I took an unexpected break last weekend. I had been away for a few days and when arriving back home, I had all the best intentions to complete a blog but the September month end compilation, posting and distribution of statistics meant that I just had no time in which to fully prepare a blog.
Not to worry, here we go again...
So much has happened since the last blog;
- NAFTA deal done now re-branded USMCA.
- ITALIAN BUDGET concerns rattle’s the EU pen pushers in Brussels.
- The DANCING QUEEN (aka Theresa May, UK Prime Minister) tries to rally the troops behind her hard stance on a soft BREXIT at the Conservative Party Conference.
- EU’s Juncker (sober... at the time I think) tells Theresa May that the CANADA +++++ deal is still on the table.
- UK Prime Minister opponent, a leader of a BREXITEER group of rebel Tory backbenchers, Jacob Rees-Mogg says the Canada deal all things considered is not that bad.
- BRETT KAVANAUGH, U.S. Supreme Court justice nomination from TRUMP likes beer... and he’s proud of it.
- OIL prices rocket higher like a salmon leaping out of a B.C. river.
- TRUMP complains at OPEC, has a go at Saudi Arabia overprices rising saying he will charge them for protection by the U.S. military machine in the middle East.
- PUTIN says the reason that OIL is ripping higher is due to U.S. sanctions against IRAN and for the cause of the problem with prices TRUMP should look in the mirror.
- JEROME POWELL (Fed Chair) following last FOMC Meeting and subsequent commentary, looks to have the U.S. on course for December 2018 rate increase and at least 3 in 2019. Central Bank Divergence is now going to be the trade of 2019. I thought that it was going to be 2017, just a little premature on my behalf!
- US 10 YEAR NOTE – spike above 3.2% in line for a BULL FLAG 3.35% measure move target.
- DXY looks to me that 100.00 is a “nap” in 2019.
I am sure I have missed a few but the above have been my highlights.
With all of the above where do I go for my lead comment?
Theresa May and BREXIT is my choice and I have just brief observations and only a few comments to make about the subject following the Conservative Party Conference in Birmingham, UK.
It is a brave call to make that she will be out / removed by the end of next month ... but I just cannot see a compromise in the UK. although, I can one with the EU27.
Let me elaborate a little, with just highlights, I could go on for pages on this subject, but I am making this really short.
Firstly, Boris Johnson and Jacob Rees-Mogg look to be the two candidates in the wings ready to replace Theresa May as leader of the Conservative Party and UK Prime Minister.
Secondly, it is widely reported that both men want the position, despite some comments from unknown sources to the contrary, but is all about timing.... not necessarily the good of the country.
Please note, I admire Theresa May’s stance on holding another referendum and her comments made in Birmingham, they showed leadership. The UK people have already voted, quite right, but this strong stance is too little too late and general opinion is that the approach with the EU has allowed the EU to dominate the BREXIT procedures. This perceived weakness has allowed the opposition within her own party to grow in numbers and split the Conservative Party into several factions.
To be honest, for Theresa May, it has all been downhill from the election after David Cameron’s resignation when she was badly advised to go to the polls to gain an increased mandate from the people. She lost both seats and confidence, and this allowed the opposition within her own party to plan and scheme looking ahead.
Briefly, back to the subject of second referendums, one should note here that regarding the EU, the DUTCH and the IRISH had follow-up referendums as people were perceived to have voted “the wrong way” from what the politicians wanted the first time.... democracy’s at work? ... no comment.
Back on track.... My Scenario,
In late October early November, Theresa May returns from Brussels with a deal in hand. She has closed party discussions prior to the parliamentary debate.
What do the likes of Boris Johnson and Jacob Rees-Mogg do?
- Should they launch a vote of no confidence at this stage after reading the EU proposal and then deal with BREXIT in the HARD BREXIT scenario?
- Should they wait until the EU / Theresa May proposal / agreement is presented to the UK parliament and tackle the leadership issue in the House of Commons as parliament votes on the matter?
I think the first option, as the cleaner route would be take a Parliamentary vote out of the equation.
If the EU27 proposal is a Canada++++ deal which leaves the Irish border crossing as it is today, Theresa May could on first sight have a chance of success. But the strings attached will no doubt be both costly in ££££’s and also hit at sovereignty issues. Therefore, such a deal may be too much of a pill for HARD LINE BREXITEERS to swallow.
Let’s assume the second option from above runs on and we have a House of Commons vote.
The simple truth is that Theresa May’s grip on control of her own party is almost non-existent. The opposition Labour Party will oppose anything presented by the UK Government on a vote. This is now partisan politics like the U.S. BREXIT HARD LINE supporters of Boris Johnson or Jacob Rees-Mogg total about 100 MP’s, therefore a deal will never get through the UK parliament. The numbers just do not add up for Theresa May. She will resign as leader of the Conservative Party and a snap general election will be called for early 2019, after Christmas is out of the way.
Then the fun really begins.
Don’t worry about the EU timings they just love kicking cans down the road and delaying matters a few months is nothing to EU.
From a Forex perspective...
The GBP will drop like a lead balloon.
I believe the calls of GBP/USD 1.1000 may be extreme, but my God, what a run back to fair value of circa.1.4000 we would enjoy.
This is NOT the end of the world. If the UK gets clarity from ending this two-year blurred mess, the markets, businesses and the UK Population will at least know what they are dealing with.
It will be hard if not impossible to trade the cable. Right now, it is BULLED UP with positive talk. I believe that we would see a capitulation move lower on the timeline that I have described. We may spike lower to the lower 1.20’s but the market will settle, and it will base. At this point, it is time to think about entering long.
Over the past couple of months helped also by the “RISK OFF” periods in the market I have made a killing on GBP cross rate pairs (GBP/AUD and GBP/NZD in particular and the EUR/GBP), I would love to trade these pairs long again from much lower levels. The opportunity is exciting.
This is now a wait and be patient play.
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:
Longer-term into mid 2019, I do see the DXY tacking the big 100.00 level. Between now then we have BULLS and BEARS fighting for control at previous resistance around 95.70.
In my opinion, there is only one way that the USD is going, based upon Central Bank Divergence the move will be higher. Once through the present level which may take a few attempts we have to tackle 97.00, at which time I expect a period of consolidation before the push higher.
For now, we need to exercise patience and wait for the move to develop.
Should the DXY move lower on USD weakness, my thoughts are that this would only be temporary.
1.5. USD MAJORS - TRADING CHARTS and MY THOUGHTS:
I posted a chart on twitter last Thursday stating that the trading range was 1.1460 to 1.1540 and that this range should contain pricing through NFP. My concern was the resistance level at 1.1540. I felt comfortable though, on the basis that the ITALIAN issues should keep the EUR pressured lower.
As usual I took a trade on the short side and set my stop at 1.1550. I was top ticked a while after the NFP data was released and it goes without saying that the pair moved lower in the week’s close.
I just wanted to share that because not all my trades are good ones. I have losses more than I want to have obviously, but I do have losses. The trade is referenced in section 2.3 the trade reference was MOM090.
Support at 1.1460 is key moving forward. Maybe to be safer resistance should be at 1.1555-60!!
Lots of BREXIT news floating around at the moment and I am having a party at the moment with my GBP CROSS-RATE pairs with what I call my BREXIT RELATED TRADES. After NFP I left over 400 pips on the table with trades I covered pre NFP.
I have already put in black and white what I think lies ahead for Theresa May, the UK and BREXIT at the beginning of this blog. Trading the GBP is dangerous and open trades are liable to severe volatile moves that could be so strong margin calls will be made on those of you that gamble / over trade, call it what you will rather than trade managing RISK.
Key levels to look out for are 1.3300 on the topside and support breaking below 1.2900. Personally, I welcome another break lower before moving forward towards 1.4000 – 1.5000. With my thought process vis-a-vis Theresa May etc. I see a test of 1.2000 – 1.2300 area again with all the uncertainty that lies ahead.
Bold calls from me here....
Let’s see what happens.
The MONTHLY chart below is my favourite for this pair at the moment. We have trend line resistance of 0.7330 inside the rectangular trading range box.
My target short level was not hit. This pair has traded so heavy of late, it’s next test on the downside move is 0.7000. A break of the 0.7000 level opens up 0.6750, which, is at the base of the rectangular box on the attached monthly chart.
Bulls do not get control of this par unless we see a break above 0.7350, in my opinion.
This pair has been under real pressure of late, Business Confidence is low in New Zealand and it is just a one-way street at the moment.
Key areas on the way lower are obviously the 61.8% retracement at 0.6400. I do expect a battle at this level and some sort of a bounce although it could be nothing more than just a dead-cat bounce.
The real battle zone lies a little lower as referenced on the monthly chart below between 0.5925 and 0.6100. A break through this zone and we may be heading for 0.5000 in the longer-term.
The BULLS do not assume any control of this pair unless we are back above 0.6870.
I am short this pair and out of the money a little. I believe like many others that the BOC will be raising rates soon. I made the decision to remain short through NFP in the full knowledge that my position could deteriorate... which, it has.
Before the end of the year I see this pair below 1.2750. The upside should be contained by 1.3160.
I have left the daily chart from my last blog, a couple of weeks ago.
If there was a trade chart that I missed this year and saw it happening it was the reversal. The DOUBLE / TRIPLE TOP move played out and I failed to go long at the base 400 pips ago. What a bloody dummy!
I think we see some resistance at the BEIGE trend line on the chart, but I do think that this pair is heading back above parity this year.
Another trade I screwed up this week. I placed my stop at 114.50, when it was obvious to anyone with a brain is should have been 114.60-70. That cost me 120 pips (TRADE REF: FUN1089).
I have decided that I am no longer touching JPY pairs this year. I seem to have real issues once again getting my entries and exits sorted. This year its cost me over 1,500 pips.
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:
October 2018 so far: 1,026 net profitable pips
2018 to date: 12,692 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 THRU THE YEAR:
3.4. BREXIT RELATED TRADES:
3.5. LIVE TRADES and LIMIT ORDERS:
3.5.1. LIVE TRADES:
3.5.2. LIMIT ORDER TRADES:
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: #295 FREE NEWSLETTER
DATE: 7thOctober 2018