As we head towards the end of H1 2019, I have been reflective this week on my overall FX PREMIUM trading performance on completed trades for the year so far, also taking stock of the current live trades that are held as longer-term core positions. This complete review will manifest itself in the June 2019 performance review which will close Q2 and H1 2019 at the end of the month.
Why was I reflective just one week into June? All will be revealed in a few paragraphs time.
Last week was a strange week for me, I am losing count of how many times I use that or similar words to describe the overview of my trading activity.
Despite 2019 being my best start to a year ever, I am reluctant to celebrate. I am grateful and positive moving forward. I never considered myself a “Contrarian” trader, but I find myself at a crossroads, vis-à-vis my FUNDAMENTAL thoughts and views, versus what seems to be the majority of analysts and bank opinions whose commentaries land in my inbox. I am haunted by the well-used trading phrase...
“It’s okay to be wrong with your trade, but, it’s NOT okay to remain wrong”
After NFP last Friday, with the above thought in mind I removed loss making trades totaling c.250 pips that I had been holding a little longer than I should have been. I hate posting losses as capital preservation is extremely important when trading in FX, but at times you just have to move on and last Friday was one of those days.
Moving on... again!
The current FX market is a wild-ride affair similar to a thrill ride in a theme park. You never quite know from day to day if we are in a “RISK ON or RISK OFF” mode today and, if so, why are inter-market correlations not working!
At the completion of most trading days I provide WEEKLY FX PREMIUM subscribers with a brief rundown of my thoughts following the NY session close. I thought this week (typos included), I would share my thoughts from Tuesday and Wednesday’s “Twit Longer” posts from last week, which gives the flavour of how it's a day to day trading environment, with obvious frustrations at the moment and to try and trade too far in advance is fraught with danger.
You will also note I mention a TRUMP “Fake News” announcement of a FOMC meeting on Wednesday that was never on the calendar. Stress or just being a numpty just not able to read properly?
In the run up to NFP, I am always looking to exit RISK and as a rule I never trade on NFP data, it is almost a day off for me.
Back on point...
Last week was a relatively quiet week for me which allowed me to plan ahead and strategize for Q3 and longer into H2. I will elaborate more on this at my H1 summary, but we have witnessed a game changer in the past week.
The TRUMP weaponizing of tariffs for political justifications, vis-à-vis MEXICO, rather than economic reasoning was in my opinion a game changer. In one blow, TRUMP ripped up the USMCA deal and gave the world economy a view that no deal no matter how hard fought to negotiate was worth the paper it was written on.
Add to this, the FED interference and the pushing of the markets to try and influence the FED decisions we are witnessing a MASTER MANIPULATOR in operation, who has the bare faced nerve to accuse others around the globe of MANIPULATION.
I think all markets not just FX are now practically operating in ATWEET TO TWEET STRATEGY.
Without doubt the TRUMP tweets move markets but the unpredictability of the contentscrews with longer-term strategies.
Central banks are quickly racing to zero interest rate policies and the credibility of some will be brought into question.
I am NOT a fan of markets dictating a country’s economic policy and we are certainly on shaky ground with this topic especially when you look at the FED and the severe pressure it is under not just from TRUMP, but also Wall Street who I now see have 4 x interest cuts priced into its forward projections.
This statistic is just incredible given that we now seem to be in an environment that is 100% reactive to data and continuing trends in data apparently no longer count for anything. For a Central Bank to remain credible, not just the FED all of them, they need a rational policy based on an actual clear platform with a forward-thinking policy NOT the TRUMP back of a cigarette packet policy approach. How on earth can business invest in a 100% reactive environment.
This is a topic that will no doubt be revisited on numerous occasions. The next two weeks are huge.
- MEXICO TARIFFS – YES or NO
- G20 MEETING
- CHINA TRADE DEAL UPDATE
- FED INTEREST RATE DECISION
Watch this space...
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 has broken out above the longer-term down sloping channel resistance trend line. I know much has been written about FED interest rate cuts and gloom about the world economics.
At the moment it has not been reflected as one would have thought with this pair. One major reason is that the EUROZONE economy as a whole is in poor shape. If everything was that bad, I would have expected this pair to be edging towards 1.1600 by now. The simple fact is NOTHING in FX is clear cut at the moment.
Recent candles as you can see on the DAILY chart below, showa very bullish pattern, BUT I am still NOT 100% convinced and I know, I am all alone....
We have the 61.8% retracement level (LIGHT BLUE FIB) at 1.1390 (Jan 2019 – May 2019 low) and 1.1406 being the 88% Fib level (March 2019 – May 2019 low) confluence which I think could see sellers step in.
There are a huge number of geopolitical factors at play that could affect the way this pair moves.
Theresa May left office last Friday 7thJuly. She is now in temporary charge pending the selection of her successor.
Cable is a difficult pick at the moment. My longer-term bias is to be long. For now, you need to take a very long-term view when trading anything GBP in my opinion.
Following NFP last week, this pair appears to be reacting quite well to USD weakness and on the WEEKLY chart below we have a nice strong bullish candle. Can we establish this as being a turn higher? I think only time will answer this.
Leadership campaigns and the UK House of Commons are still all over the place, the next few months are NOT straightforward at all for this pair.
However, being constructive a move above 1.2850 would certainly have me thinking that a shorter -term correction move is now in play. This is a big ask given the overhead conditions in which the cable trades.
This pair is the “KING” of false breakouts.
I currently hold a SHORT POSITION (POS301), I am not amending my stop loss level, just in case this is the time we see a full-on AUD spike higher.
However, I am expecting a move higher will attract sellers to step on maybe around 0.7075 the 61.8% retracement, or a trend line resistance around 0.7120. I will be more than happy to re-enter short from these higher levels, in fact the higher the better. It goes without saying I prefer not to lose my existing short trade but if it goes it goes.
The DAILY chart below shows what I think will happen.
Spike to the 61.8% Fibonacci level at 0.6760 and then sellers will step in to take this pair lower once again.
Just because I want this to happen and its my plan, it may of course not do this, and I will have to have a re-think. It seems a plausible move in my mind, but I will need to have a backup plan in place as well.
Longer-term my BIAS is short, but I am now as mentioned planning to short from higher levels. To be honest the higher the better.
I was wrong a couple of weeks ago when I said that 0.6625 may be a good area to enter short, it is obviously much higher now given the mix of geopolitical factors.
Wow, on the WEEKLY chart below that is what is called a bloody big RED candle. Usually candles as decisive as this example have similar ones to follow.
I have been completely sidelined from all thing’s CAD of late and like many I was expecting the Head and Shoulders pattern on the chart below to play out. By the way it is STILL NOT invalidated... yet!
Despite this powerful move, I do not want to have a knee-jerk reaction to it. I am still in my “Not sure what to do” mode with this pair. OIL issues over IRAN and the Straits of Hormuz are not helping. The chances of a military incident are increasing and the fact that the IRANIAN regime and TRUMP are both extremes with regards rhetoric does not bode well looking ahead.
I write this knowing that TRUMP has said he does NOT want a military conflict. I have learned that what TRUMP says and what TRUMP does are two different things.
I am remaining sidelined this pair for now.
As you can see from the WEEKLY chart below, this pair is getting close to a buy zone.
Will I pull the trigger is the question?
I really do have a wish to be long USD/CHF. Last time I had the opportunity I procrastinated over trying to get the best entry level and at the end of the day the opportunity passed me by.
I really screwed up this pair just prior to NFP. I removed a short for basically flat money to reduce my overall RISK going into the NFP data.
I guessed wrong on the NFP number placing too much emphasis on the PMi contributing data which just did NOT come through.
I need to re-enter short early this week, my bias is still short.
2. THE WEEKLY FX PREMIUM TRADING SUMMARY:
June 2019 so far: +80 net profitable pips.
2019 year to date: +7,986 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.
My website www.weeklyfxdrivethru.comhas full details of my trade projection for 2019 along with reasons why you should consider joining my other subscribers at the WEEKLY FX PREMIUM. You will this information under the “History and Performance “tab
Plus, my website also contains full details of the subscription options available. You will find this under the “Subscriptions” tab.
3. WEEKLY FX PREMIUM SUBSCRIBERS ONLY:
3.1: TRADING REVIEW:
3.2: LOOKING AHEAD - IDEAS FOR THE COMING WEEK:
3.3: FUNDAMENTAL: THOUGHTS AND VIEWS:
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: #325 FREE NEWSLETTER
DATE: 9thJune 2019