I have to start this week’s blog by saying what a strange week last week was. As I had mentioned last time, I was going to be more selective and patient when selecting trades. I also added the following section into the blog on FUNDAMENTALS.
“From an FX perspective there are some FUNDAMENTALS hovering around that will NOT be ignored by the market makers: -
- HUAWEI – TRUMP due mostly to decreasing popularity over his handling of the Covid-19 pandemic has switched focus to bring back a vote winning popularity by attacking CHINA, in particular HUAWEI. Banning HUAWEI is seen by CHINA as an act of war! This week’s open could be interesting with weekend comments added into the mix.
I expect CHINA to retaliate against APPLE, BOEING, U.S. TECH etc....
On a side issue and NOT wanting to be too cynical but......
On Friday when TRUMP launched his popularity vote winning rhetoric in CHINA the S&P sank.
Usual response on a Friday to give him a “feel good factor” over the weekend....
Out comes LARRY KUDLOW to tell us all is good basically, don’t get your panties in a twist, the CHINA deal is NOT falling apart.
The Stock Market does NOT believe him... at last thank GOD!
Then revert to PLAN B....
Out comes TRUMP in the Rose Garden telling the world he thinks there will be Covid-19 vaccines ready and implementation started before the end of 2020.
Project “WARP SPEED” is launched FFS....
We are now up in the stars there will be URANUS jokes soon.
TRUMP will say or do anything to win votes and boost his failing popularity. As I mentioned last week to vote him in as President once can be seen as an accident and excused but twice.... give me a break surely people can see through him by now.
- BREXIT – The negotiations are at stalemate. Red lines are drawn, and no side wants to move. I think that the UK may just walk away and leave the EUROZONE. Michel Barnier, the European Union Chief Negotiator is focused on a two-year extension to talk about a deal. This is a pure cash grab with no guarantees.
Wouldn’t the UK just be best to leave and take all the bad economic data at the same time as the Coronavirus negativity in one and build from a base?
The European Union is in a mess, why drift for two years?
- OIL – Not out of the woods yet. If we have a second Coronavirus wave it will be more disruptive than the first wave. It will be of little consequence how much OIL is not produced, as ALL storage facilities will be full very quickly.
- RISING DEBT – I could NOT get the numbers I wanted but there are large mutterings of thousands of Americans NOT paying their mortgages. I am sure that this will be reflected all over the globe.
- POOR ECONOMIC DATA – I eluded to this earlier. We are shrugging off economic data and poor earnings with a stock market grossly over-values. There will be a payback time. It will harsh and 100% unforgiving. It will be a FLUSH of all FLUSHES and will go down in the history books.
WE ARE ASLEEP AT THE WHEEL”
Whilst that is a large section to re-post a week later, I felt as if the RISK ON SENTIMENT was about to turn sour. It just never happened early last week. In fact, we rallied hard on Monday and Tuesday on the back of what now appears to have been mostly fake Moderna (U.S. Biotech Company) news vis-à-vis a Coronavirus vaccine. In addition, during the week we saw the number of Americans out of a job and claiming benefit rise to almost 39 million people.
It took until Friday on news that CHINA was passing a new Security Law to cover Hong Kong for the markets to take on a RISK OFF mode. The new law will both “prevent and punish” acts in Hong Kong that threaten National Security. Both TRUMP and POMPEO announced action against Hong Kong if the law passes and Hong Kong activist protestors were back on the streets again.
So, where am I?
I did not trade much last week. The markets are so well manipulated we are range bound with most FX pairs.
There are opportunities every day and that is what is so good about Forex, however, entries are important. As a longer-term trader they do not have to be 100% spot on, but I like to try and maximise the move that I am looking for as much as possible.
Last week, my plan was to wait for equities and the overall sentiment to commit to change. I know that the market is what it is, but the reality of what the world is dealing with needs to come through to get me to commit to trading on a grander scale.
Obviously, if you are 5-15 minute scalper or a 60 minute up to a day trader your time horizons are completely different from mine. You can take advantage of bottoms and BUY THE DIP even if it’s just for a 60-minute trade, or vice versa.
My trading horizons are larger and therefore I trade with, and more importantly, to a plan. For day or hourly traders’ reality is not important, you just trade off charts and you work within the noise. With a larger timeframe it is more strategic.
Therefore, I am sitting and waiting for the technical set ups to line up with my fundamental views. The days of fueling Brokers with my cash are gone. We are range bound with many pairs and I want to see breaks with momentum shifts with direction to get me fully engaged.
The tensions between the UK and the EUROPEAN UNION have blown up over the past week or so. The chief negotiators David Frost (UK) and Michel Barnier (EU) have been exchanging letters and emails that basically highlight little to no progress has been made regarding a trade relationship between the two after 31st December 2020.
When you sit back and draw breath, it makes sense for Boris Johnson to just BREXIT. He has a large majority in Westminster, Parliament cannot force a soft deal. The Coronavirus may just be the incentive gifted to him to just get it done now. The economic costs would be dwarfed (or not easy to price up) by those of the pandemic.
The UK is committed to a gross payment of about £20 billion a year to the EU, but in real terms the net after grants that return to the UK it’s about a net £15 billion a year.
Boris Johnson knows the EU wants to keep talks going for at least two years to achieve a trade deal resolution. Boris Johnson would argue a deal can be done by the 2020 deadline with the cost / benefit analysis of two more years of negotiation and a £40 billion outlay not adding up.
This possible UK government approach would obviously place the GBP front and centre. The next deadline to note is June 30th, 2020, which is the deadline for extending the transition period beyond December 31st, 2020.
There will be GBP trading opportunities ahead. The June deadline will be more important than the December one in my opinion. Cable will be hit on a no extension headline BUT the pandemic will minimalize the volatility to some extent. Many traders have already priced in a no deal BREXIT as the obvious outcome as Boris Johnson will not give the EU fishing rights etc., and he is quite prepared to walk away.
THE UK & EUROPEAN UNION ARE ON THE ROAD TO NOWHERE, both parties probably recognize it, it’s a really high stakes game of CHICKEN. I do believe though that the pandemic has helped the UK to start an economic recovery from a really low level without the shock of a no deal BREXIT.
I am long several GBP pairs via my BREXIT trades and I also have a core long position with GBP/USD. I have been trading these pairs for the past 18 months or so and have made some great pips and $$$. I am always looking to buy dips. There is a RISK involved but my position sizes are small I am not over 50% position size, most trade sizes are about 15%-20%.
FX - FORWARDS, BACKWARDS & SIDEWAYS:
1: - USD INDEX (DXY) TRADE CHART and MY THOUGHTS:
(The Daily DXY chart is below and my thoughts, ideas and comments regarding the DXY are contained on the chart)
MY SHORT-TERM BIAS: Neutral
MY LONGER-TERM BIAS: Bullish
2: - USD MAJORS - TRADING CHARTS and MY THOUGHTS:
3: - THE WEEKLY FX PREMIUM:
3.1: FX PREMIUM MONTHLY PERFORMANCE:
3.2: WEEKLY FX PREMIUM SUBSCRIPTION INFORMATION:
The WEEKLY FX PREMIUM is my subscriber 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 https://www.weeklyfxdrivethru.com you will see more information about the WEEKLY FX PREMIUM.
Lots of information about the way I do things, plus, previous reports about my trades, my trade styles and my trade projections for the year are located on my home page by selecting the appropriate tab located at the top of my home page.
There are 3 options for subscribing: - 10, 20 or 40 weeks.
The entry level is with a 3 month’s (10 weeks) subscription in CAD$450.00 equals approximately: -
CAD = CAD$450.00 (CAD$ 45 per week)
USD = USD$340.00 (USD$ 34 per week)
EUR = €310.00 (€ 31 per week)
GBP = £265.00 (£ 27 per week)
AUD = AUD$500.00 (AUD$ 50 per week)
NZD = NZD$520.00 (NZD$ 52 per week)
JPY = JPY 38,000.00 (JPY 3,800 per week)
CHF = CHF 340.00 (CHF 34 per week)
Further information about how to subscribe to the WEEKLY FX PREMIUM is also located at the top of my welcome page under the “SUBSCRIBE” tab.
4: - WEEKLY FX PREMIUM SUBSCRIBERS ONLY:
(This information is only available to WEEKLY FX PREMIUM subscribers and is posted via a separate version of this blog)
5: - THE FINAL SHOT:
Not much major news on the horizon this week.
- CAD: BOC Governor Poloz speaks twice this week.
- USD: FED Chair Jerome Powell speaks.
- NZD: RBNZ Financial Stability Report.
- AUD: Private Capital Expenditure
All economic data is expected to be poor and it remains to be seen if its poor enough to move markets that are still dominated by Covid-19 headlines. With CHINA / U.S. trade war issues resurfacing and HONG KONG autonomy back in the news, these FUNDAMENTALS may drive markets.
The FX market remains headline driven.
5.2: CLOSING THOUGHTS:
Finally, as usual…
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.
Self-isolate and stay safe...
The Pip Accumulator
BLOG VERSION: #FREE NEWSLETTER