Finance geeks: what's behind this odd chart? | Hacker News Reader

Finance geeks: what's behind this odd chart?

6 pointsdavidw21 comments

This is strange looking:

http://finance.yahoo.com/q/bc?s=EURUSD=X&t=5d

Not the fact that it's trending downward, but the very regular looking stairstep each day. Any idea what that is?

Your link goes to the 1 year chart, but I think you meant the 5 day chart. I dunno how to hotlink to specific ranges in the new Y!Finance charts; viewer should click on 5D.

Anyway, the stairstep is at 4:00 AM GMT, which happens to be midnight EDT. I don't know about the intricacies of currency markets, but I'd imagine there's some sort of daily currency balancing where the main banks buy all the currency they need to settle international transactions on behalf of customers. Note that there's a sharp gap downwards between 9:00 PM and midnight GMT (when European banks would presumably be buying dollars to settle international transactions), and a sharp gap upwards at midnight EDT (when U.S. banks would presumably be buying euros to settle international transactions.)

This pattern is anomalous. It cannot be explained by normal daily activities because it does not happen every day, just for the last five.

Is there a way to get historical intraday data for currencies, beyond the last 5 days?

I'm just going by what the data shows - this is a plausible explanation given the times and known facts about the domestic financial system. (For example, domestic banks have the balance all deposits daily to ensure they meet reserve requirements.) If you can find data that refutes this hypothesis, be my guest. Simple assertions don't count, though.

The currency markets work 24 hours. Yahoo plots the intra day voltality but the graph that yahoo shows in that link does not chart all 24 hours and that is why you see a break which causes it to look like steps. The steps are going down because the currency seems to be on a downward trend.

I think he was really asking about the 5-day chart, which has a large stairstep upwards at 4:00 AM GMT on each day. The date range parameter apparently doesn't hotlink very well on Y!Finance.

Exactly.

Market prices as fractal patterns? Where have I seen that before?

Ah, yes, here: http://www.amazon.com/Mis-Behavior-Markets-Fractal-Reward/dp...

Yahoo's data appears to be messed up. Maybe screwed up the trade date when dealing with different timezone... or something. Here's another couple free charts you can verify against:

http://chartsrdc.cme.com:443/cs/charts.jsp?_quickEntry=6E1%2... http://www.dailyfx.com/charts/ChartStation.html

I realize the first is futures, but they match the spot market extremely well.

Switching from the 5 day view to the 3 month view, you tell me what's behind this chart, and I'll be impressed:

http://finance.yahoo.com/q/bc?s=EURUSD=X&t=3m&l=on&#...

The central banks are flooding the markets w/ currency right now to try and bail out the banks who took on bad debt.

The European central bank floated more currency(~100bn) than the Fed did(~60bn), so I think that is why the dollar gained a little on the Euro over the past few days.

I'm impressed. :)

Interestingly I was looking at this chart and then came to news.yc and saw your post. I don't understand your question. Are you asking why there are lows and highs for each day? It is because the its traded just like stocks are traded and have intra day lows and highs.

Ok, but why the odd looking stairstep?

http://finance.yahoo.com/q/bc?s=%5EDJI&t=5d

Is not nearly so regular.

It's the "plunge protection team" at work.

If your choices are "The world is complicated," or "The world is simply controlled by powerful, evil forces," why would you choose the latter?

I don't know if the PPT is doing anything with the USD-EUR, I was only being cute. But if you're implying the PPT does not exist and is not active, you are naive. Its existence is fact. The evidence for its manipulations in the past is overwhelming.

"State Sponsored" manipulation of currencies explains a lot of weird forex chart patterns. It's hardly a secret that the BoJ manipulates the Yen, for example.

http://xkcd.com/258/

I don't doubt that states manipulate currencies when they can, and that they aren't always open about it. I just don't think it's useful to attribute moves to that. "Noise" might be a better term than PPT. As far as analysis is concerned, they're synonyms.

> I just don't think it's useful to attribute moves to that

Over the last couple years I have seen analysts anticipate and detect concerted manipulation of the gold market and profit accordingly. The proof is in the pudding. It is useful to attribute some major market moves to manipulation by the elites. Though, as I said, I actually doubt there's anything conspiratorial going on in this particular chart.

It's hard to manipulate markets when someone else knows what you're up to -- especially if you intend to make any money at it.

http://hanson.gmu.edu/biastest.pdf

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