In many regards, I could just re-post last week’s blog post. Yes, I will admit some additional “facts” have come to light vis-à-vis BREXIT and the CHINA / U.S. trade deal, but these moves are not really ground breaking, or earth-shattering news, what happened was predicted.
Last week my blog title was: -
CENTRAL BANKS ARE MOVING BACK INTO THE LIMELIGHT:
Last week we saw further evidence of this with growth numbers for 2019 and 2020 from both the Bank of England (BOE) and the Reserve Bank of Australia (RBA) both slashing growth expectations. It really does look as if we are heading towards another worldwide recession.
I am 100% a FX trader, I obviously look at OIL, METALS and STOCK MARKETS, I even look at CRYPTO’S sometimes. Over these past two weeks FX has basically come to almost a standstill. The EUR/USD has been drifting lower but in a very tight range each day. This tight range has had an effect on the overall FX market, there have been just one or two exceptions based around key news events, but in real terms the FX market has been dreadfully slow.
I also referred to the fact that I thought we were at a new set of crossroads and with the growth cutbacks the crossroads scenario would appear to be playing out.
So, what’s next?
FX: TIGHT RANGES ARE SET TO CONTINUE
Probably just more of the same. We are on hold on BREXIT and we are waiting for confirmation of the fact that TRUMP / XI will definitely not meet pre the U.S. trade tariff deadline of 1stMarch regarding the U.S. / CHINA trade deal.
I cannot see anything else that could create a response big enough to kick start the FX market. As I mentioned last week the markets are digesting the sentiment change from the FED, the subsequent changes in growth predictions from other Central Banks and the fact that the TRUMP tariff program with CHINA and probably the EUROPEAN UNION will move to a new level of intensity.
Basically, we have uncertainty, because markets lack a great deal of information, not just on BREXIT or CHINA trade but also economic data missing from the U.S. government shutdown. This time uncertainty has manifested itself in the FX market as very range bound conditions.
I have no doubt that a major breakthrough with BREXIT will kick start FX, but equities (S&P) are very range bound as well.
From a trading perspective, this type of market affects all trader styles, whether you are a scalper, day trader, swing trader or position trader. This really is the time to set your entries and exits and wait for the trades to come to you. It is so tempting to chase the market at times but all you will do is set yourself up for a trade that you do not want to be in.
I am a position trader, I have my TRADE PLAN in two camps at the moment.
Firstly, since Q2/Q3 2018 I have been trading BREXIT related trades with a specific easy to identify plan. As I have told my FX PREMIUM subscribers on many occasions the approach to these trades will remain unchanged until a BREXIT deal is signed, sealed and delivered.
This type of trade approach could be with me for another two years as the BREXIT exit trade deal with the EU has not yet even started. It is a straightforward trade approach and style and has yielded a huge amount of pips in 2018, I expect the same this year as well.
Secondly, I have my new trading approach for 2019, As a position trader, I am taking less trades and they are focused more on range limits to take full advantage of a trade over an extended period.
At the moment, I cannot get longer-term trades to get the traction I want and into February, in my own mind despite making $$$ and generating pips, I am not yet sitting in the types of trades that I had expected. I am not struggling to make pips, but I am struggling to get traction. This is a typical feature of a range bound market starved of data and fundamentally caught between a rock and hard place vis-à-vis direction.
There is no magic answer apart from saying patience is required.
Fundamentally, there is still Central Bank divergence, and this has not changed, but from a macro level there is, as I have stated already, a lot of uncertainty.
To trade clever, one should in my opinion, sit it out and wait. You can do a lot of chart analysis and get your levels noted and ready for either direction. But at the end of the day wait for the data.
1. FX - FORWARDS, BACKWARDS & SIDEWAYS:
1.1. THIS WEEK’S ECONOMIC DATA:
NOTE: Only the items that interest me are listed here.
1.2. BIAS CHART - USD MAJORS SUPPORT and RESISTANCE:
1.3. USD INDEX (DXY) OVERVIEW – MY THOUGHTS:
The Daily DXY chart is below and my thoughts, ideas and comments regarding the DXY are contained on the chart.
1.4. USD MAJORS - TRADING CHARTS and MY THOUGHTS:
This pair as I mentioned last week is basically still moving sideways, albeit drifting slowly lower. This pair the most liquid pair in the FX market is starved of data and what data that has been forthcoming has only served to keep the pair almost static.
On a daily basis of late we are moving in just 30-45 pip ranges. For as long as this pair remains contained the rest of the FX market will also be subdued.
We are in the range identified on the chart below of 1.1275 to 1.1575. It's a clear 300 pip range. We have a huge long RED (BLACK) candle and whilst we sit in the range one cannot ignore the strength of the weekly negative move. Obviously, the round number of 1.1300 should offer up some support BUT a break lower brings not just the range support but beneath this the 2018 low of 1.1215. Below here we see 1.1000 in my opinion.
Nothing to do here pre-BREXIT.
I am more interested in placing ARMAGEDDON trades in position to take advantage of some of the highly anticipated DIPS in price.
The market feeling is that a deal will be done to avoid a BREXIT “CRASH OUT” but the clock is clicking down day by day towards the end of March deadline. The smart money wants to long for a relief rally, but will we dip prior to any rally?
The RBA has cut growth and along with some poor data the AUD has dropped lower once again. My goal target level to short was towards 0.7400, I may have even been tempted at 0.7300. Alas, it really does not matter as the RBA has left the door open to both a rate increase or maybe a rate cut being the next RBA move.
Initially, the markets read the RBA statement as a little HAWKISH only to do an about face 24 hours later as the speech given by RBA, Governor Philip Lowe was DOVISH.
We ended the week with a very bearish RED (BLACK) candle. Obviously, 0.7000 looks to be a big support level.
With the above in mind, I am a seller on rallies, but I would like a decent pullback.
Really poor jobs data was released last week which caught most analysts off guard. As a result, the move lower by the NZD was not expected.
Another huge RED (BLACK) candle on a weekly chart. I want to be short this pair and I am hunting an appropriate entry. No surprise therefore that, I am a seller on any rallies.
I hate this currency pair at the moment.
When good data is released it reacts badly and when bad data is released it does not react....
I am staying away for now
Ultimately, I do want to be short but closer to 1.3360-80, maybe a shade higher. I am waiting and exercising patience.
We see a huge GREEN (WHITE) candle on the weekly chart, we are as you can see still in the upsloping channel and so caution should be exercised.
Not sure what to do until I am aggressively short the EUR/USD.
I have lost my mojo with this pair, a few years ago I was always in a CHF position whether this pair or the EUR/CHF. At the moment I am long GBP/CHF on the back of being short EUR/GBP, so I am not directly interested in the CHF.
I am waiting but believe this pair will be back towards 1.0500 by the year end.
This pair like the EUR/USD has been almost stagnant for the past week. Ultimately, I want to short but my thoughts are from above 110.20, maybe towards 111.00.
2. THE WEEKLY FX PREMIUM TRADING SUMMARY:
2.1. WEEKLY FX PREMIUM PERFORMANCE:
February 2019 so far: +575 net profitable pips.
2019 year to date: +2,820 net profitable pips.
The WEEKLY FX PREMIUM is my subscribed based FX support option, which offers, subscribers’ full access to my suggested trade set-ups and my market commentaries.
If you go to my website you will see more information about the WEEKLY FX PREMIUM, including the “SUBSCRIBE” tab at the top of my welcome page.
2.2. SOME OF THE BENEFITS OF SUBSCRIBING:
2.3. WEEKLY FX PREMIUM – TRADING PROJECTION 2019:
2.4. WEEKLY FX PREMIUM SUBSCRIPTION COSTS:
SILVER: 3 months (10 weeks) = CAD350.00
GOLD: 6 months (20 weeks) = CAD$600.00
PLATINUM: 12 months (40 weeks) = CAD$900.00
(Platinum renewal = CAD$750.00)
Go to my website www.weeklyfxdrivethru.comfor more details of all the subscription options under the “SUBSCRIBE TAB.
To subscribe to the WEEKLY FX PREMIUM, you will require a valid credit card.
3. WEEKLY FX PREMIUM SUBSCRIBERS ONLY:
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: #312 - FREE NEWSLETTER
DATE: 10th February 2019