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should be strictly the money you can afford to risk.

Highlights

Latest Chart Views

Economic Calendar

Central Bank Watch

POSITIONING

Short EUR/USD 1.0914/1.0914/1.0550

Long GBP/USD 1.4122/1.4222/1.4400

SETUPS

Looking to get long USD/JPY on a pull-back

Looking to get long AUD/USD on near-term correction

US $ INDEX - Still ranging, 100.51/92.62; above 100.51 validates trend move higher…with 104.68 target. USDJPY – Recovery from here looks good, considering two factors: 1) an intermediate-term bottom in Japanese stocks; and 2) the idea the BOJ may be emboldened by the ECB. EURUSD – Our man Mario did the deed. ECB clearly made it clear more help is on the way; yield spread relative to dollar falling again. Looking for acceleration lower to add validity of wave V trend move down… GBPUSD – Nice big rally on risk on and oil prices….was extremely oversold and likely most of the bad news (which we know) is in the price. USDCAD – Good reaction to the Bank of Canada yesterday; and yield spread surged in favor of CAD. Maybe a near-term rest, but this correction seems to have legs. AUDUSD – Held key technical support with four days of support in 0.6820-level. Back in rally mode; watching for near-term opportunity to get long.

BLACK SWAN FOREX

Friday 22 January 2016/7:55 a.m. ET

*Bold represents a change

Comments

Mr. Draghi did the deed and it seems

global equities liked it even more than the

euro. Stocks are sharply higher for a

second day and so is oil (up 6%), of all

things. Commodity currencies and the

pound are strong again today…euro is

lower…with yen back above 118. What a

difference two days makes; likely many

stock guys can now come in from the ledge

for the weekend…but plenty of time left in

Macro

Is the Fed forecast of four hikes in 2016 plausible give growth and risk concerns?

China financial crisis inevitability, or is transition progressing?

Will pressure on Germany (economic and political) trigger another euro crisis?

Price Trends Among Major Dollar Pairs Trend

$ - Pair (FX)

Daily Weekly Wave Bias Near-term

USDJPY Down Down Neutral+

EURUSD Range Down Neutral

USDCHF Range Up Neutral

GBPUSD Down Down Neutral-

USDCAD Up Up Neutral

AUDUSD Down Down Neutral -

Will pressure on Germany (economic and political) trigger another euro crisis?

Price Trends Among Major Dollar Pairs

Trend

$ - Pair (FX)

Daily Weekly

Wave Bias

Near-term

USDJPY Neutral + Down Up

EURUSD Down Down Down

USDCHF Up Up Neutral

GBPUSD Neutral + Down Up

USDCAD Neutral - Up Down

AUDUSD Neutral + Down Up

Black Swan Forex Page 2 of 9

Forex is strictly an informational publication and does not provide individual, customized investment advice. The money you allocate to futures or forex

should be strictly the money you can afford to risk.

the day.

From the FT:

The ECB president said it would “review and possibly reconsider” its monetary policy stance at its next

meeting in six weeks — little more than a month after the ECB last unleashed a round of stimulus.

“We are not surrendering in front of these global factors,” he said, referring to the China slowdown and

the falling oil price that have destabilised global markets in recent weeks.

The ECB has “the power, the willingness, the determination to act, and the fact that there are no limits

to our action” to bring inflation up to its target of just below 2 per cent, he added. Policymakers, he said,

would “absolutely reject” attempts to derail their efforts to raise inflation “without undue delay”.

Enough said. A pretty clear message he sent to markets, and they liked it.

The Nikkei jumped 5.9% today and the yen is remaining true to its correlation there as it too is moving higher.

Take a look at the almost perfect measuring extension level in the Nikkei 225 Index, i.e. it rallied right on cue as

wave C = A in a classic A-B-C correction. Key Question: How much is the Bank of Japan emboldened by the signal

sent by the ECB yesterday?

So, looking for a near-term opportunity to get long USD/JPY…(see setup page 4)

Black Swan Forex Page 3 of 9

Forex is strictly an informational publication and does not provide individual, customized investment advice. The money you allocate to futures or forex

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---

News Briefs (IFR Markets)

• DXY firms on day, on track for slight weekly gain. Plays 99.113-99.461

• USD/JPY extends recovery to 118.32 fm year's low (Wed) at 115.97

• Euro pressured after Draghi signals more easing. EUR/USD 1.0900-1.0813

• GBP/USD recovery rally extends to 1.4307 fm 7 yr 1.4080 low (Thurs)

• Brent up 5.5% to $31.10/barrel. Off this wk's 2003 low of $27.10

• Asia stocks end week rallying off 4-yr lows, helped by ECB, oil bounce - RTRS

• GB Q4 Retail Sales +1.1% q/q vs prev 0.9%. Strongest calendar qtr since Q4 2014. 3.7% y/y vs 4.9%

• EZ Jan flash Mfg PMI 52.3 vs prev 53.2. 53.0 exp. flash Serv PMI 53.6 vs prev 54.2. 54.2 exp

• EZ Jan flash Composite PMI 53.5 vs prev 54.3. 54.2 exp

• PBOC Zhang: China won't easily cut RRR - SINA

• S&P: More oil-exporting countries' sovereign credit ratings could be downgraded

• Kremlin spksm: Putin has no emergency meetings planned on rouble, oil situation

• Ability to maintain macro stability test for Russian govt - c.bank head - RTRS

• Germany's Schaeuble warns against overreaction to China, low oil price - RTRS

• ECB's Weidmann says line between fiscal, monetary policies blurred - RTRS

• Draghi says ECB determined, willing to act - RTRS

Looking Ahead - Economic Data (GMT)

• 12:30 CFNAI (Dec) (prev -0.30)

• 13:45 Markit PMI (flash Jan) (mkt 51.1, prev 51.2)

• 14:00 Existing Home Sales (Dec) (mkt 5.20 mn, prev 4.76 mn)

• 14:00 Leading Economic Indicators (Dec) (mkt -0.1% m/m, prev +0.4% m/m)

Looking Ahead - Events, Other Releases (GMT)

• 15:45 FedTrade Operation 30-year Fannie Mae / Freddie Mac (max $1.950 bn)

Wave View

USD/JPY Medium term (1/22): Targeting a trend move to 114 in larger Wave C. Or Wave C could be in place and a rally to new highs—we need to be open to that possibility if the BOJ is emboldened by the actions of the ECB yesterday.

Daily View (1/22): Nice big bounce (or new multi-week trend) triggered by the bounce in stock markets. Key

swing resistance at 118.37. A nice head fake two sessions ago on the move below key swing 116.49…a bear trap?

Black Swan Forex Page 4 of 9

Forex is strictly an informational publication and does not provide individual, customized investment advice. The money you allocate to futures or forex

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USD/JPY 4-hour View: A bit extended…1st pivot resistance at 118.18 and …looking for a bit of recycling here for a

chance to get long.

Black Swan Forex Page 5 of 9

Forex is strictly an informational publication and does not provide individual, customized investment advice. The money you allocate to futures or forex

should be strictly the money you can afford to risk.

EUR/USD Medium term (1/22): In Wave V trend down; likely taking a wedge pattern to complete 5 of V with scope to par; support 1.0565; then 1.0456. Looking for a break of the daily downtrend line, just below 1.0800, to add validity to a more powerful trend move lower. Alternatively Wave 4 in larger complex corrective pattern with larger rally ahead…. Daily View (1/22): 1.0984 has capped for now…next support at 1.0800; then the next key swing low at 1.0709… ECB’s Draghi made it clear he will ease a lot more if necessary…2-year US-Eurozone yield spread heading down again….is the this the trigger to par?

US-Eurozone 2year Spread vs. EUR/USD:

Black Swan Forex Page 6 of 9

Forex is strictly an informational publication and does not provide individual, customized investment advice. The money you allocate to futures or forex

should be strictly the money you can afford to risk.

GBP/USD Medium term (1/22): 1.4100 (March 2009) swing support area held, just in time for a risk on rally. Is major Wave V down in place? We don’t know yet, but a rally back to at least the 21-day moving average at 1.4491 seems likely. The credit crunch low of 1.3500 has to be on the mind of longer term players.

Daily View (1/22): A sharp rally off the low on risk on rally in stocks and oil, which the pound continues to track closely…near-term resistance comes in at 1.4338 (maybe a good spot to peel off some gains); 2nd pivot resistance at 1.4350.

USD/CAD Medium term (1/22): Big figured 1.4700 proved resistance; and this pair has plunged on: 1) Bank of Canada holding rates; 2) the risk on move in stocks; and 3) oil. But as indicated yesterday, yield spread is also a big driver in the background. Still looking for move back to 1.4000-1.3800…and it is getting there fast…no rest so far. Daily View (1/22): Any correction should carry to at least 1.4000 daily basis, and if commodities can catch any

type of support, 1.3800 is the next likely daily target on a correction. Near-term swing support comes in at 1.4144

(61.8% of Wave 5 rally); it coincides with pivot resistance at 1.4144; looking for a bounce in here and possibly an

opportunity to get short (early next week)…watching…

Black Swan Forex Page 7 of 9

Forex is strictly an informational publication and does not provide individual, customized investment advice. The money you allocate to futures or forex

should be strictly the money you can afford to risk.

AUD/USD Medium term (1/22): Alternative view is Wave IV is complete and we are in Wave V down with scope to 0.5900 weekly target is gaining favor. But, still open to the idea of a deep wave B correction of larger Wave IV. Still depends on commodities and China it seems. Daily View (1/22): Bumping up against 21-day moving

average at 0.7036 (today’s high); next swing high

resistance at 0.748. Looking to get long on any decent

near-term correction lower…watching for a three-wave

correction down on the hourly chart….

Black Swan Forex Page 8 of 9

Forex is strictly an informational publication and does not provide individual, customized investment advice. The money you allocate to futures or forex

should be strictly the money you can afford to risk.

Pivots Levels

R3 R2 R1 P S1 S2 S3

JPY Pivots 119.17 118.67 118.18 117.31 116.82 115.95 115.46

EUR Pivots 1.1063 1.0999 1.0936 1.0856 1.0793 1.0713 1.0650

CHF Pivots 1.0281 1.0210 1.0140 1.0074 1.0004 0.9938 0.9868

GBP Pivots 1.4417 1.4350 1.4458 1.4181 1.4115 1.4012 1.3946

CAD Pivots 1.4853 1.4656 1.4458 1.4342 1.4144 1.4028 1.3830

AUD Pivots 0.7161 0.7106 0.7051 0.6962 0.6907 0.6818 0.6763

2-yr Yield Spreads (Major Pairs vs. US)

2-year Spreads vs. US t t-1 t-2

JPY Spread Trend - - +

Japan-US 2-yr Yld -0.860 -0.851 -0.843

EUR Spread Trend - - +

Eurozone-US 2-yr Yld -1.294 -1.239 -1.218CHF Spread Trend - - +Switzerland-US 2-yr Yld -1.779 -1.751 -1.728

GBP Spread Trend - - +

Britain-US 2-yr Yld -0.415 -0.407 -0.364

CAD Spread Trend + + +

Canada-US 2-yr Yld -0.387 -0.441 -0.534AUD Spread Trend + + +Australia-US 2-yr Yld 1.128 1.109 1.093

FX Portfolio Trade Recommendations

Short EUR/USD from 1.0914; risking to 1.0914; targeting 1.0550 - Looking for acceleration lower in widening US

spread and ECB ease…

Long GBP/USD from 1.4122; risk to 1.4222; targeting 1.4400 – Correcting from “deep oversold” territory; should

get help from EUR/GBP cross; a lot of the bad news seems in the price and a one-way bet was shaping up.

Performance Summary Monthly – Total PIPs

Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total

Black Swan Forex Page 9 of 9

Forex is strictly an informational publication and does not provide individual, customized investment advice. The money you allocate to futures or forex

should be strictly the money you can afford to risk.

2013 1146 715 117 442 69 -203 -484 -220 -273 420 329 -133 1925

2014 404 148 -160 -100 -15 -59 339 88 379 751 452 -101 2126

2015 -93 -307 1099 -380 1039 -582 305 496 -390 -35 188 -284 1056

2016 -53*

*Thru 1/4/16

Chart of the Day “Since the middle of November, the trade weighted sterling index has fallen by more than 7 per cent, a two-month devaluation of a scale almost unprecedented since the MPC was given responsibility for UK monetary policy almost twenty years ago. The one occasion when a larger fall was recorded over this timescale was at the end of 2008, at the peak of the global financial crisis.” FT 22 Jan 2016

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