THE LONG ROAD OUT OF EDEN

So here we go, the final DRIVE THRU blog of 2020, except for a very brief end of year version that will be posted sometime in the holiday period when I decide to close off 2020 and prepare and update everything for 2021. If I recall last year, I think it was early in the morning of the 27th or 28th of December, when I had the urge to spend a few hours pulling everything together.

I am not going to come over all soppy about 2020, suffice to say it was a very strange year for so many reasons not just the pandemic or because of an unhinged U.S. President who appeared to watch a lot of TV during the day, tweet some of the most bizarre tweets known to man, ramble on in Press Conferences, pick fights with the press and play golf at the weekend. It was a strange year because 2020 was the year when Technicals and Fundamentals did NOT count. High probability trades, candlestick and chart patterns counted for nothing. Economic data... who cared.

Markets moved on tweets. We were totally trading in a 100% news driven market. Initially it was CHINA / U.S. trade then latterly the Covid-19 pandemic.
In response to the pandemic, Central Banks decided to flood the markets with cheap money. As much liquidity as possible and support it all with great, huge, bigly bits of QE (Quantitative Easing).
The FED sacrificed the USD in favour of market protection, boosting QE and offering Financial Institutions the full knowledge that they were backstopping the equity markets.

I for one am hoping that with someone less self-centered and basically a leader in the White House a sense of normality will return once the vaccine rollout reaches most of the world’s populations by Q3 2021. Only then can we fully accept that 2020 and all that went with it, is in the rearview mirror.

1. THE SOAPBOX:

THE LONG ROAD OUT OF EDEN

Back on the 23rd of June 2016, my wife and I were hoteling in Ballsbridge Dublin, IRELAND, like many I was expecting the UK referendum result to be close BUT the vote to REMAIN would just about cross the line.

I will never forget a couple of things from that night when the votes were tallied.

The poor hotel wi-fi connection that made trading impossible.
The reaction on TV by the “pundits” when the Sunderland vote came through as “LEAVE”.It took a few minutes to factor in a nationwide result based on the exit poll from that constituency BUT when it was probably checked, re-checked and re-checked again and then announced to viewers, one could literally feel the sharp intake of breath being taken around the TV studios in the UK.
The rest as they say is history....

“HISTORY my arse....” 4.5 years later and we are still dealing with BREXIT. We are still going around in circles on the same issues that divided the EUROPEAN UNION and the UK.

The largely “Symbolic” deal on Fishing in UK waters.Fishing contributes about 0.1% of UK GDP. About 70% of the fish caught in UK waters ends up on dinner plates in mainland Europe.
A “Level Playing Field” marketplace.The EU on granting access to the “FREE MARKET” wants alignment in areas of employment etc. This strikes at the heart of sovereignty that Boris Johnson has a RED LINE under. To have the UK aligned to EU changes in law for eternity is NOT what the UK wants to commit to moving forward.
Governance of the overall deal.As the UK does NOT want alignment tied to the deal, a mechanism to allow or deny access at times to the EU has to be agreed.
This is seen as a “TRUST” issue and on the basis Boris Johnson introduced what he called a safety mechanism, called THE INTERNAL MARKET BILL, which threatened the IRISH Good Friday agreement, this caused outrage in the EU and the USA.

The sections of the bill that were contentious were removed and an agreement with the EU made to protect the integrity of the Good Friday agreement maintained, nevertheless culturally the initial move by the UK government was seen as breaking international law and this has the EU on guard with all details of any agreement.

Last week, the details of the INTERNAL MARKET BILL were announced as being no longer an issue. I thought Johnson would not have done this, had he not smelt a deal that was acceptable politically for him. I am therefore a little perplexed, that after the “Dinner for Two” last Wednesday in Brussels between EU Commission President Ursula Von Der Leyen and Boris Johnson that the outcome was not more positive. In fact, we came away with hard rhetoric and a deadline of Sunday 13th December 2020 to “get a deal” done.

So, is this it?

Is this the real deadline?

The real deadline has to be 11PM (CET) on December 31st, 2020, having said that we are talking about the EU and history has shown throughout that they will NEVER be the first to stop talking and that usually a rabbit is pulled from the hat at the last minute.

Since June 23rd, 2016, it has been so to speak, THE LONG ROAD OUT OF EDEN, 4.5 years and even now as I type this the Sunday night deadline may NOT actually be it.

Both sides have a lot to lose if no deal is made. The expectations of a great deal went long ago and frankly those calling for a closely tied deal to EUROPE have their heads buried in the sand.

From the outset the EU made it clear that the UK would NOT get a favorable exit deal, without a cost. From an EU perspective this is the right approach otherwise all ‘n sundry would be looking to leave. The FEAR of CONTAGION ranked very high initially and it still does today from an EU perspective.

The EUROPEAN UNION is like a club, and not wanting to continue to quote song titles or lyrics by the Eagles too many times, but look at the EU as HOTEL CALIFORNIA in the sense that the EU hierarchy want the following ideally to maintain regional control amongst other things like cash contributions...

“You can check out any time you like BUT... you can never leave”

That is essentially what the EU goal is with anyone wanting to leave the club. They want ties to keep control in return for access.

What many people lose sight of is that from a NO DEAL perspective the timing could NOT be better for the UK. The economy is fecked because of the pandemic costs and as such like other economies, growth, inflation, unemployment etc. are all poor. Leaving the EU now, would it really make things that much worse? If the UK was in a good place economically, with 5% GDP and low unemployment it would be a major shift. Right now, the timing is good. A vaccine rollout should get the population more positive and a gradual return to normality will mask some effects of BREXIT. However, the UK press and media in general will do its utmost to ensure the UK population remains beaten down during the transition.

So, THE LONG ROAD OUT OF EDEN that has taken 4.5 years so far, will need perhaps the guts of another year in my opinion to be fully transitioned. I am sure there will be setbacks and hiccups along the way but DEAL or NO DEAL 2021 should be a huge transitional year for the UK.

It is NOT a make or break. The UK has a robust economy without the EU and trade will still go on.

Moving on...

From a personal perspective, I have a lot in pips not that much in $$$ resting on the outcome. I have my TRADE PLAN for either way firmly set up in my mind and via today’s SUNDAY MORNING ZOOM it has been outlined to my subscribers.

So, I will either end 2020 a hero or a zero...

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5. CLOSING THOUGHTS:

Firstly, before finally...

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Why not get positioned at the front of the line!

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.

And a final final....

Thanks for your support during 2020, I hope you and your families have a great Holiday season, it looks like it will be a strange one, one to reminisce about possibly for years to come.

Stay safe and wear a mask.

Scott Pickering
The Pip Accumulator
Twitter: @pipaccumulator
https://weeklyfxdrivethru.com/disclaimer/
BLOG VERSION: #393 FREE NEWSLETTER
DATE: 13th December 2020