I never get bored trading Forex; I may at times get very frustrated. Being a longer-term trader, the market fundamentals count in my world and as we all know of late fundamentals have counted for diddly.
My start to trading this month was poor given my recent performances in 2020 and whilst this was disappointing and carried with it a whole set of questions for me to challenge myself with, this past week has seen a turnaround that I knew would eventually come my way.
The markets are not only driven by FEAR and GREED but also FOMO and TINA right now and the combination of these are tantamount to skating on thin ice if your trading time horizons are longer. I decided this past week to approach trades with a greater flexibility. In the past, I would attempt to let trades ride out moves, last week, I covered instead. I did this with my shorter-term trade styles of SWING and MOMENTUM trades. The other trade styles FUNDAMENTAL, BREXIT and INVESTOR I have not changed. Just subtle changes for a temporary period. The week before last my total pips for June 2020 to date was a net gain of +10 pips. It has stepped up a bit this past week.
Enough about me what about the market...
If we think about the current marketplace scenario:
- The markets believe that there is 0% chance of a Coronavirus second wave. Concerns are growing allegedly but pricing action do not reflect this.
- The markets also have a 100% certainty that we are going back to the old normal of pre Covid-19. Change has already happened the markets are in denial.
- Central Banks are happy to support ASSET BUBBLES in this continuing scenario. By continuing to intervene, the FED will be guilty of creating not just a distorted manipulation but possibly “Zombie Markets”.
At a macro level, in fact on any level, the above scenario sounds stupid and, in any world, looking at the above in isolation one would think that we have lost the plot. The markets are allowed to believe and trade whatever way they want right or wrong because ultimately, they know if they get it wrong, which equity traders invariably do, the relevant Central Bank will be supporting them by just stepping the printing press gears up a notch. The markets are totally manipulated, traders know it, governments know it, good Lord even my dogs Ozzy and Aoife know it.
Now we have a piece of terminology to work with; “Robin Hood Traders”. These are allegedly, “Main Street” normal peeps, who are using their Covid-19 cheques to play the stock market. They have read the headlines, listened to #bunkerboy and now decided to buy, buy and just buy stocks. This resulted in the rather bizarre situation of Hertz Car Hire which had just moved itself into U.S. bankruptcy protection seeing its shares spike higher, I thought it was on the back of American Airlines stating that they were increasing seat capacity, which would have a knock-on effect into Car Rentals, but apparently not... this is mental!
My list of FUNDAMENTALS is still there and still quite long:
- HONG KONG – CHINA imposing Security Laws.
- CHINA – Is the Phase 1 trade deal dead... it looks like it?
- RACIAL TENSIONS - worldwide following the death of George Floyd. TRUMP is floundering. Photo opportunity in front of church waving a Bible a poor choice of a publicity stunt.
- COVID-19 PANDEMIC – the Coronavirus is still “living” with us. Lawmakers caved in too early to re-open economies.
- NORTH KOREA – Kim Jong Un cuts off ties with SOUTH KOREA.
- BREXIT – Negotiations are at stalemate and the Red lines are drawn.
- OIL – A second Coronavirus wave would be more disruptive than the first.
- WORLDWIDE RECESSIONS – Markets touching highs? Many countries are in recession... quite bizarre.
- DEFLATION – a real threat
- WORLD RISING DEBT – Business Rents, Mortgage Repayments and Credit Cards are going unpaid in larger numbers each month. Its NOT just the U.S.
- POOR ECONOMIC DATA – We are shrugging off economic data and poor earnings with a stock market grossly over-valued. There will be a payback time. It will be harsh and 100% unforgiving. It will be a FLUSH of all FLUSHES and will go down in the history books.
- JOE BIDEN – Now leading in Presidential Polls for November 2020.
In my opinion, looking at the world’s leaders I have to ask - ARE WE ASLEEP AT THE WHEEL? ... IT’S ALL GOING TO END IN TEARS.
It’s not all about popularity and photo opportunities. Playing with a pandemic for which there may NOT even be a vaccine is dangerous and playing with the longevity of people’s lives is reserved for a God. TRUMP and all the other world leaders rolling the dice are NOT Gods.... despite what their ego’s might tell them.
Last week we saw the roller-coaster effect once again in U.S. equities that followed the latest FOMC statement and Jerome Powell Press Meeting. Powell delivered a measured review, which I thought was one of his best performances. He basically told it as it was. There were gaps in the data, but I think that should have been expected, given the current situation.
Both my wife and I used to work in “Corporate America” and we often use the line for someone you want to move on from their existing position, if you give them enough rope, they will hang themselves.
Powell was measured. He may have a twisted view and lie about the effects of FED policies on Main Street versus Wall Street, but he was controlled. Compare that to TRUMP who basically must be the kinkiest fecker on this planet, he hangs himself everyday he really does not know when to close his mouth and say nothing.
From a Forex perspective...
I feel that I am repeating myself almost every week BUT nothing has changed.
- The markets move on news headlines and tweets
- It’s all about RISK SENTIMENT
- FUNDAMENTALS – what are they all about?
- Commodity currencies are the most efficient to trade
AUD, NZD, CAD and MXN are my preference.
- Cross-rates when playing RISK better than USD
EUR/AUD, EUR/NZD, GBP/AUD, GBP/NZD, EUR/MXN and USD/MXN
- Trade smaller position sizes. This allows wider stops to compensate for volatility swings.
- Trade selection in this type of environment is paramount.
- Remember trading Forex is a marathon NOT a sprint.
- You do NOT need to trade every day. Wait for your entry levels.
It is all very simple, obvious stuff to consider but FX Trading is NOT complicated.
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: Bearish
MY LONGER-TERM BIAS: Bullish
RESISTANCE: 97.41 (14 DAY EMA)
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 section is available only to WEEKLY FX PREMIUM subscribers via a separate version of this blog)
5: - THE FINAL SHOT:
5.1: LOOKING AHEAD – THIS WEEK’S ECONOMIC DATA & MY THOUGHTS:
A bit more to consider this week. As always, bear in mind we are headline driven and fundamentals together with economic data is mostly ignored... the markets just brush off the data.
So I am listing notable news events below, however, to gauge the effect now versus normal trading conditions is difficult to predict.
- JPY: The BOJ Monetary Policy Statement.
I expect nothing market moving, so stand by! It is just a question of if the BOJ come through with some new initiative to support the market.
- USD: Core and Retail Sales.
Inside the ultimate consumer society. These numbers will be interesting to note.
- USD: Jerome Powell (FED) Humphrey Hawkins Testimony.
Given the fact we have just had a FOMC decision and press conference I am not expecting much. Plus given the U.S. lawmakers are mostly incapable of being able to ask a question it may offer nothing new from what we have already heard.
- AUD: Jobs Data.
The mix between part and full-time jobs in Australia is always an interesting read.
- GBP: BOE Monetary Policy Statement
Another BOE “Super Thursday” many will be looking to see if negative interest rates are talked about.
This week we also have the SNB (CHF) Quarterly meeting, CAD Retail Sales and CPi data as well as NZD GDP.
NOTE: 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.
The Pip Accumulator
BLOG VERSION: #371 FREE NEWSLETTER