Forex has basically been consolidating this past week, yes, we can highlight moves with the cable and its crosses but outside of the GBP and related trades we are in a “chopfest” and like many traders I have been “chopped about”. I have made pips but at the same time lost pips and at the end of another week my trading accounts as a net are flat.
Basically, from the macro view, absolutely nothing has changed; the world’s Central Banks and Political Leaders have happily traded short-term financial stability for long-term growth and the day of reckoning vis-à-vis unemployment levels and the number of company liquidations is not really a consideration.
THE PRESSES JUST KEEP ON ROLLING and at this stage, I just cannot see light at the end of the tunnel. We are still living with a deadly virus amongst us and maybe economies have been opened up too soon, we will know if there is a full-on second wave of the pandemic in about 3 or 4 months’ time.
An obvious issue that I have looking forward is that Central Banks appear hell bent on one route... intervention, intervention and more intervention. The more intervention suggests to me that its only going to get increasingly difficult to keep the fundamentals at bay. It is a very dangerous game of diminishing returns (once again my Economics Lecturer David Woods would be happy to see that I have not forgotten his teachings), the bubble just gets bigger and bigger and increasingly posing a substantial risk to the global economy.
We have a new circle of life to consider, nay.... ACCEPT...
- Corporations issue Bonds
- The FED buys the Bonds
- Gives corporations money
- Corporations buy back stock at zero interest rates
- Off we go again....
It is just a fact that TOO MUCH DEBT = TOO LOW A YIELD = MORE DEBT....
Without Economic Growth... we are screwed. At the moment its only relief based.
The pandemic over the next year or so will be blamed for basically everything corporate, and the boards of the major companies will be talking through the options on restructuring so headcount can be off-loaded whilst the politicians have an open cheque book in play.
My fundamentals from last week remain in play: -
- HONG KONG – CHINA imposing Security Laws.
- CHINA – Is the Phase 1 trade deal dead? Although Friday I read on BLOOMBERG that CHINA was ready to buy soybeans etc. Maybe we have the LAZARUS effect in play. Nevertheless, anti-CHINA rhetoric has increased.
- RACIAL TENSIONS - worldwide following the death of George Floyd. In America will TRUMPS Tulsa rally start a healing process or will it just incite further violence.
- COVID-19 PANDEMIC – the Coronavirus is still “living” with us.
In a quite remarkable move TRUMP is holding an election campaign rally in Tulsa, Oklahoma a state where Covid-19 cases are skyrocketing. TRUMPS blatant disregard for public health safety and ignorance of the science in favour of politics is stunning.
If this event goes “arseways” it will be termed a “Super spreader of Disease”. Voters in line to attend appear not to give a rat’s ass about their personal health fears or those of any other attendees. The stupidity and selfishness of people beggar’s belief.
- NORTH KOREA – Kim Jong Un cuts off ties with SOUTH KOREA. Calls TRUMP a liar on previous agreements.
- BREXIT – Negotiations are at stalemate and the Red lines are drawn.
- OIL – Prices have perked up a little however, a second wave of the pandemic would be more disruptive than the first.
- WORLDWIDE RECESSION – 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 dismiss company earnings with a stock market grossly over-valued.
- JOE BIDEN – Now leading in the U.S. Presidential Polls for November 2020.
- TRUMP is floundering. He is out of his depth politically and has no idea of empathy.
The recent book revelations from John Bolton seem to be 100% in character with the TRUMP we have seen since 2016. One would think Americans with a brain would be sick of the TRUMP rants on twitter by now.
TRUMP is now taking credit for “Juneteenth” Day and is also self-congratulating his own tweets.... an emergency sanity check is required here.
Friday’s market close on Wall Street was very bullish for the USD. It is too early to draw significance and say we are here, the turn in sentiment is upon us. Frankly, I think it was nothing more than market participants taking protection against TRUMPS Tulsa rally and the potential negative fallout.
However, I do think there is a shift happening with monies leaving the U.S. market in favour of Europe, were valuations are more realistic. As I have stated before the U.S. is nothing more than a bubble.
The U.S. is a major critical accident waiting to happen
The smart money is moving.
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. Many FX pairs have now reached a consolidation period.
- 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 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. Apply patience, sit tight.
It is all very simple, obvious stuff to consider but FX Trading is NOT complicated, although it may be heavily manipulated. At its core it is routine, and repetition based.
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: 98.39 (200 DAY SMA)
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:
Not a huge amount on the agenda this week.
- AUD: RBA Governor Lowe speaks.
- CAD: BOC Governor Macklem speaks.
- NZD: Interest Rate and Monetary Policy Statement.
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. Keep a POSITIVE MINDSET in play at all times, regardless of the market conditions.
The Pip Accumulator
BLOG VERSION: #372 FREE NEWSLETTER