I am going to start this week’s blog with some book keeping notes.
This is my last blog prior to my summer break, the next DRIVE THRU blog is scheduled to be posted on September 7th2019. I will, however, provide month end summaries of the results of my trading via the WEEKLY FX PREMIUM at the end of July and August.
Moving on and in the past week...
- Boris Johnson is now confirmed as the new UK Prime Minister and leader of the Conservative Party.He has started with gusto. He has removed the Theresa May balanced cabinet approach, which frankly assembled with good intensions was a recipe for the disaster it was. It has been replaced by a pro BREXIT cabinet.Johnson has already advised the EU that the “Irish Backstop” is a non-starter and that he will not be building a border. The EU have retorted the withdrawal agreement is not going to be re-negotiated. Leo Varadkar, the Irish Taoiseach has said the “Irish Backstop” remains.So, the UK leaves with no deal.... A HARD BREXIT. The UK saves GBP39 Billion and who builds a border? There is a belief in the EU that the UK will do this. From where I sit right now this is down to IRELAND and the EUROPEAN UNION.The EU has no idea what or who they are dealing with here. This will be a fascinating summer/autumn(fall). The UK and EU parliaments are basically not around for August and with the BREXIT date being October 31st 2019 that leaves just 60 days of “whatever” to deal with.
- Mario Draghi failed to impress the markets by failing with details in depth of the support the ECB is going to introduce into the EUROZONE economy in September.The markets were left a little disappointed that he wasn’t specific about exactly what the ECB were going to do. Low on details until the actual event happens is the usual way with the ECB.As a result, the EUR/USD went on a roller coaster ride strengthening and then weakening into the day’s close.So in the usual EU style the “Can” has once again been kicked down the road. Draghi with just two meetings left as ECB President is going to let the FED and Jerome Powell go first and react later.
- Tensions in the Strait of Hormuz have increased, following the IRANIAN Republic Guard capturing a UK flagged tanker. This was in retaliation of the UK seizing an oil tanker off Gibraltar en route from IRAN to SYRIA, which was in violation of United Nations sanctions.There are reports some confirmed, some unconfirmed of rockets being fired. The tensions here are increasing and it may not be too long before this situation escalates.
- Mnuchin and Lighthizer are having a “Jolly Boys” outing to Shanghai to continue trade talks with their opposite numbers in the CHINESE government, in an attempt to progress a TRADE DEAL agreement between the U.S. and CHINA.TRUMP sidekick Larry Kudlow has already played down expectations and frankly it makes sense for the CHINESE to keep these talks going on and on and on and play the real long game at least through the 2020 U.S. elections.
- President Kim has been firing “Nukes” again and whilst it looks like this was possibly a move to gain leverage in the upcoming talks with the U.S., who knows?
- TRUMP continues to be TRUMP... enough said!
I am personally looking forward to 4/5 weeks away from the daily nitty gritty, usually, I would say that the summer months trading in the FX market are tantamount to watching paint dry. With the above list maybe, it will not be a long hot summer and as quiet as usual. I will be ready to step up if required to.
Plus, coming this week, we have the next, eagerly awaited FED meeting with Monetary Policy Statement and Press Conference scheduled for July 31st2019.
This event should deliver a fair degree of volatility into August. One piece of news that was hanging around in the air was cleared up by Larry Kudlow on Friday which was, the White House has no intention of directly intervening in the FX market. The debate of whether to cut interest rates 0.25% or 0.50% has consumed the media. The sales of “depends” for the BLOOMBERG, FOX BUSINESS and CNBC TV Anchors must have increased to record levels. They were wetting themselves with over a week to go, God only knows what state they will be in on the day itself?
What do I think vis-à-vis the rate cut?
My position has not changed from last week or the week before. I believe the FED has been bullied by TRUMP and Bullard is putting himself out there sucking up to TRUMP as the possible Powell replacement. I maintain the FED if they cut are giving away the equivalent of GOLD should a world recession hit. In writing this, I know that there are pockets of weakness in and around the economy BUT in general terms the U.S. is in really good shape.
I expect a 0.25% rate cut this coming week, and one further cut later in the year. My over-riding thought though is that the FED should keep as much back as possible to use tactically should the much talked about global slowdown materialize. Giving away the crown jewels now is a weakness in my view.
I listed several geopolitical events earlier and it may be because of these and TRUMP in position that my summer break may NOT be as quiet as I am thinking it may be.
In advance of the upcoming FED announcement, I closed my CORE SHORT POSITIONS with EUR/USD and EUR/JPY, taking a net +157 pips and +86 pips from both positions. I still have USD/NOK, USD/CAD and USD/JPY CORE POSITIONS in play.
I have also introduced a SUMMER PROMOTIONAL campaign for new subscribers to the WEEKLY FX PREMIUM. Full details are on my home page under the Promotions folder under the tab History / Performance. Additionally, details can also be found in section 2 of this blog.
This PROMOTION gives FX traders a great opportunity to try the WEEKLY FX PREMIUM to the end of 2019 on a great deal.
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:
I closed my CORE SHORT position after the ECB Press Conference last week. It was a difficult news event to trade in my opinion. The markets were extremely short the EUR and when Draghi disappointed the markets, I closed both my EUR/USD and EUR/JPY trades stating to subscribers that a short squeeze was possible. We saw an 80-pip squeeze in EUR/USD and well over a 100-pip squeeze higher with the EUR/JPY.
- I did not expect to see the EUR/USD moving lower to just above key support at 1.1100 on Friday.
- The DAILY candle last Thursday was a really strong “Bull Hammer” it ended up on the day being a completely indecisive “DOJI”.
- The FED are going to cut. It’s just a question of 0.25% or 0.50%. The markets seem to be in favour of 0.25%.Will this weaken the USD?It depends on the language that the FED have written in the Monetary Policy Statement.
- The last thing that Draghi wants to see is a weaker USD and a stronger EUR.
The above are all the factors I am considering at the moment. My thought process is that this week we remain in a tight pricing range pending the FED statement. I cannot see institutions wanting to second guess the FED.
One thing I do know is that 1.1100 is key support. If that should give way, we should see 1.1000 very quickly. Prior to closing my CORE POSITIONS my longer-term target with the EUR/USD was the weekly chart gap fill of 1.0780.
On the upside, should the EUR/USD get above 1.1260 This should give the bulls a chance.
Not wanting to be a “Debbie Downer”, I do NOT think that the bulls will take charge, but it does depend on the FED’s language.
So, we now know that Boris Johnson is the new UK Prime Minister and leader of the Conservative Part.
On the chart below, you can see that we are breaking lower and I think this puts 1.2000 in play in the coming weeks. On Friday, last week we dipped below 1.2400 for the first time since April 2017.
Johnson has loaded up his cabinet with BREXITEERS and some are saying that the make up represents more of an election team. Timing for Johnson is key moving forward. The EU has already said that the withdrawal deal will not be changed. Johnson is prepared to exit with no deal if he can force this through Parliament.
The chances of a delay on the 31stOctober 2019 exit date are increased as Johnson may go the people and have a snap election to have a mandate moving forward.
It is a mess and the ultimate game of spoof.
The 88% retracement for cable is at 1.1638. Do I think we could drop to this level? It depends how messy it all gets, but one cannot rule it out. It is all very depressing for cable at the moment.
We need to see a break above 1.2750-70 in my opinion to give the GBP bulls a chance to regain control.(INSERT GBP/USD CHART)
I let myself be STOPPED OUT on a short trade I had with this pair believing it was about to RIP higher. What happened was it topped out, reversed and it now sits +85 pips below my initial entry price from which I was stopped out for 90 pips.... bugger!!
The move lower looks to still have more legs, 0.6830 would equate to a full retracement of the last move higher. At 0.6995 at the 14 DAY SMA, in my opinion that is where the bulls can strike to take control again.
Right now, it all looks rather bearish.
I have unusually for me, been absent from shorting this pair.
The chart below looks bearish. In my opinion, the bulls will not regain control until the 14 DAY SMA at 0.6697 and the 200 DAY SAMA at 0.6722 are surpassed.
Obviously on the down side the level of 0.6600 looms big, large and key.
In my TRADE PLAN relating to future potential CORE POSITIONS the NZD features prominently. I just cannot see me entering trades until the fall trading sets in.
I hold a CORE SHORT position and today since its inception I have generated well over +400 pips from my trades.
Right now, I am under-water and holding two short trades. I am not particularly happy, but I am, (fingers crossed), expecting USD weakness from the FED rate announcement and this should help my open trades.
As you can see, we are up against resistance with the bearish channel on the chart below. I do know that to break lower through 1.3000 will be huge.
This is a pair that is confusing to follow, it behaves irrationally at times but once it is in a direction it does trend most of the time and has the ability to shrug off data that hits the market against the trend that is in place.
1.3285 may be where this pair will end up pre-FED.
I am waiting patiently to enter long at lower levels, close to the trend line support on the chart below.
This pair is subject to the whims of the EUR, GOLD and a flight to safety move, in addition moves in EUR/CHF are one of the key drivers of this pair.
The EUR/CHF will come under intense pressure lower should the ECB introduce another round of QE in September and then the markets will be looking to see how the SNB react. Will they start intervening?
Whilst I am trading the USD/CHF, you always have to have one eye on the EUR/CHF.
I maintain a CORE SHORT position. I am looking for the “Flight to Safety” move to dominate Q2 and Q3 moving forward.
I am happy to stay short albeit I am under water with my open trade at the moment. I am hoping that the FED will create USD weakness which will support my open trade and my overall CORE SHORT POSITION.
Earlier last week, I removed positions with this pair but, I am looking to add back to my longer-term CORE SHORT position.
2. THE WEEKLY FX PREMIUM TRADING SUMMARY:
July2019 so far: +955 net profitable pips.
2019 year to date: +9,601 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.
FINALLY: I have just recently launched CORE POSITION trades. These segregate my longer-term trades into a category that may appeal to part-time traders and those who cannot access to their trading screens more than two or three times a day.
This year I am now operating within my TRADE PLAN three categories of longer-term position trades: -
- CORE POSITION TRADES*
- NON-BREXIT POSITION TRADES*
- BREXIT RELATED TRADES*
*All categories have specific goals and objectives and vary on position sizes, RISK and RISK TOLERANCE.
THE WEEKLY FX PREMIUM: SUMMER PROMOTION 2019
3. WEEKLY FX PREMIUM SUBSCRIBERS ONLY:
3.1: MY TRADING REVIEW & GENERAL THOUGHTS ON THE FX MARKET:
3.2: LOOKING AHEAD – TRADING THOUGHTS FOR THE COMING WEEK:
3.3: POSITION TRADES (NON-BREXIT):
3.4: POSITION TRADES (BREXIT RELATED):
3.5: EXISTING CORE POSITIONS – UP TO DATE EXCEL SPREADSHEETS:
3.6: POTENTIAL CORE POSITIONS:
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: #331 FREE NEWSLETTER
DATE: 28th July 2019