I took a week away from my screens last week and traded via by MacBook Air and iPAD whilst enjoying the sights around St. John’s, Newfoundland.
I was traveling home last Friday and missed all the shenanigans of the USD falling in spectacular fashion and the EUR rising as the books of the larger institutions were balanced for both the quarter and half-year ends.
When the accounting ends were added to an already twitchy market based on the back of U.S. Tariff and TRADE WAR escalations, it was inevitable that a potential spark of increased volatility could occur causing an exaggerated move. In fact, it was the EUROPEAN UNION striking a deal on a policy over IMMIGRATION that got things moving and the June flash CPi report just added to the initial move higher for the single currency against most currencies.
So, with that being said, where next for the USD?
Looking around the markets, the USD has performed well against the JPY of late as the JPY weakens and I think that a test of the 2015 trend line resistance (see USD/JPY Chart later) is just a matter of time. Oil rose about 8% last week and this is on the back of just under 6% the week before. U.S. treasuries are falling, last week was the third week and Gold is lower now well below the $1,300 level, in fact almost at $1,250.
Was does all this mean.... I wish I knew!!
The simple fact is that we are in a news driven “sound-byte” market at the moment and whilst I can say that this is bullish the USD or bearish the USD it really counts for nothing when you are trading in a “sound-byte” environment.
Looking at the chart above a couple of factors immediately stand out.
Firstly, last week’s closing daily candle is a very LONG RED example, and, usually I tell my subscribers that when one sees such a dominant candle such as this, more tend to follow until a decent support level is found.
Initial support is at the 23.6% retracement of 93.82. However, if this level were to be support and the USD bounced higher at this level, with it being such a shallow retracement from the recent highs of 95.53 amove higher in the DXY should be very strong.
The 38.2% retracement at 92.76 is more realistic in my opinion.
Secondly, the retracement to the 38.2% level still keeps the BULL FLAG pattern measure move to 96.46 very much alive.
My thoughts are that we should see at the start of this week a continuation move. However, to add a little spice to everything, we have a U.S. holiday in the middle of the week for Independence Day and we also have FED minutes and Non-Farm payrolls to negotiate as well. The Economic data will be key drivers in the DXY this week.
We have this week as major influences on the USD (DXY) therefore to consider:
Technically I see a Fibonacci retracement to 92.76.
Fundamentally, do not assume a trading direction as it could flip very quickly.
If a gun were to be held to my head, I would be technical through to Wednesday and count my blessings as Thursday it could reverse.
1. FX - FORWARDS, BACKWARDS & SIDEWAYS:
1.1. THIS WEEKS TRADE INFORMATION: ECONOMIC DATA:
NOTE: Only the items that interest me are listed here.
1.2. THIS WEEKS TRADE INFORMATION: GEOPOLITICAL EVENTS:
1.3. BIAS CHART - USD MAJORS SUPPORT and RESISTANCE:
1.4. USD INDEX (DXY) OVERVIEW – MY THOUGHTS:
My thoughts, ideas and views regarding the DXY are at the beginning of this blog.
1.5. USD MAJORS - TRADING CHARTS
A few points to mention here.
Firstly, last Fridays BULL CANDLE is very powerful indeed. However, we must not get too carried away. The 61.8% at 1.1721 should prove a tough nut to crack and at this level I would imagine EUR BEARS are ready to put a toe in the water.
Secondly, we still have Central Bank divergence to consider and the interest rate differentials look as if they are just going to widen and widen before Mario Draghi even considers raising interest rates as an ECB policy.
Thirdly, the BEAR FLAG with its measure move to 1.1000 is still in play until we break above 1.1770 in my opinion.
We are banging our head against the down sloping channel resistance c.1.3200 at the moment.
Very similar to the single currency vis-à-vis the powerful move last Friday. We must consider BREXIT and the fact that the huge uncertainty of all that BREXIT contains still hangs over the GBP currency like the sword of Damocles.
An upside move in my opinion therefore should have limitations. The DOUBLE TOP measure move to 1.3040 has in my opinion played out and is no longer a pattern to follow (see chart black / brown and green dotted lines).
There are BEAR FLAG patterns off the weekly and monthly charts which have measured moves to circa. 1.2600 – 1.2700. During this week, I will be looking at these in more detail.
Upward moves towards the 200 DAY SMA at 1.3580 would be a gift, an early Christmas but in reality, I just cannot see this level being achieved unless a BREXIT deal is completed and announced.
Reaction at the trend line resistance is key for the early part of this week.
Last week I talked about “SELL THE RIPS”. We are below trend line resistance and shorting around the trend line resistance of 0.7540 around the 61.8% retracement makes some sense to me looking forward.
Whether we are in a larger corrective move is “STILL” out for debate at the moment in my opinion.
We have a BEAR FLAG measured move to the “John Key” level of 0.6525.
I think that this is a SELL THE RIPS trade and the 61.8% retracement level of the recent move lower at 0.6850 looks a great area to look at (BLUE LINE). This would still keep the BEAR FLAG in play!
No change in my commentary from the last two weeks:
We are now breaking out higher and, in my opinion, could possibly move as high as 1.3600 looking at the triangle break pattern.
It is a powerful move higher given the fact that we have broken through a 2-year-old trend line.
It is still a danger to get too heavily involved with this pair given U.S. / Canada tariff issues. I think NAFTA is now off the table until 2019. TRUMP however could withdraw from NAFTA and this should send this pair much higher, very quickly based upon uncertainty etc.
Last week we played the Fibonacci levels of 76.4% back to the 61.8% level. This should act as support this coming week. Bear in mind Monday this week is a national holiday in Canada as Canada Day celebrations will be taking place.
Looks like a nice BULL FLAG coming into play very soon.
Not wanting to sound boring, but, no change from last week despite all of the geopolitical news.
A nice triangle break will be on the cards very soon.
At the moment the pair looks bullish and a bullish break would favour many people. However, the pattern has been maintained in a very orderly fashion and it is quite likely that we see this pair pushed lower from trend line resistance c.111.00.
Time will tell.
2. THE WEEKLY FX PREMIUM TRADING SUMMARY:
2.1. INTRODUCTION...SOMETHING TO CONSIDER:
Trading with me via the FX PREMIUM option is a relative low-cost option to give you some or all of the following: -
Confirmation of what a trader who actually trades his trades, thoughts and ideas is doing and thinking in real time.
I am a long term “POSITION” style trader at heart. I believe in FUNDAMENTALS first. If you are a TECHNICAL trader first this could be a good fit. I have a proven record.
I DO NOT trade if I do NOT see a trade.
I am a disciplined trader. I have my TRADING PLAN, plus my RISK, MONEY and HEAD MANAGEMENT rules that I stick to.
If your trading is NOT as smooth or rewarding as you would like, even if you just captured just 50% of my trades due to geographical location issues, you should still cover the cost of a subscription if you traded single mini lot trades in a year.
I tell it as I see it. I am not interested in bullsh*t.
You can get on board and join my FX PREMIUM subscribers and subscribe to the “10,000 pips a year” group from as little as CAD$10 for the first 10 days and then CAD$150.00 per month, currency conversions for CAD$150 are roughly as follows: -
GBP £90 per month
EUR €100 per month
USD $115 per month
JPY 12,500 per month
AUD $160 per month
NZD $170 per month
CHF 115 per month
Go to my website www.weeklyfxdrivethru.comfor more details under the TAB – “SUBSCRIBE”.
2.2. WEEKLY FX PREMIUM PERFORMANCE HIGHLIGHTS:
June TOTAL: 1,520 net profitable pips
2018 TOTAL: 7932 net profitable pips
2.3. WEEKLY FX PREMIUM PERFORMANCE SUMMARY:
(Incorporating the last 5 WEEKLY FX PREMIUM TRADES)
3. WEEKLY FX PREMIUM SUBSCRIBERS ONLY:
3.1. TRADING REVIEW:
3.2. OPEN TRADES... HOW WILL I TRADE THIS WEEK:
3.3. MYFUNDAMENTAL & MACRO THOUGHTS:
3.4. THE MARKET SENTIMENT CHART:
3.5. CURRENT LIVE TRADES & LIMIT ORDERS:
3.5.1. CURRENT LIVE TRADES:
3.5.2. CURRENT LIMIT ORDER TRADES:
3.5.3. BREXIT RELATED TRADES:
3.6. FX BROKER NEWS:
4. 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: #288 FREE NEWSLETTER
DATE: 30th June 2018