Another week completed and what have we learned?
- That an asset with no credible value.
- That cannot be used efficiently anywhere on this planet.
- That some call a store of value.
- The price of which can drop c.30% in one day.
- Can also have its price, and, by association, thousands more similar assets influenced by one man’s tweet!
I am course referring to BITCOIN.
We’ve all learned that CRYPTO-CURRENCIES; the home of drug money, earnings off prostitution, child trafficking and other low life activities such as money laundering and bribery scams to Business and Private individuals plus a home for the true gambler as an alternative to Las Vegas, a totally 100% unregulated market influences market directions in the world equity markets and beyond.
What a lesson learned.... it beggar’s belief how cryptos have embedded themselves into everyday conversations. I think the fact that DOGECOIN started as a joke, now has a greater financial base than FORD MOTOR COMPANY.
It’s like the first time I tasted garlic bread, I knew it was the future... When someone said have you tried cheesecake? Cheesecake? A cake made from cheese are you serious? Try it, you like it, you know it's the future...
Am I getting old?
I understand the theory, practicalities and benefits of Blockchain technology, and I understand how Ethereum has differentiation as a true developer’s platform with use of decentralized apps called dapps. I get all of that, I see a future with real advantage built upon Ethereum technology, it has a value.
Has all the other stuff just grown because of the pandemic, because gamblers could not visit casinos?
Given the volatility last week in cryptos, regulation is on its way at a pace, taxable income from gains will be aggressively sought and thousands of coins out there will probably disappear by over 80% as Governments and Central Banks around the world coordinate their polices.
Just to support my comments about a “Store of Value” below are the BITCOIN and GOLD daily charts.
As a true store of value GOLD was breaking out as BITCOIN was dropping like a lead balloon. I know there were market fundamentals in play at the time BUT there is no built-in value at all to BITCOIN to prevent such moves it is all built on a HOUSE OF CARDS full of gambling and pure speculation.
Moving on and stepping down from my soapbox....
Talking about rigged markets....
My Forex performance last week, moved forward once again. I am now in full readiness for the summer doldrums and have literally pulled back my activities by 50%. I intend to enter the summer of 2021 with less trades, less hassle, minimal trade management and get myself ready for the fall when I expect the FED to act upon their monetary policy.
Referring to the FED, is it just me or does anyone else believe that the numbers of FED speakers in the media every week is nothing more than just noise?
Sticking with the FED, the FED minutes last week were nothing more than a well contrived joke. The markets are so pathetic, we saw a well over-played USD strength moved based on what from the minutes? All I could see was the most complicated sentence structure for a long time basically saying nothing. The minutes reflected nothing more than a bunch of ifs, what’s and maybes.
What a week that was....
1. WHAT CURRENCY PAIR HAS MY ATTENTION and WHY?
1.1: BACKGROUND TO MY TRADING STYLES:
Over the past few weeks I have received several emails etc. asking me what my process is for posting a trade. With this feedback in mind, over the coming weeks I am going to run through my process with a particular currency pair in mind, looking at all the stages I take into consideration.
Please bear in mind, I am a long-term trader with longer-term horizons so my process will be completely different to scalpers, range traders and some day traders.
Essentially, I am a “Swing Trader” looking for trades to develop. This style of trade for me I refer to as “Radar Trades”, with a time horizon of hopefully a few days or weeks, to a few months.
However, currently, I am looking deeper and looking to trade over a longer period of time. This type of trade style I call “(Core) Position Trades” and depending upon my conviction and market conditions, trades that I believe are longer-term over 9-12 months duration, these trades become a multi-positional (Core) Position trade.
1.2: THE POTENTIAL TRADE:
GBP/USD – A VERY BULLISH LOOK
First, a little history down memory lane...
Ever since the BREXIT referendum vote on June 23rd, 2016, moves in the cable have always been looked at with a wry smile and a view that the months to come were going to bring challenges the UK was just not ready for.
Well, we certainly got all of that and more, changes in Prime Ministers, failures to get the UK parliament on board with changes and requirements to push through the will of the people. In fact, looking back there was NO chance that the UK parliament would support the will of the people. The UK House of Commons was pro REMAIN NOT pro BREXIT.
Nevertheless, after an election victory in June 2019, current Prime Minister, Boris Johnson that tore down decade long opposition party constituency strongholds, had a mandate to push through all that was required.
The ensuing BREXIT negotiations missed deadlines and volatility with the GBP was at fever pitch. Cable volatility however hit a low on the COVID-19 pandemic low on the back of prolific USD strength in March 2020. A low of 1.1407 was recorded with the GBP/USD.
From that date the rest is what one calls history. Just take a look at the weekly chart below in section 1.6.
At times I really do feel I am out on my own with my views here.
I have been long via a CORE POSITION (CP23) with GBP/USD since the 5th of January 2021. To date I have completed 21 trades for a total pip gain of +1,451 pips so far. The trade remains open, although at the moment I have just one live trade in play (POS087) from 1.4170, see my excel spreadsheet below.
This trade was initially set up for the following basic FUNDAMENTAL and MACRO views that I have held since 2016 in the aftermath of the BREXIT referendum.
- Fair value for the GBP versus the USD has always been closer to 1.5000 than 1.2500 or 1.3000.
- Central Bank monetary policy supported the trade.
- The separation of the bureaucracy of the EUROPEAN UNION allowing greater autonomy despite the trade risks with the bloc would in the longer term give the UK an edge.
- Obviously, the global pandemic would have its effects, but the vaccine rollout has shown the EUROPEAN UNION in its true colours, and the UK had the edge.
- Since September 2020 the pair has remained well above the 200DAY SMA.
- Pullbacks have been minimal. Only 38% retracements at most since to March 2020 lows. That is impressive and shows demand.
- Pullbacks have been nothing more of late than opportunities to buy more!
1.5: THE MACRO CENTRAL BANK PERSPECTIVE:
THE BANK OF ENGLAND (BOE) AND THE FEDERAL RESERVE (FED):
Subscribers to THE WEEKLY FX PREMIUM will know I place a lot of thought with my trading about how Central Banks review moves in their currencies.
- Both Central Banks are operating under the same policy at the moment. They both want to see actual meaningful numbers before changing policy. They are both on a wait and see approach.
- In this environment the FED will always be dominant. USD weakness = a stronger GBP and the move higher should remain intact.
1.6: THE CHARTS:
WEEKLY CHART: This chart basically highlights all the points that I need to make about the GBP/USD.
I have written some additional thoughts that support my commentary on the chart.
My thought process for now consists of the following: -
- My price target is 1.5000
- The Bull / Bear liner in the sand for me lies at 1.3980 -1.4000 now. Above this level we still retain a BULLISH outlook in my opinion.
- I have my global stop loss for the moment sits at 1.3450.
It is hard for me to view the GBP/USD as anything other than BULLISH.
At the moment economic data is secondary to pandemic news and whilst I do feel that this will change in the coming months, the marketplace appears to be waiting upon the FED to act on their monetary policy. I do NOT see such an action taking place until the FED September meeting (22nd) at the earliest. There is a Jackson Hole symposium in late August that could be a teaser prior to the main event later in the fall.
I see this pair as a BUY THE DIP opportunity and I will be adding on pullbacks but at what levels?
Sorry everyone, but that is between my WEEKLY FX PREMIUM subscribers and me...
2. FOLLOW UP ON PREVIOUS POSTS:
2.1: CURRENCY PAIR - USD/CAD:
DATE: 16th May 2021
BLOG NUMBER: #412 FREE NEWSLETTER
Upon some reflection, I decided to add the USD/CAD to my CORE POSITION list. I have trades in play at the moment and my thoughts about a CORE POSITION remain in play.
The initial trade that I posted in the blog last weekend, (FLA024) I covered for +75 pips. Below, I show my twitter feed that was used to advise WEEKLY FX PREMIUM subscribers of my actions from the start of the trade through to its completion.
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.
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:
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.
The Pip Accumulator
BLOG VERSION: #413 FREE NEWSLETTER
DATE: 23rd May 2021