So, this is blog number 25 out of 40 for this year and it is my last “DRIVE THRU” until returning on September 6th, 2020. Not on a 100% complete break from the blog as I will be posting month-end blogs for July and August. Being totally honest; I am looking forward to having a break from blogging I feel like I have been standing at the precipice for weeks upon weeks and nothing has really moved or changed.
Of late, the markets have been frustrating as FX in particular has only really suited 15-30 minute scalpers that can feed inside very tight choppy ranges. It does look as though we may be in the “Summer doldrums” range bound conditions and probably many false breakouts or breakdowns. At the end of June being the completion of Q2 and H1, I suspected the big money players would have been locking down positions for the summer, rotating money around and basically tightening up a bit ahead of Q3 which leads into the November U.S. Presidential circus, apologies I meant election.
Looking around the markets nothing fundamentally has changed, the news is still very much Covid-19 driven. Many countries are experiencing localized spikes in what could be called a possible second wave e.g. Australia and Spain. South American countries are under real pressure as they come to terms with a full-on wave one intensity and then you have the U.S., which is still dealing with the first wave. It closed too late and opened up too early. It is politically driven NOT driven by health and safety. TRUMP is in denial about the record daily cases of affected Americans, he is only focused on the November election. He claims that because the U.S. does a lot of testing that's why the reported cases are so high, which is correct BUT he fails to understand why testing is important and he only seems capable of understanding one part of the 5 piece jigsaw.
Looking back at my “Precipice” thoughts in my first paragraph. I thought that it would be interesting to post today what and where I think we are vis-à-vis FX and fundamentals with the objective of comparing positions and thoughts when I return later this year. So, with this in mind, I actually wonder about when I do come back in September how much will have changed?
I will continue to trade through the summer, but I do understand the requirement for traders to step back and re-charge their batteries. So my primary goal over the next seven weeks will be a battery re-charge.
Part of my daily routine after completing my initial chart analysis is to list out the pairs that I am interested in trading and to markup key support and resistance levels, if required I back these up with alarms from the broker platform.
Over the past few days WEEKLY FX PREMIUM subscribers are aware of a number of FX pairs to which alarms have been set regarding what I have identified as either a key level from which to enter long or enter short.
In this blog I want look at the USD majors, annotate key support and resistance from the current ranges and see if these are broken or will they remain intact for the summer.
Over the past couple of blogs, I mentioned that I was finding the market awkward to read. After talking with my peer group, the suggestion was to get onto several trader’s webinars and see what “market intelligence” was out there. I have done this recently; attending about 7 over the past week listening to the hosts thoughts and ideas. Here are some interesting takeaways: -
- There are no “Genius’s” out there.
- Most FX webinar hosts are heavily involved in trading either INDICIES, GOLD, SILVER or OIL.
- Many are trying to be super contrarian by picking tops or bottoms to look like superheroes.
- There is a recognition of the market being very difficult.
- Calls are made to be patient, but this is contradicted at times.
- No-one specifies the type of trader they are when suggesting trades.
- So many participants are trading for 5-10 or 15 pip maximums. Literally really quick scalps. I got the impression from one group that the they were almost trading off tick charts!
I am none the wiser other than it does appear that if I am struggling at times and find the market challenging, awkward and frustrating my peers are not fairing much better if at all.
Back on point...
As said earlier, the market is rangebound; it is for the most part two steps forward and three steps back. Ranges will be threatened in a rangey market environment but invariably they will hold, or false moves will be seen. So, what I want to do is note the ranges today and review them again after my summer break. How many will be broken? I will of course relate to most of these ranges later in the blog on the USD majors trading charts in section 2.
My list of fundamentals remains in position, they are in no particular order of ranking importance: -
- COVID -19 Pandemic:
Despite all the SPIN. This virus is with us for the long term, even if a vaccine was found today, by the time it completes clinal testing receives approval and the pricing and distribution is agreed, it would take 6 months minimum. Then to produce 7.5 billion vaccines for the world will take a minimum of 18 months.
Therefore, from today move out 2 years to complete and we have masks and social distancing until mid 2022 at the earliest.
- HONG KONG autonomy removed by the Beijing imposed “Security Law”:
This continues to bubble away just beneath the surface. Australia in addition to the UK is offering passport to Hong Kong residents. Will rioting kick-off again to test the Hong Kong resolve.
- “PHASE ONE” CHINA TRADE DEAL with U.S.:
That’s all folks!
There is NO PHASE TWO. All the hype and SPIN from KUDLOW, TRUMP and LIGHTHIZER. It’s dead.... did it actually exist?
Was it announced to pacify the market at a time the S&P was under threat?
TRUMP and KUDLOW definitely misled the markets once again.
This begs the question; “Which is more corrupt CHINA, or a TRUMP led White House?”
- WORLDWIDE RECESSIONS and DEFLATION RISKS:
Not really discussed as it is widely accepted that most countries are actually going to be in ‘technical recessions”. My issues are the spin about V shaped recoveries. It is very difficult to see how this can be so as the numbers of layoffs / redundancies announced globally on a day by day basis just means that there are less and less people to spend money.
- WORLD RISING DEBT:
This is just out of control. No-one cares, Central Bankers are the backstops and they will just print more.
- S. PRESIDENTIAL ELECTION – November 2020:
“Call me Joe” has basically a 14% lead in most polls that are published at the moment. TRUMP will play dirty and if he loses the election, he will challenge the result in court. There’s a prediction for you.
There is going to be a “FAKE NEWS” extravaganza from now until the voting takes place.
BIDEN has been very quiet so far, although he made a big speech scoping his manifesto last Thursday. On the other hand, TRUMP does not know how to keep his mouth shut. What would happen if Twitter banned TRUMP for continually breaking their rules?... just saying! This will be a DIRTY TRICKS campaign and it will give us a very choppy USD.
So, there it is, the above list of FUNDAMENTALS should break any range in a normal market, in fact, in normal trading conditions the USD majors ranges listed in the spreadsheet above would have been long gone.
There will be a TIPPING POINT for this market.
Are we getting closer to the TIPPING POINT and what will it be?
These are the two big unanswered questions. I very much doubt it will occur during the summer and as of right now I cannot see any fundamental change in the way the market performs. One day up, the next down seems to be the way we are proceeding, BUY THE DIP remains the play as traders know the FED and its equivalent around the globe will backstop excessive downward moves.
However, we just don't know. It’s like a “Mexican Standoff” of shorts. Traders know valuations mean nothing. The FED has made it impossible to obtain a yield anywhere else apart from stocks. The FED is buying up debt left, right and centre fueling the rally. No-one wants to get off the roller coaster because of FEAR of FOMO.
What will be the TIPPING POINT?
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: 98.27 (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. Currently my pip tally stands at + 15,430 pips which represents 101% of the 2020 objective.
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 for WEEKLY FX PREMIUM subscribers only and is available via a separate blog)
5: - THE FINAL SHOT:
The following are the news items that are on my radar.
- CAD: BOC Monetary Policy Statement and Press Conference.
- NZD: CPi.
- AUD: Employment Data.
- EUR: Monetary Policy Statement and Press Conference.
- USD: Retail Sales.
NOTE: Whilst all of the above are called market movers the potential for large market moves has diminished greatly of late due to the pandemic. As a result, the FX market remains headline driven primarily driven by Covid-19.
So DO NOT get too excited on any small moves in volatility as the news breaks.
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
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