Another week and not a lot has changed in the FX market. It is still basically a chopfest within a range. Every now and then it looks like a break in habit is about to be fulfilled only for either buyers or sellers to step in and push the currency pair back in its range once again.
My same list of fundamentals remains in position and I merely list them without supporting details and they are in no particular order of ranking importance: -
- HONG KONG / CHINA
- CHINA TRADE DEAL with U.S.
- RACIAL TENSIONS
- COVID-19 PANDEMIC
- NORTH KOREA
- WORLDWIDE RECESSIONS
- DEFLATION RISKS
- WORLD RISING DEBT
- POOR ECONOMIC DATA
- JOE BIDEN
The usual mix of applying logic, common sense and reality to the FX market still needs to be sidelined for now. For those of you still fighting with the neural pathways of the brain telling you that things are just crazy... you are not alone.
The White House continues to SPIN and MANIPULATE, last week we had NAVARROGATE over the CHINA trade deal.
What does concern me is that liquidity in FX continues to be an issue. It is only exacerbated by the moves that occur on comments like those made by Peter Navarro last Monday evening on FOX news.
The markets drop 2% and race back to highs vey quickly. Traders are blown out and accounts get hit. As a result, liquidity gets less and less, and institutions and retail traders take smaller positions. Next the moves become more unstable because position sizes reduce again for the different trading sessions, or traders just walk away. The markets are RIGGED and MANIPULATATED and TRUMP and his puppets are the biggest currency manipulators of all.
You just have to look at comments last week from ECB Vice President Luis de Guindos stating in Der Spiegel that the ECB has expanded its bond purchases in the face of a severe economic crisis to promote growth and achieve its inflation aim.
I thought that QE does NOT promote growth nor does it achieve inflation. For God ‘s sake the ECB has had 12 years trying to hit an inflation target... give me a break.
Anyway, enough of that nonsense what about FX...
Many FX pairs are at range extremes and are testing breakouts. Many breakouts would represent long term mufti-year breakouts or breakdowns. As usual, when we have situations like this the conflict in price between buyers and sellers manifests itself with false moves. I want to focus on two currency pairs; AUD/USD and NZD/USD.
Both pairs are always on my RADAR and over 10 years of trading I have had great success trading both pairs, of late however, my “report card” has been spoilt somewhat. I have been what you can say is “trying to pick tops”, when the markets are still trying to resolve who is in control, the buyers or the sellers. I have suffered as a result. Combine this with rigged / manipulated markets and it has been a bit of a nightmare!
From the chart above here were my plays this year and why: -
- 6940 represented a double top last 2019.
I entered short and the double top did not play out, in fact we spiked higher – losing trade.
- Next we had another double top c. 0.7000.
Overall, this was a winning trade, but I exited too early on several occasions as the sell-off intensified on the huge move lower from 0.7000 to 0.5500.
- Price spiked from 0.5500 and once price was more stable, I shorted again based on a BEAR FLAG, which did not play out. I took another loss.
- This month we have broken through a 7-year trend line (PURPLE) from 2013. I have tried to short on at least three or four occasions on the false breakout at 0.7040. Strange as it has been given when you look at smaller time framed charts I have been stopped out for losses. I still find this hard to believe when I revisit my trade journal.
- I am waiting for the monthly candle to complete on Tuesday this week.
Trend line resistance is now lower at 0.6900. A monthly close places the BEARS in control and a close above places BULLS in an excellent position with a potential move through to 0.8000 if momentum grabs hold.
- My FUNDAMENTAL views (listed at the beginning of the blog) has me believing that this pair should head lower.
It’s about the closing monthly candle. The longer-term candles especially the weekly and monthly candles are used extensively by the larger financial institutions.
At the moment the FX market is rangebound, “the noise” on the smaller time-framed charts is making the market a scalpers market, we need to see some longer-term stakes in the ground firmly planted.
This pair is a FX market lead indicator and whilst not in the DXY weighted basket it can lead the USD at times. It’s link to commodity prices (COPPER & GOLD) plus the CHINA trade relationship makes it a pair to track and examine closely.
The price levels on my mind are:
0.6940 and 0.7036 recent highs
0.6900 Trend line resistance.
The pair has been really well supported of late with equities pushing higher and with a MONTHLY BEAR CHANNEL in place any break out of the channel would in my opinion be very powerful. But I think 0.6940 needs to be noted.
Basically, the trading options are: -
Shorting with a stop above 0.7040 would be the longer-term trade. Above that level you know that you are wrong.
Long with a stop below the multi-year trend line which would then be acting as support.
- As you can see from this chart above, the 6-year trend line from 2014 was tested at 0.6575. I missed the initial trend line test and the subsequent re-test, which is usually my lead to short.
- I have largely remained sidelined this pair as I chose the AUD to trade instead as I believed that there were better high probability trades on offer.
- Fundamentality my bias is short. My thoughts are in line with those relating to the AUD.
This pair does tend to follow the AUD the same way that the GBP follows the EUR. My bias is lower. The closing monthly candle is important, but price levels are not as close to trend line resistance with this pair vis-à-vis the AUD/USD.
This overall issue is of course being bearish one is much happier if prices fall back a little so that one’s eyes are focused towards support rather than resistance levels.
Very similar trading opportunities to the AUD/USD with this pair based around the trend line acting as either support or resistance. The only difference is I am not working with false moves and the RBNZ is on my side with a short bias.
It goes without saying...
Obviously, my attention is also focused on AUD and NZD cross rate pairs at the same time. The JPY, GBP, EUR and CAD crosses are also on my RADAR. I already have a few limit orders in place and last week I took nice profits off a NZD/CAD short.
As we head into the summer months one has to be selective and decisive on the trade selections that are chosen. I do NOT think it prudent to be in every trade, every cross that is available, the great news is that there are opportunities.
Finally, in this section I just want to advise every one of the following: -
- Tuesday 30th June is not only the month end it is also the completion of Q2.
Expect some volatility. It could be worse than ever just prior to the summer this year given the November U.S. Presidential election.
- I think money flows out of the U.S. into better valuation stocks in Europe could be seen.
- Referencing the above it is also a good reason for some equity selling into July, August, September and October as the likelihood of a BIDEN victory increases.
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
RESISTANCE: 98.36 (200 DAY SMA)
2: - USD MAJORS - TRADING CHARTS and MY THOUGHTS:
3: - THE WEEKLY FX PREMIUM:
3.1: FX PREMIUM MONTHLY PERFORMANCE:
You will see from the excel sheet below I have now exceeded my 2020 target of 15,260 pips.
Yippee!! I am now 100.31% of my 2020 objective. Given that my 2020 objective was over 50% greater than 2019 I am delighted. There are areas of improvement required which I will be addressing this next weekend when I will be reviewing the June 2020 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:
(The content for this section is available via a separate blog for WEEKLY FX PREMIUM subscribers only)
5: - THE FINAL SHOT:
5.1: LOOKING AHEAD – THIS WEEK’S ECONOMIC DATA & MY THOUGHTS:
- USD: ADP Non-Farm Employment Change
- USD: Non-Farm Employment Change.
NOTE: The FX market remains headline driven. No better headlines than these!
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. Keep a POSITIVE MINDSET in play at all times, regardless of the market conditions.
The final final...thanks Mary for the confirming inspiration.....
The Pip Accumulator
BLOG VERSION: #373 FREE NEWSLETTER