data continued to support the greenback. Thanks to these circumstances, the probability of further declines increased as the bearish formation is underway. What impact could it have on the exchange rate in the coming days?

In our opinion the following forex trading positions are justified – summary:

• EUR/USD: short (stop-loss order at 1.1363; initial downside target at 1.0462)
• GBP/USD: none
• USD/JPY: none
• USD/CAD: none
• USD/CHF: none
• AUD/USD: none

….go HERE for more analysis and larger charts

Along with the currencies of most other commodity-exporting countries, the Canadian dollar has been in near-freefall lately.

Gold, meanwhile, has been sucked down with the rest of the commodities complex, falling hard since 2013. But only in US dollars. For Canadians, with their weak domestic currency, gold has been behaving just fine. It’s up 17% in C$ terms over the past two years and looks ready to rally from here:

Protection from currency trouble is why people own it, and why in the vast majority of places it’s owners are very happy.

Now combine a falling currency with a crashing oil price and the result is a surprisingly favorable environment for Canadian and other weak-currency-country gold miners. Big mostly-Canadian miner Goldcorp, for instance, has seen its production costs fall by almost 20% in USD terms in the past two years, with more to come based on the subsequent cheapening of the diesel fuel required to run its equipment.

If 2016 plays out according to the script that has rising US interest rates producing an even stronger dollar (and correspondingly weaker currencies elsewhere) the terms of trade for non-US gold miners should become even more favorable. Many of them will report positive earnings comparisons while most other industries are doing the opposite, putting them on the radar screens of momentum traders and value investors who haven’t been paying attention since the last gold/USD bull market ended.

…also:

The Recession And Bear Market Of 2016, In Two Charts