This month has certainly been a roller coaster from my own trading perspective. After a great start I gave it all and more away, re-focused, picked myself up and got back in the saddle again, reclaimed a positive outlook and then mediocrity into the month end.
At the moment, September is positive +250 pips. I usually guide myself towards +1,000 pips per month over 10 months, I discount August and December as non-events.
I am being caught out by the JPY trade.
It looks like TRUMP now under an impeachment investigation and according to recent polls losing some of his base support may opt for an interim watered-down CHINA trade deal. It also looks like the USMCA deal will also be pushed through in the next 4-6 weeks. TRUMP needs wins. He needs a positive agenda and above all he needs to wind back the rhetoric.
There was a leaked behind closed doors meeting where he was videoed, calling out and questioning the whistleblower in the impeachment investigation.
Basically, TRUMP has a big mouth and is uncontrollable, he just does not understand when to shut the f**k up. It will not be the DEMOCRATS THAT BRING TRUMP DOWN... HE’S MORE THAN CAPABLE ON HIS OWN!
TRUMP has stated that the U.S. economy will crash if he is impeached. Does he actually believe in such an extreme political environment of Washington that the Democrats care about this, their focus is to remove TRUMP?
So, what to trade and how am I reacting to the events...
CHINA TRADE DEAL:
- I have removed trades and several limit orders that are long the JPY currency (i.e. Short NZD/JPY). I am now looking for the JPY to strengthen and so moving forward:
- I have CORE SHORT USD/JPY trades that I will hold but I have removed some of the staggered entry set ups that add to my total position. So, I am managing my RISK.
- Long time followers of this blog will know through my chart analysis section that I believe the only winner in a U.S. / CHINA trade deal will be the U.S. even with a tame, get something agreed deal.
I will fade the TRUMP SPIN against the AUD and NZD currencies which I believe will be the biggest losers.
USMCA DEAL BEING RATIFIED:
- The CAD$ should strengthen.
- I have a CORE SHORT USD/CAD position in play.
- Long CAD/JPY is the trade that matches both the USMCA and CHINA trade deal outcomes.
Just a note to say that if you are struggling with trading this month you are not alone. My peer group are struggling in almost the same way that I have this month. The market is rangebound and basically, we move from one range to another.
Below I have tried to show you what I mean via the EUR/USD daily chart.
As you can see below, as the price moves from the BLUE, GREEN to RED zones, we test the range limits, then consolidate the move before heading lower, very standard most of the time for currency moves. However, the headache is tight daily ranges, the moves are slow and painful. As a DAY TRADER possibly OK to trade, as a SCALPER most definitely fine, but, as a SWING trader, almost impossible in my opinion.
This trading environment is also exacerbated given the market knee-jerk reactions to tweets.
Finally, in this section....
Trading cable is going to get rougher over the next few weeks as we approach Halloween.
I know many traders are long very small positions given the belief that Cable will rise to fair value when the BREXIT stage one RISK EVENT is over; I am one of these traders.
Please make sure that your “stops” are wide to cope with spikes, examine the cable flash crash limits of about 3 years ago and look at the BREXIT spikes.
I totally agree with many traders that the cable fair value is closer to 1.7000. I see a 25% leap on a BREXIT conclusion but in the interim I see lower prices across all GBP related pairs.
Just keep in mind, there are huge institutions looking to pick up cable on dips. At a level it has a bargain value. They see the opportunity to make a killing financially. Our goal as retail traders is to ride the coattails higher.
1. FX - FORWARDS, BACKWARDS & SIDEWAYS:
1.1. THIS WEEK’S ECONOMIC DATA:
Courtesy of Forex Factory.
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:
Nothing much has changed since last week. We continue to grind lower through consolidation moves along the way, if that makes sense.
The WEEKLY chart below: -
- Descending Wedge pattern. Usually the outcome is a strong reversal move higher.
- Base of wedge is at 1.0910.
- WEEKLY chart GAP FILL is at 1.0780.
- Huge support at multi-year trend line from September 2000 is at c.1.0770.
- Top of wedge to confirm any breakout is at 1.1200, confluencing with the 61.8% Fibonacci retracement at 1.1182. (see PALE BLUE) rectangle.
So; what to do?
I am probably going to wait. If you go long at the base of the wedge you know your RISK which, is going to be best lined up with the multi-year trend line being used as support.
Since last week and as we get closer to the Halloween BREXIT deadline cable is going to get more and more volatile. To add into the mix, last week UK Prime Minister, Boris Johnson suffered the UK Supreme Court defeat about unlawful Parliament prorogation.
The upshot of which was, Parliament returned in chaotic scenes of finger pointing, red faces, border line house of commons etiquette with regards to language in exchanges and frankly it just highlighted to the UK population the very simple fact; the voters said leave and the politicians who think that they know better want to remain inside the EU.
Sad but true... Democracy is dead in the U.K. and every political leader has their own definition of democracy.
As a result of all the UK negative headlines, this pair had dropped out of the BULL CHANNEL.
I think moving forward for the next few weeks the line of least resistance is lower, but at some point, value traders, mostly those institutions with deep pockets will step in.
Where is the value level?
We saw it recently at 1.1950.
Support at 0.6740 held.
As you can see from the BURGUNDY rectangle on the daily chart below resistance is at 0.6830.
Usually, I would say that this is an opportunity area to enter short, however with what appears to be a CHINA / U.S. trade deal of sorts in the near future we may move higher than this level, but I do see the AUD/USD a short trade longer-term. I will be looking to fade any trade deal.
A nice spike off 0.6270.
Possible DOUBLE BOTTOM pattern in play on a break above 0.6450 as shown on the chart below in BURGUNDY, with a measured move target of 0.6630.
This is very much at the moment a wait and see.
Like the AUD/USD, I would be looking to fade any CHINA / U.S. trade deal.
Nothing has changed in the past week.
I still hold a CORE SHORT position.
1.3300 appears to be the level that sellers like to step in.
This has been a frustrating CORE POSITION to hold of late. The announcement of a Canadian Federal Election has also muddied the waters a little.
I was quite happy with the fact that the USMCA deal would soon be ratified and my thought process is that this should provide CAD strength.
A messy looking chart from my perspective.
We still appear to be trapped between the 14 DAY SMA at 0.9915 and the 200 DAY SMA at 0.9950.
We are tightening and a breakout looks on the cards to break the SMA levels.
I prefer to be long from much lower levels. In 2019, I really have not participated well with trading this pair.
No change from last week.
I hold a CORE SHORT position.
Long-term, I am still bearish this pair and my targets are between 100.00 and 102.00.
At the moment frustrating to hold as we range between 107.80 and 108.40. We need a break preferably lower!
2. THE WEEKLY FX PREMIUM TRADING SUMMARY:
September 2019 so far: +250 net profitable pips.
2019 year to date: +13,246 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.com has 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 find 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 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.
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:
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: #337 FREE NEWSLETTER
DATE: 29th September 2019