A few weeks ago, I had an abundance of possible start points for the soapbox feature in this blog, and I remember writing saying that I would be able to use them at a time in the future. Time has passed by and I am no nearer to using them than I was a few weeks ago, so in the shredder they have all gone.
Having said that, I still have space to write about: -
- Covid-19 Pandemic
- The stages of The Economic Recovery
- Cryptocurrency Frenzy
- Increasing Debt Levels
- Raising Taxes to repay the unprecedented Debt
As with most people on the planet the pandemic at some stage takes over all conversations and despite wanting to write about something with a non-pandemic slant, it is very difficult as probably the next 15-20 years of world economics depends upon the next couple of years of actions by the World’s leaders and Central Banks.... FFS, that's enough to get readers depressed. In my opinion, politicians are only useful for attributing blame, looking at them as problem solvers, the jury’s out.
From a trading perspective last week, I added just under 500 pips, for which I am 100% grateful. Over the past couple of weeks, I have actively been reducing the number of live trading positions. I have been doing this as I believe the summer doldrums of trading will return this year in spectacular fashion due to the fact that there should be no FED activity and for the first recent summer no more antagonistic TRUMP tweets. Obviously, there may be the odd bit of spice but in real terms as the vaccine roll out continues, I expect this summer to be long with plenty of BBQ’s.
1. THE SOAPBOX:
Last week we had a little taste of the spice I referred to above when JOE BIDEN announced a proposal to double CGT (Capital Gains Tax) for wealthy Americans to 43.4%. The DOW plunged +400 points in response, panic? not yet, and let’s face facts, the Democrats campaigned on this, so for those on Wall Street who are shocked, I find this really hard to understand.
What makes me laugh are some of the responses on Financial TV (BLOOMBERG, CNBC and FOX NEWS) from the bank analysts, institutional experts and well-known TV pundits who are rolled out from time to time. On the basis it was a well telegraphed move that was on the cards, I actually believe, Wall Street expects to be wrapped in bubble wrap, cotton wool or whatever with written confirmation from the FED guaranteeing them a 100% “BUY THE DIP” policy.
Looking forward, I think that it is very fair to say the gap between the “Have’s” and the “Have Not’s” at a country level has never been so wide. Over recent months I have talked about “Wall Street versus Main Street”, but the pandemic responses have shown how large the financial gap has grown.
At some stage, we should see an equity market pullback. Maybe a correction of c. 20% and let’s face it, the only people buying at these almost daily all-time highs in the equity markets are mainly the uneducated retail buyer and companies themselves buying back their own stock to take advantage of zero interest rates.
Whether it be a BIDEN GCT Tax hike or something else, the unprecedented worldwide stimulus has to be paid for and the U.S. is NOT alone, all G10 countries and dozens more all face the same issue.
There are huge issues to tackle, and I do NOT have them all listed here, but here are a few I am thinking about that need to be addressed: -
- The vaccine rollout is really two speed (“The Have’s” v “The Have Not’s”)
India now showing daily news Covid-19 cases in excess of 320,000
- J&J and Astra Zeneca vaccines creating health issues
They are offered but are rejected by many through fear of death
Is this dramatically slowing the rollout?
Can the distribution gaps be filled?
- Chinese vaccines into Asia have very low efficacy rates c.50%
Some people choosing not to bother as vaccine deemed pointless
Governmental Education and Communication is weak
- International travel possibly NOT back to 2019 levels until 2023
Flag carriers will require more aid for possibly two more years
As long as we have a two-tier approach until we achieve 70%-75% total coverage the world CANNOT reopen safely
- Leisure and Hospitality that are reliant on International travelers will require more state aid possibly for two more years
- How will countries balance between repayment of debt not knowing what the final tax burden will be?
- How will countries open up and seal off borders to try and grow their domestic economies?
- How is the supply chain going to work with broken distribution chains?
- Are we going to see excessive inflation due to basic supply and demand issues?
- Day to Day life will NEVER be the same again
Semi-annual boosters against Covid-19 will be required
Mask wearing will be commonplace in many parts of the world
Vaccine Passports will be required to travel internationally
- Workplace environments will alter
Working from home / remotely will remain in place and grow as companies pivot
The above is NOT a pretty list and it is by no means complete.
As a FX trader I firmly believe we have to continually try to keep reality in place despite rigged, corrupt and manipulated markets and how these markets unwind without tears will be impossible from my point of view.
I find myself always returning to economics.
REALITY HAS SLIPPED and we have grown accustomed to this fact whilst we listen to and react to vaccination news. All you have to do is listen to, watch and read journalistic contributions to the media of late and very few are prepared to look more than a week ahead, in fact some simply can only look backwards and forward thinking from analysts is now in my opinion similar to forward guidance from Central Banks. Nothing more than a finger in the air to check the wind direction... basically total bollocks.
I mentioned last week that we have at this present time very emotional markets with moves based on emotion rather than technical analysis. This is a very real issue. It is tantamount to gambling rather than trading via RISK.
My final point in this section is in what reality can DOGECOIN which was started as a joke coin by two ex. Google members of staff have a greater market value and be worth more than FORD MOTOR COMPANY.
This is where we are....
Moving to Forex...
Last week I noted a USD/MXN trading opportunity, which I took 1,500 pips of profit from. Personally, I value these pips at 5% of those based on a USD major, therefore my gain was 1,500 x 5% = +75 real pips. A nice trade.
Looking around we have seen false breakouts higher in several pairs, I am noting the AUD/JPY, which also has a Head and Shoulders pattern possibility (see below). Additional thoughts are contained on the chart.
We are at a crossroads once again.
Equities will lead FX at the moment given the macro-overview and equities remain toppy, frothy, bubbly whichever you prefer. Notably this past week we saw both BITCOIN and ETHEREUM make false breakouts, which have produced the usual technical reversal patterns. For someone who never mentioned cryptocurrencies for years, I find myself defending, justifying and referencing their moves. The reason for this is very simple, that is their relationship with RISK.
As we all know RISK ON or RISK OFF plus FEAR and GREED drives equities and a 10% or greater move lower in both BTC and ETH will have a RISK effect.
I continue to watch the AUD currency closely. The AUD/USD has had great support at 0.7700. I mentioned the AUD/JPY above.
The main reasons for my interest in the AUD are as follows: -
- It is one of my LEAD INDICATORS
- The AUD tends to lead commodity currencies
- It is a great currency vis-à-vis RISK
- Great indication of the effects of world trade especially with CHINA
- Commodities lead and the AUD is a commodity led country
- Finally, and most importantly, when we see equities at all-time highs and the AUD does NOT follow, the divergence is fascinating.
Look, last week I mentioned the MXN currency as a RISK OFF trade to look at and focus on, and this week that currency, plus the other commodity currencies like the AUD, NZD, CAD and NOK. But as with everything trade related at the moment patience is required and you must wait for prices to come to your preferred entry level.
2. THE WEEKLY FX PREMIUM: SUBSCRIBERS SECTION:
3. THE WEEKLY FX PREMIUM - PERFORMANCE:
3.1: THE WEEKLY FX PREMIUM: MONTHLY PERFORMANCE:
3.2: THE 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 4 options for subscribing: -
- Monthly revolving subscription following a 10 day for $10 trial then a monthly CAD$250.00 per month.
- 10 weeks (c.3 months) = CAD$600.00
- 20 weeks (c.6 months) = CAD$1,000.00
- 40 weeks (c.12 months) = CAD$1,500.00
Further information about how to subscribe to the WEEKLY FX PREMIUM is also located at the top of my welcome page at https://www.weeklyfxdrivethru.com under the “SUBSCRIBE” tab.
4. CLOSING THOUGHTS:
Firstly, before finally...
My “YouTube” channel THE WEEKLY FX DRIVE THRU now has a library of the older DRIVE THRU ZOOM presentations. Check it out and maybe subscribe. My intention is to post other “ZOOMS” there from time to time related to FX Trading.
Why not get positioned at the front of the line!
Always remember longevity in Forex trading can only be achieved through trading with good RISK, TRADE and HEAD MANAGEMENT, and above all set your position sizes in accordance with the size of your account and allow for some flexibility. Trade with a TRADE PLAN, basically, plan your trades and Trade your Plan.
Mental toughness is key, and this is all about emotional control. Your mind can do amazing things, but only when it wants to, threat and alert will get your mind’s attention.
“Everyone has ability. It always comes down to mind games. Whoever is more mentally strong, wins” – Mohammed Ali.
Finally, be GRATEFUL for your wins and COUNT THEM. Keep a POSITIVE MINDSET in play at all times, regardless of the market conditions.
Stay safe and wear a mask.
The Pip Accumulator
BLOG VERSION: #410 FREE NEWSLETTER
DATE: 25th April 2021