Every time I sit down in front of my computer screen and start to type about a subject that is front and centre in the news, I wonder will I be scrapping what I have just written because news events have overtaken my thought process whilst typing!
I know when you have your own blog you have license to voice your opinions on a whole host of subjects, literally get on the SOAPBOX and off you go. I know at times my language can be colourful and I know that I am harsh and often critical on my pet subjects such as; BREXIT, THE EUROPEAN UNION and of course not forgetting TRUMP. This week’s blog focuses on the effect TRUMP has on the FX market.
Since his inauguration, his Presidential style, or lack of it, coupled with his aggressive language and bullying management style, not only ruffles feathers, but having watched and listened to him in action for almost three years, I am now convinced that he does more harm than good. His bullying style may have suited corporate America but in the world of foreign policy he lacks diplomacy and looks clumsy. To mask this failing, he turns to bullying and uses rhetoric that just gets peoples backs up. To add insult to injury he is then condescending by saying that he has great relationships with people that he has just bad mouthed.
Initially, I tried to give TRUMP the benefit of the doubt but basically, he does NOT know when to shut up, he doesn’t appear to understand what diplomacy means and basically, he lies, over and over and instead of shutting up he digs himself into a bigger hole because he just does NOT know when to button it!
I firmly believe that his fourth year in office will be a year in which he will be entered into the Guinness Book of Records on multiple occasions for setting speed records on walking backwards!
What has TRUMP achieved?
- Deregulation on Wall Street to help Business.
- Personal Tax Cuts.
- Business Taxation cuts.
- Abolished the “Affordable Care Act” (Obamacare) and replaced it by Increasing Health Insurance costs that more than erode any of the tax cut benefits
- Started a TRADE WAR with CHINA.
- Introduced tariffs on thousands of items imported from CHINA and the EUROPEAN UNION.
- Half built a wall between the U.S. and MEXICO – not paid for by MEXICO.
- Separated families on the U.S. / MEXICO border and housed people in third world conditions well below minimal standards expected under any United Nations conventions. Some disgraceful pictures seen of children in cages sitting in their own faeces.
- Through the TRADE WAR with CHINA it has gone so bad it now resembles a new “COLD WAR” instead.
- Raised tensions in the Middle East with IRAN by cancelling the IRAN NUCLEAR DEAL.
- Ripped up the NAFTA (North American Free Trade Agreement) Treaty and then replaced it with USMCA (United States / Mexico / Canada agreement) ... basically just the title has changed. It has still NOT been ratified.
- Exited the TPP (Trans Pacific Partnership) agreement.
- Signed a great deal with JAPAN on trade, which was virtually a copy of the TPP agreement that he pulled away from.
- Pulled out of signing the treaty on Global Warming in Paris.
- Impeachment proceedings starting over TRUMP trying to link overseas funding to Ukraine against Democrat nominee JOE BIDEN and his son Hunter Biden to help TRUMP establish leverage over BIDEN.
Overall, it’s not that good is it?
I know those Republican party politically activated in the U.S., will say that I am cherry picking when judging my list above. I am just a Canadian looking south and this is what I see. Is this how he will be judged? That is down to the historians, but by any stretch it’s not a bed of roses.
His entire Presidency has been covered in controversy even from day one based on how many people lined the streets on inauguration day. That really set the tone for the ensuing years.
TRUMP lined the pockets on big business, the links to the TRUMP ORGANISATION are still there regardless of what is said and lower interest rates (FREE MONEY), help highly geared companies such as the TRUMP ORGANISATION.
TRUMP is not managed, his is out of control. Whilst attacking CHINA on trade has cross-party support, the Democrats are edging him on, and CHINA are being cute knowing that they have a lame duck President who recognizes the level of the S&P500 as being a measurement of his Presidential success. CHINA can afford to run down time up to the 2020 Presidential Elections. Despite the rhetoric from TRUMP that CHINA wants a trade deal, it is TRUMP who needs a trade deal more.
TRUMP has been as bad with his language about CHINA as he has with Federal Reserve Chairman, JEROME POWELL.
Chinese President Xi must look on in disbelief at times regarding the TRUMP rhetoric. It looks more and more, despite the bits of “HAPPY TALK” that President Xii is just stringing TRUMP along. He knows that with the U.S. Presidential election happening in 2020, to hurt TRUMP where he feels it most is by ensuring the stock market declines as far and as hard as possible, in so doing ruining whatever positive legacy TRUMP believes that he has brought to his term as President.
As I have said on so many times before.... “The Art of the Deal” ... my ar**.
TRUMP has failed in every deal he has touched since becoming President, any success claimed is nothing more than SPIN.
Let me a little more specific....
I look at the Business Tax cuts for example, and basically, all that Businesses did with the “FREE MONEY” was to manipulate the EPS (Earnings Per Share) for shareholders and use all the tax cuts to buy back stock. Investment in plant and machinery or increased hiring of employees did not really happen. It has been widely reported during 2019 that the only real buyers of equities at the top of the market were companies using the “FREE MONEY” to buy back their own stock.
It all begs the question...
CAN A TRUMP IMPLOSION BE AVOIDED?
I do NOT think so. In my opinion, it is a train wreck waiting to happen.
I think that a potential likely outcome as we move through 2020 will be his puppets resigning, like rats deserting a sinking ship. Big names are the clue; POMPEO, LIGHTHIZER, ROSS, MNUCHIN and KUDLOW.
Into 2020, I just see a TRUMP IMPLOSION gathering speed, just increasing in intensity to the eventual collapse.
Assuming the equivalent of a Presidential rail crash via either a trade deal or impeachment issues, what do you trade?
We will have RISK OFF conditions should the stock market sell-off. If you trade metals, which I do not, GOLD is an obvious long.
I only trade currencies, here are a few ideas: -
2020 will be the year of the TRUMP TRADE and The BREXIT TRADE and my focus will be here.
LONG: USD/MXN, EUR/AUD and EUR/NZD.
SHORT: AUD/JPY and USD/JPY.
(My FX Premium subscribers will have more details about the 2020 trading opportunities in section 6 of the blog).
If the BREXIT deal is done and the future BREXIT negotiations are proceeding well, GBP/AUD and GBP/NZD both long would be a great pick.
We live by ALGO’S, TWEETS and SPIN at the moment. I cannot see this changing. As mentioned recently we are in the NEW NORMAL, so if you are going to trade these pairs above, take small positions with wide stops to cope with the (hopeful) volatility that will ensue.
Having spoken with a number of traders directly this week, I think that it would be wrong of me not to say a few words about the current trading conditions.
Look at the EUR/USD, the most liquid of all currency pairs. In the past two weeks, it’s trading range has been just 110 pips or so. FX volatility has never been this slow since possibly the Breton Woods agreement was signed in 1945!
I firmly believe that we will get an explosive move but for now you have to sit and wait or just use targeted entries to trade with small position sizes.
FX is cyclical... this cycle is really hard to hold onto. If you are surviving this cycle with your head above water, congratulations to you. It is really hard trading.
Finally, in this section...
My subscriber promotion “TAG ON” is now launched.
Subscribing now on an annual basis will have you set up through to the end of 2020. The remainder of this year can be used to get familiar with the system and have you ready to hit the ground running in 2020: -
- My goal this year on net new pips was +10,000.
- I have so far achieved +17,393 net positive pips.
- Next year there is an aggressive +15,200 pips target
Even trading single mini lot trades only on the most liquid pairs and maybe only as little as 2 or 4 micro lot trades on the more volatile pairs, there are some great opportunities available.
Details are in section 5 of this blog and they can also be found on my home page at www.weeklyfxdrivethru.com
FX - FORWARDS, BACKWARDS & SIDEWAYS:
1: - THIS WEEK’S ECONOMIC DATA:
(Courtesy of Forex Factory)
2: - BIAS CHART - USD MAJORS SUPPORT and RESISTANCE:
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)
4: - USD MAJORS - TRADING CHARTS and MY THOUGHTS:
In the past two weeks the trading range of this pair, the most liquid in the currency market has been a pitiful 110 pips or so.
I posted the chart below to twitter on November 5th stating the TRIPLE TOP would be in play on a break thru 1.1075. We are now in the middle of that pattern playing out down to 1.0980.
I decided to enter short this pair. Below is the TwitLonger post that I issued to my FX PREMIUM groups on the 20th of November 2019. This details my reasons behind looking to enter a short position.
The 14 DAY SMA = 1.1047
The 200 DAY SMA = 1.1172
We have a BULLISH set up on the daily chart below. A break of 1.3020 in my opinion sets up a bigger move higher.
Despite quite a large c.200 pip sell off from the recent highs, we are still set up constructively to move higher.
We are sideways in a consolidation range for now 1.2750 to 1.3000.
14 DAY SMA = 1.2874
200 DAY SMA = 1.2702
The ALTON TOWERS / SIX FLAGS chart pattern continues.
The range is set in my opinion from 0.6670 to 0.6930.
The 200 DAY SMA is at 0.6931.
The 14 DAY SMA is at 0.6835
The last move upwards basically stopped at the 61.8% retracement of 0.6926.
The moving averages are ticking lower.
I am now of the opinion the CHINA / U.S. trade deal Phase 1, must be almost priced in by now so after an initial spike I think there are many currency pairs prime to be faded and this pair is one of them.
The word on the street is that the RBA will cut interest rates once again pre end of 2019.
I am sidelined on the AUD/USD at the moment.
The inverted Head and Shoulders pattern in still in position for this pair. It triggers at 0.6460 and the measured move is to 0.6690.
In my opinion, apart from the AUD it is the second currency to have the greatest number of false moves. I like being short this pair but I am very skeptical irrespective of chart set ups to be long.
I am sidelined waiting on the U.S. / CHINA trade deal outcome. I think it must be basically baked in by now, but any initial spike will give us opportunities to fade.
14 DAY SMA = 0.6385
200 DAY SMA = 0.6557
No change from last week...
We are operating inside the range but my overview for now remains.
I still hold my CORE SHORT position.
This pair is as always, a bit of a frustration.
I see looking forward, well at least I thought that this was the case: -
- USMCA deal signed off = CAD strength.
- Phase 1 TRADE DEAL signed off = strength for commodity currencies.
Longer-term and a bit away from current prices, I see 1.3014 is a key level for me. The range is STILL 1.3014 to 1.3350.
The triangle on the WEEKLY chart below is being tested on the upside as the EUR/USD moves lower. The trading range as I see it is, 0.9650 to 1.0240.
Longer-term, I am looking to go long in the area of 1.9720. 1.9600 would be even better. This may be a dream trade. At the moment I am NOT expecting moves lower until the EUR/USD re-tests recent lows. Given today’s market moves in FX this could take some time to complete!
I STILL hold a CORE SHORT position.
My bias is still lower, but there is an inverted Head and Shoulders pattern to consider. The measured move with this chart pattern is 113.50.
We are bouncing around at the moment and any moves with this have not been convincing at all.
I would like, but there are no guarantees a move to stick below 1.0840.
Long-term, I am still bearish this pair and my targets are between 100.00 and 102.00.
5: - THE WEEKLY FX PREMIUM TRADING SUMMARY:
November 2019 so far: +972 net profitable pips.
2019 year to date: +17,393 net profitable pips.
2019 Annual pip target: +10,000 net profitable pips.
Performance: = 173%
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.
Next year in 2020, there will be a revision of my TRADE STYLES, but I will still be retaining my macro views as a longer-term POSITION STYLE trader.
6: - WEEKLY FX PREMIUM SUBSCRIBERS ONLY:
6.1: MY TRADING REVIEW & GENERAL THOUGHTS ON THE FX MARKET:
6.2: LOOKING AHEAD – TRADING THOUGHTS FOR THE COMING WEEK:
6.3: PERFORMANCE SUMMARY OF EXISTING CORE POSITIONS:
7: - 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.
Finally, Be GRATEFUL for your wins and COUNT THEM. Be positive, keep a POSITIVE MINDSET in play at all times, regardless of the market conditions.
The Pip Accumulator
BLOG VERSION: #345 FREE NEWSLETTER
DATE: 24th November 2019