- THE FIRST SHOT – “THE SOAPBOX”:
Of the 52 weeks in a year that was one of them!
- A DOVISH hike from the FED.
- The TRUMP narrative goes global with TRADE WARS.
- The WH revolving door whooshes again: - HR McMaster, White House National Security Advisor and John Dowd TRUMPs lead Lawyer in the Mueller Russia Investigation both OUT!
- The BREXIT transition gets approval, albeit the IRELAND and GIBRALTAR border issues need to be agreed and finalized.
Over the past few blogs I have talked about economically driven markets and news driven markets. The market appears to be more focused on and reacts more to “news” driven events than responding to economic news. If you check back through the “RED” events in the Forex Factory calendar and then recall the responses, how many were market moving, or, offered some volatility compared with say, 12-18 months ago?
We are moving to a news driven environment with trading. Reactions and follow through to economic data is now very short lived assuming we get a reaction at all. I read during the week that the FOMC meeting was a waste of time. I could not get the context of the comment, but when a new FED CHAIR outlines the Central Bank position on monetary policy for the largest economy in the world, I would be very careful to just dismiss it as a waste of time or claim it to be irrelevant.
From a trading perspective I can understand that many traders and I was one of them were disappointed with the fact that it was a DOVISH HIKE. I strongly suspect that many people were caught the wrong side of the market when sentiment switched, so I guess from a positioning perspective many traders could call it a waste of time.
I truly hope that economic data will still retain a place but of late market reactions have been on the basis of a complacent and flippant response in favour of a TRUMP tweet!
We are now in TRADE WARS...
TRUMP has started something that he may in the future regret. It is an uncertain future and “tit for tat” moves could last forever. I am not so sure that the WTO, which appears to have no teeth at all could mediate through what will no doubt be a painful period.
The word RECIPROCAL was the word used by TRUMP prior to signing the tariff legislation. He wants and in reality, you cannot really argue the point if you agree with FREE TRADE. Many of the U.S. trade agreements were set up when some countries would have been treated as Emerging, such as South Korea. One certainly cannot count South Korea in that group any longer.
Over time, let’s see where we end up!
Of late as traders, geopolitical news has dictated many of the larger market moves, in both equities and FX. We have had several big changes over the past year or so that have brought this news rather than economic to the forefront: -
- TRUMP: A master control freak and media manipulator. TRUMP is either genuinely awkward, or, a bloody genius. His unpredictable style, non-Presidential and non-political, talk about it on Twitter approach has the media in a frenzy. Strip all of this down and TRUMP is just employing an age-old sales ploy to his approach on policy. Go in hard and then walk it back. There is nothing special here it's the style of doing it.
This is great theatre and, it has taken the narrative away from traditional sources.
- WORLD ECONOMIC CHANGE: We have now moved away from recession, away from the GFC. As the world economic position improves with the G10 countries in particular, the G10 Central Banks start to move away from a policy of accommodation to normalization. I am not alone in thinking that there has been a sense of complacency in the markets, over improved economic data. Whether you believe this improvement to be true is for another blog!
- SOCIAL MEDIA: Now deeply inter-twined in communications. The fact we see the news almost before its released. Or, is it because it is debated to the end of the world in Social Media it is treated as second hand news when released and thus this is why we have such muted reactions?
From a trading perspective if the markets are now becoming reactionary to news events this opens up a whole new can of worms on trading and the style of the way we trade.
Trading this week has all been about the JPY. It’s sensitive to GOLD, BONDS, EQUITIES and it is a SAFE HAVEN play. As we move forward into another week, this will be the currency to offer the best trading opportunities in my opinion.
Most other pairs look range bound and unless you are a range trader and understand the pitfalls, it is probably best to stay away, having said that some of the ranges are quite wide. (See section 2.5)
- THIS WEEKS IMPORTANT TRADE INFORMATION:
2.1. ECONOMIC DATA:
NOTE: Only the items that interest me are listed here.
2.2. GEOPOLITICAL EVENTS:
2.3. BIAS CHART - USD MAJORS SUPPORT and RESISTANCE:
2.4. USD OVERVIEW – MY THOUGHTS:
The DXY as you can see from the chart below remains in it’s downtrend.
On FOMC day last week we hit the 50% Fibonacci retracement level (90.45) and then reversed sharply. This is now the key resistance level moving forward.
Longer timed charts show “BEAR FLAG” formations with measured moves as low as 82.00.
Initially, the recent lows of 88.20 need to be tested first and obviously USD bears have this level firmly set in their sights.
2.5. USD TRADING CHARTS:
The Daily chart below highlights the trading range that I believe we are sitting in.
1.2090 to 1.2550 is the range, as you can see from the chart we are just shuffling around in the middle of the range.
We are now breaking higher. The breakthrough on BREXIT negotiations has allowed the GBP and related cross rates to mainly bottom out and move higher.
Good support now lies around 1.4000 and it is clear that following that psychological move the GBP bulls now have something like the recent highs as seen on the chart below of 1.4345 in mind.
The China Tariff and duty trade is in play here. As soon as someone mentions issues with China as a trader you should think AUD.
Unless we break above the trend line seen on the chart below of c.0.7850 I remain bearish this pair and moves up the trend line resistance I believe will find sellers waiting.
We are to a large extent just range trading here waiting for a catalyst to break the boredom. Like many, I thought the FOMC would have been that catalyst... alas not!
Have we had a false breakdown?
From the chart below, you can see the move lower through 0.7176 on FOMC day then we have seen a swift move higher. Am I bullish? No, I believe that we are in a range, which is clearly defined on the chart of 0.7176 to 0.7350.
We have a very bearish RED candle on the Weekly Chart below. My thoughts were on FOMC day to short at trend line resistance at 1.3180 after an initial spike higher as the announcement took place. That idea was very quickly blown out of the water as the USD sold off.
Like other pairs I think we are again in a range. 1.2800 to 1.3180 would be what I believe it to be.
I want to short the USD/CAD it fits into my longer-term view, but I am waiting patiently for at least 1.3000.
As you can see on the Monthly chart below, the triangle pattern is “RIPE” for a breakout. My thought process is a long side breakout towards parity once again.
There is a range in play, which I have been following of late which is from 0.9190 to 0.9850. I am a little reluctant to aggressively trade the CHF given its flight to safety and neutrality attraction.
We are tightening in the triangle.... something is going to give soon.
We are in the throws, in my opinion of breaking down towards 102.00.
The triangle breakdown measured move play is still valid. TRUMP’s TRADE WARS was the catalyst to start the move lower. Stops have been taken below 105.00 and we are now consolidating.
- THE PREMIUM SERVICE TRADING SUMMARY:
3.1. PREMIUM SERVICE PERFORMANCE YEAR TO DATE:
(Incorporating the last 5 PREMIUM SERVICE TRADES)
You can get on board and join from as little as CAD$10 for 10 days and then CAD$150.00 per month, currency conversions for CAD$150 is roughly as follows: -
- GBP £90 per month
- EUR €100 per month
- USD $120 per month
- JPY 12,700 per month
- AUD $150 per month
This represents a great value way to subscribe…
Go to my website www.weeklyfxdrivethru.com for more details under the TAB – “SUBSCRIBE HERE”.
- PREMIUM SERVICE SUBSCRIBERS:
(This section is for PREMIUM SUBSCRIBERS ONLY)
4.1. TRADING REVIEW:
4.2. OPEN TRADES...HOW I WILL TRADE THIS WEEK:
4.3. A LOOK AT CROSS-RATES & EMERGING MARKETS PAIRS:
4.3.1. CROSS RATES:
4.3.2. EMERGING MARKETS:
4.4. SENTIMENT, FUNDAMENTAL & MACRO THOUGHTS:
4.4.1. OVERVIEW THOUGHTS (MY MACRO PLAN & IDEAS):
4.4.2. THE MARKET SENTIMENT CHART:
4.5. CURRENT LIVE TRADES & LIMIT ORDERS:
4.5.1. CURRENT LIVE TRADES:
4.5.2. CURRENT LIMIT ORDER TRADES:
4.6. FX BROKER NEWS and MARKET FEEDBACK:
- THE FINAL SHOT:
Nothing more to add here, I have said enough except,
Always remember longevity in Forex trading can only be achieved through trading with good RISK and MONEY MANAGEMENT, and above all set your position sizes in accordance with the size of your account and allow for some flexibility.
The Pip Accumulator
BLOG VERSION: #275 FREE NEWSLETTER
DATE: 24th March 2018