EUR/USD: ARE RETAIL TRADERS GETTING AHEAD OF THE MARKETS?

Here we go back in the groove for 2022.

For me, it’s been a relatively quiet start to the New Year. I have posted various ZOOM content to FREE SUBSCRIBERS and to my FX PREMIUM subscribers and groups, it was all a little bit hectic at the turn of the year but thankfully last week allowed me to ease back in without too many problems or issues.

As always at the beginning of a New Year there are plenty of analysis and reports to read as some providers update their last reports from just prior to Christmas. There has been some interesting concepts and ideas to digest, one of which is trading the EUR/USD in 2022, which forms the basis of the first SOAPBOX of 2022; more of that later.

Moving on...

At the end of last week, THE WEEKLY FX PREMIUM 2022 update, start to 2022 was as follows: -

JANUARY 2022 to date:
Total net pips = +610 pips

YEAR TO DATE 2022:
Total net pips = +610 pips
2022 pip objective = +14,920 pips
(4.09% of 2022 objective achieved)

If you would like to see more information on how I trade etc., check out the link below that will connect you to my video presentation, which is on my YouTube channel: -

THE WEEKLY FX PREMIUM REVIEW OF 2021 & LOOK FORWARD INTO 2022
https://bit.ly/review2021look2022

1: THE SOAPBOX

EUR/USD:
ARE RETAIL TRADERS GETTING AHEAD OF THE MARKETS?

I suppose I would not be far off claiming that last week’s market reaction to the FOMC Meeting Minutes was a little strange. There was nothing new said that really shook my world, but WTF the reaction was bizarre.

I suppose it would be best summarised as being something like the market “Smelling the Coffee” or something close to that. A realisation that the FED has maybe turned HAWKISH, and that tightening is on the way.

The most bizarre, even laughable fact of all is probably all this noise about rate increases and f*ck me, we are still in QE (Quantitative Easing) mode as bonds are still being bought by the FED in their millions of dollars. The FED Balance Sheet grows yet we witnessed markets going apeshit over the FED stating in the FOMC Minutes that they will be reducing it’s, for now, ever growing, Balance Sheet at a faster pace when it starts normalisation along with interest rate increases.

USD$30Billion per month of QE until March and we are HAWKISH....

You could NOT make this stuff up.... this is either modern day Monetary Policy or the lunatics are on the grass.

If that raised a few eyebrows last week, I quickly made an appointment for “Spec Savers” as I thought I had misread articles from several different places about the EUR/USD.

Let me elaborate...

Now, I am NOT always right. I understand that there are always two ways to look at things and with charts I could give you a combination of 50 chart analysts from Banks, Market Institutions, FX experts etc. who when looking at the same chart, would come back with 40 different conclusions on direction, levels to watch out for etc. This is what makes the markets go around, I get that BUT, there are times I just can’t see it, understand where the opposing viewpoint comes from as a base. If we all start at the same point how in God’s name can we interpret so differently, the same charts and same fundamentals. This was how I felt reading opinions about the direction of the EUR/USD in 2022.

Basically, the FED is as HAWKISH as hell and the ECB is as DOVISH as any Central Bank could be.

This overview could change, but I see nothing in H1 to help me understand what pieces of data these analysts are looking at to get them BULLISH the EUR/USD.

The following would be my base case.

I could understand a little if the FED pulled back on their intentions, but right now they are in FIGHT not FLIGHT mode vis-à-vis rate increases. I could understand if the FED disappoints, we could have a “BUY the RUMOUR, SELL the NEWS” event. Even then, maybe, I would want to hear it straight from the horse’s mouth, so to speak with namely Christine Lagarde needing to speak about a tightening policy and right now that looks a very, very, very long way off in my opinion.

I just cannot see the ECB playing catch-up very soon.

The pandemic has hit the EUROZONE really hard, German manufacturing output has slowed, the divergence between Northern and Southern countries within the EUROZONE remains as wide as it ever has been since the GFC.

Yes, I understand, trading is all about timing your entries and getting the best optimum pricing available to maximise one’s profits. As a POSITION TRADER 30-50 pips too soon is NOT a major issue for me but nevertheless I pride myself on getting the best entries available.

I agree with some of the commentaries I have read where there is a caveat of waiting until late Q1 early Q2 to see how the FED reacts and to see does it deliver on its promises to the extent it has prepared the market for.

For those advocating leap in now, I think that this is way too soon, without basis and frankly a bit reckless and scary.

Looking at the EUR/USD weekly chart below. If I were to consider getting long, I would be looking for much lower levels than those were we currently trade around. In fact, based upon the CENTRAL BANK DIVERGENCE fundamentals, we should see this pair move much lower for the Q1 2022 at least.

If you want to find what I am trading, you will need to subscribe to the WEEKLY FX PREMIUM. I will be giving nothing away in this forum. (https://wwww.weeklyfxdrivethru.com

2: THE EDGE
(This section of the blog is exclusive for WEEKLY FX PREMIUM subscribers)

2.1: SCENARIOS RE GLOBAL ECONOMY & MARKETS JANUARY 2022:

2.2: U.S. NON-FARM PAYROLLS – SUMMARY:

2.3: THE REACTION TO THE FED MINUTES:

2.4: THE BOE IS BEING GENTLY PUSHED TOWARDS MORE RATE HIKES:

2.5: I EXPECT THE CAD TO BE RANGEBOUND FOR A WHILE... WHY:

2.6: EUROZONE INFLATION HITS 5%:

3: THE MACRO / FUNDAMENTAL VIEW

This short section of the blog looks forward. I share my macro / fundamental thoughts and views for the coming 3-6 months on factors to consider from my Macro, Fundamental and Geo-Political perspective.

I think at the point, it would make sense to post here what I consider to be the KEY DRIVERS in 2022. These feature on my ZOOM review of 2021 and look forward into 2022.

My KEY DRIVERS for 2022 are: -

CENTRAL BANK POLICIES:
Monetary Policy
Divergence (The Central Bank Divergence Trade)
INFLATION / DEBT ISSUES / CREDIT DEFAULTS:
Inflation is a game changer versus the past
Debt Management
Bankruptcies
COVID-19:
Emergence of new Variants
Market Reaction re RISK ON / RISK OFF
Learning how to live with the Pandemic.
SUPPLY CHAIN ISSUES:
COMMODITIES:
Copper
Oil

If you resonate with my long-term MACRO THOUGHTS and want to get into the trades with me as I develop positions, you will need to subscribe to the WEEKLY FX PREMIUM at https://www.weeklyfxdrivethru.com

4: TRADING PSYCHOLOGY

For me, TRADING PSYCHOLOGY is a very important key aspect of trading that is often misunderstood or just ignored. How we use our conscious and unconscious minds when trading is crucial to our longer-term trading successes.

Over the coming weeks, it is my intention to cover areas and aspects of trading that may be new to many readers. Sometimes things can be right in front of us, and we cannot see it.

HEAD MANAGEMENT and HEAD MANAGEMENT strategies for consistent success in trading is crucial to long-term success.

TRADING PSYCHOLOGY
SOME TIPS TO KNOW

Continuing with some tips you should have, the previously posted ones being: -

DON’T TRADE WITH MONEY THAT YOU CANNOT AFFORD TO LOSE: (28.11.2021)
AVERAGE GAINS ARE WHAT MATTERS:
(05.12.2021)
TAKE A BREAK IF YOU ARE HAVING A RUN OF POOR TRADES:
(12.12.2021)

It’s very hard when discussing this subject not to be in abstract. To a large extent it is the nature of the beast, when dealing with emotions and irrationality.

However, no knowledge, no matter how abstract, is worth diddly-squat unless it can be broken down into actionable tips.

4. “DON’T SHARE THE MARKET’S SENTIMENT”:

As we know, or rather should know, the market can act very unpredictably at times. This is purely and simply because the only thing that the market reflects are the views of many large banks and the sentiments of millions of retail investors.

In Personal Development you are often told to step away from the herd where it is safe and to run with ideas fixed upon moving you up the ladder with a positive mindset and conviction. For this parallel reason, whilst trading FX you do not want to blindly follow the herd and the market’s sentiment.

Look, when you blindly follow, it is usually nothing more than a recipe for sub-par poor trades.

You need to get your own trades at entry prices that meet with your analysis. Following blindly more often that not gives you bloody awful entries and jumping in too late for poor profits if at all.

I use the phrases like “patiently waiting”, “let the price action come to you”, “do NOT be suckered” ...

I am NOT advocating mindless contrarianism here either. Good Lord, I follow two traders in particular to mostly trade the opposite direction to what they are advocating. Every now and then maybe 20% of the time one or both will have a contrarian trade work out BUT 80% of the time it's a joke.

They FEED the broker. We have all done this BUT this is NOT what trading is about.

Digressing for a moment, I have told my FX PREMIUM subscribers that this year 2022 is all about “LESS IS MORE”. I have never agreed with paying brokers for obvious reasons. It has become a passion of mine over recent years to pay myself for the time I spend in front of my screens. I am on purpose 24 x 7 with this approach

Look, to trade it’s simple, you have a TRADE PLAN, and you PLAN YOUR TRADES. It’s all about BUYING DIPS and SELLING RIPS... the clever bit is knowing where and when to enter and place your stop. Exiting in profit is easy.

All your actions as a successful FX Trader should be based on chart analysis, looking at pivot points, Fibonacci levels areas of confluence technically and where buyers and sellers come together to fight for control of the currency pairs direction. The market’s sentiment is just one piece in the puzzle to figure into your decision-making process. Your decisions should in my opinion, NOT be based upon it.

Trading longevity is the secret.

Most traders fail to make decent, reliable, consistent, long-term profits. If you blindly follow market sentiment it stands to reason that acting this way is nothing more than a recipe for disaster. You may enjoy some success but overall it is NOT rational, you are NOT being pro-active you are being reactive.

No-one ever got rich simply reacting.

As I mention at the end of every DRIVE THRU blog....

“Always remember longevity in Forex trading can only be achieved through trading with a good MINDSET, 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.

Finally, be GRATEFUL for your wins and COUNT THEM. Keep a POSITIVE MINDSET in play at all times, regardless of the market conditions.”

5: CLOSING THOUGHTS

5.1: THE WEEKLY FX PREMIUM – SUBSCRIPTION INFORMATION:

If you like my approach to the market and are wondering what my trades are like from, a live perspective and what is the WEEKLY FX PREMIUM all about, check out my website https://wwww.weeklyfxdrivethru.com

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 via Twitter, TwitLonger and ZOOM.

5.2: THE WEEKLY FX PREMIUM - 2021 PERFORMANCE:

Below is the excel spreadsheet outlining the final numbers for 2021 based upon pips and $$$.

It shows you the potential that was available last year based upon single lot trades. I have used the single “Mini Lot” column to highlight the potential income possible. Obviously, you can use this as a base case to factor up your trading opportunity based upon the size of your broker account and your position sizing based upon your RISK TOLERANCE.

5.3: THE WEEKLY FX PREMIUM – 2022 PIP & INCOME PROJECTION:

Below is the excel spreadsheet outlining my income and pip projection for 2022.

It shows you the potential available this year based upon single lot trades. I have used the single “Mini Lot” column to highlight the potential income possible. Obviously, you can use this as a base case to factor up your trading opportunity based upon the size of your broker account and your position sizing based upon your RISK TOLERANCE.

5.4: THE WEEKLY FX PREMIUM - NEW SUBSCRIBER PROMOTION:

To start off 2022 with a bang, I have launched a new subscriber promotion called “DOUBLE UP”. The details are below and can also be found on my website together with lots of other information about me and how I trade. If you want to trade with my thoughts and ideas for the entire year, this will be best the best opportunity to get your FX Trading all set for 2022.

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.

5.5: THE WEEKLY FX DRIVE THRU BLOG – DISTRIBUTION and TIMINGS:

Over the past few weeks the number of questions asked about timing and distribution of this blog have increased, so I thought it prudent to clarify.

DISTRIBUTION and TIMINGS:

WEEKLY FX PREMIUM (Full Version) subscribers:
Saturday before 5PM New York Time
FREE NEWSLETTER (Restricted Version) subscribers:
Sunday before Noon PM New York Time
SOCIAL MEDIA and COFFEE SHOP
FREE NEWSLETTER (Restricted Versions):
Sunday before 3PM New York Time

Finally, putting this blog together prior to distribution takes many hours each week. There may be occasions that news jumps ahead of some of the content, so please excuse my commentary should that situation occur.

Below are the dates for the DRIVE THRU blog in 2022.

5.6: THE FINAL CUT:

Always remember longevity in Forex trading can only be achieved through trading with a good MINDSET, 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.

Finally, be GRATEFUL for your wins and COUNT THEM. Keep a POSITIVE MINDSET in play at all times, regardless of the market conditions.

Scott Pickering
The Pip Accumulator
Twitter: @pipaccumulator
https://weeklyfxdrivethru.com/disclaimer/

BLOG VERSION: #437 FREE NEWSLETTER
DATE: 9th January 2022