So, last week may have been my 250th WEEKLY FX DRIVE THRU but from my registered subscribers list only 80 of them received the blog direct to their inbox. In fact I discovered that since returning from a short summer vacation from blogging, only the first 80 registered subscribers have been receiving the blog.
I switched website hosts from BLUEHOST (who could not maintain my https status due to their system errors) to SITEGROUND who despite a verbal run through of my requirements, have subsequently advised me that only 80 emails can be sent and plug-ins will not work inside my WORDPRESS account to send emails in batches. I thought that things were quiet, I put it down to the time of the year NOT my new hosting partners.
You will NOT be surprised to hear that I have been told the email distribution issue is all my fault… the rules are written down somewhere on the SITEGROUND website and my verbal conversation counts for feck all.
As a result, and which additionally may provide a better solution, albeit a little timelier from my perspective, I am now using my CONSTANT CONTACT account for 100% of my FREE NEWSLETTER administration and distribution.
Suffice to say, this discovery and finding a solution to the problem, has been a bit of a distraction from a trading perspective.
Two weeks ago, I launched revised subscription options and subscriber PROMOTION at the same time. Part of the launch was to open up for a week the full PREMIUM SERVICE version of the blog to my FREE NEWSLETTER subscribers. On the basis that only 80 would have had the opportunity to see the complete version, I have decided to repeat the process with this week’s “DRIVE THRU’ blog.
Over the past week or so, I have been preparing for and I am now almost ready to launch a replacement video about trading with me through THE PREMIUM SERVICE. I just need to put two or three hours to one side to get it done and edited. I know this sounds totally stupid but getting the time is a killer and I consider myself brilliant at TIME MANAGEMENT.
I mentioned just before the summer break that I was working on some algorithms for trading. I am still not sure how I get these into the PREMIUM SERVICE but these are now ready for further refinement. Again, I just need a couple of hours with my partners on this and then will hopefully be a quick “GREEN FOR GO”.
Back to trading …
I have had one of those weeks; distraction and the nagging of hindsight!
Like every trader, you try your best to leave the woulda, coulda and shoulda’s behind. Hindsight is just a wonderful thing. Nevertheless, I think it was Bernard Baruch who said, “Nobody ever lost money taking a profit”; so with those words fresh in my mind, I will shut up.
The pips are starting to accumulate as I head towards my annual net 10,000 pips target. My house move, a month’s vacation to Australia and New Zealand plus my summer break are all in the rear-view mirror now. If you are considering joining the PREMIUM SERVICE no better time than the present.
- I am on my charge to reaching 10,000 pips before the year end. There are risks attached but I beat my 10,000 pips target in 2014, 2015 and 2016, no reason why I can’t do it again to make 4 years in a row (Check it all out on my website weeklyfxdrivethru.com under the tab HISTORY & PERFORMANCE).
- I have a great new subscriber promotion to the PREMIUM SERVICE offer available (Full details in Section 4 of this blog and on my website weeklyfxdrivethru.com under the FX PROMOTIONS tab).
- My buddies at VANTAGE FX are ready for you if you don't have a great broker or you want to add a separate broker for PREMIUM SERVICE trades (Just click the link to VANTAGE FX on my website weeklyfxdrivethru.com ).
Finally, in this section and I should initially mention it here…
You will see from the title of this week’s blog; I have had as far as many of you are probably concerned “A Hallelujah Moment”. I will go into my reasons for my 360-degree turnabout in “THE SOAPBOX” later in the blog in section 5.
For those regular followers; I think I had a “nose-bleed” moment when I decided I was going long the cable. It still does not feel quite right having been bearish for 15 months.
On the Thursday evening after the BOE Super Thursday, I wrote to PREMIUM SERVICE subscribers telling them that I was now going to change sides and because we are entering the weekend and the fact that North Korea had just launched another missile test, I would look for long GBP trades over the weekend’s charts and start posting trades early this week.
WTF, as quoted by one of my long-time subscribers “Yer man Gertjan Vlieghe a BOE MPC member somehow read your tweet and decided this was enough to send the cable higher without you”. Very funny. Cable soared through 1.3600 over 220 pips range on the day without the US session. I was asleep through the plough higher from the 1.3400 break out level.
- LAST WEEK – MY TAKE ON SOME KEY EVENTS:
In no particular order, here is what floated my boat last week.
GBP: UK AVERAGE EARNINGS INDEX & “SUPER THURSDAY”.
I will be going through these headlines later in Section 5 - “THE SOAPBOX” section of the blog.
USD: INFLATION DATA.
PPi – dreadful and the USD rallied.
Core CPI and CPi - Core CPi came in line with expectations and regular CPi was a beat. The USD rallied, sold off, rallied, sold off, rallied and basically it chopped its way throughout Thursday. It was probably not helped by a possible North Korean missile launch news wire.
Core Retail Sales and Retail Sales – Poor data. Retail Sales was -0.2% against a positive 0.1% and Core Retail Sales 0.2% against 0.5% expectations.
Zero inflation is evident in the Us markets. Demand through Retail Sales has taken a nosedive. It all looks a difficult time for Janet Yellen this week. What has the FED policy done vis-à-vis getting the US economy back on track?
Here’s a thought…
At the FED Press Conference this week. Announce that the poor recent data was due to the weather and that it’s simply transitory as the underlying data supports the current FED policy!
My thoughts are US data is much the same as always. If we see good data all I read is FED TO RAISE RATES IN DECEMBER or if we see poor data FED NOT GOING TO RAISE. This is all I see now. I think I have grown so accustomed to this bollocks I do not really read it anymore and I skim the document.
I think that as traders, we should just react to whatever Janet Yellen says. Everything else is just noise from people who know about as much about what is on the minds of the FOMC as Ozzy my boy Labrador about the FED’S intentions.
- THE FX MARKET PLACE:
3.1: THIS WEEK’S ECONOMIC DATA RELEASES:
3.2: USD MAJORS – MY SUPPORT & RESISTANCE LEVELS:
3.3: MY THOUGHTS ON THIS WEEK’S ECONOMIC DATA:
The FOMC is the standout this week. However, there are couple of other bits and pieces that have caught my eye.
Here are my picks of the upcoming week.
USD: Janet Yellen is back on the stage again. Everything about this Press Conference and Rate Statement is only going to be about two subjects: -
Firstly, when is the FED going to raise rates again. Before the end of 2017 or spill it over into 2018?
Secondly, will she provide updates about the FED reducing the size of its balance sheet. By how much and when will they start.
Frankly, I do not think that the rest matters. She will drone on giving us waffle for a good 15-20 minutes, but at the end of the day, in my opinion its only about the above two points. You will see and hear media account executives asking the same questions 50 different ways to let their managers know that they turned up and weren’t “bunking off”, but at the end of the day it could be all over in a “Wham Bam Thank You Mam” 10 minutes maximum and everyone could be down to the pub after 20 minutes writing their pieces.
The drama unfolds at 2PM EST and the Press Conference at 2:30PM EST on Wednesday.
GBP: On the back off the HAWKISH BOE last week we have Retail Sales this Tuesday. I can see it now on twitter. BOE to definitely hike in November as Retail Sales beat, or, BOE rate hike this year in question as UK Retails sales miss.
For Carney to do a complete u turn is not unheard of.
If ever you go to lunch with him, beware if you only have one hour for allocated, as he is so indecisive about his choices, you may end up eating nothing or eating alone. Allegedly, Carney cannot make up his mind what to eat and when he does he keeps changing his mind.
It is so bad that in local restaurants, close to the Threadneedle Street area of London that are known to accommodate BOE employees they have alternative Mark Carney menus. They include a clause “Mr. Carney, once you have decided upon your choice of food from our menu you cannot change your mind. Regretfully forward guidance is believed and 100% adopted by our chefs. The direction you have chosen is final”
Do not be surprised if Carney has you brain in a fecking twist up to the end of this year. He is the master of changing one’s mind. If it were an Olympic sport he would win the GOLD MEDAL.
CAD: I am a buyer of CAD$ and I am adding to positions, taking profits here and there as the markets chop back and forth. This week we have CPI and Core Retail Sales, this inflation data will be key for the BOC vis-a-vis another interest rate hike before the end of 2017.
The economic data from Canada recently has been really good just the odd bit of mixed data, like the Employment numbers when the mix between Full and Part Time jobs was skewed.
If this week’s data does NOT rule out another BOC rate hike, I will be adding more positions to my CORE CAD position.
NZD: It is the New Zealand 2017 General Election this Friday. I am generally bearish the Kiwi; however, I believe it would be sound to wind back trades ahead of the result. I have already started this with PREMIUM SERVICE trades and I will continue this process through the week.
I would imagine the start of trading next weekend will be the time for volatility on a grand scale if we are going to see big moves.
- THE PREMIUM SERVICE:
4.1: PREMIUM SERVICE PERFORMANCE YEAR TO DATE:
The PREMIUM SERVICE is a subscriber based Forex support service offering my suggested trade set-ups and market commentary.
Full details of the PREMIUM SERVICE and costs to subscribe plus the various trade styles and how suggested trade set-ups are communicated can be found on my website landing page at www.weeklyfxdrivethru.com by selecting THE PREMIUM SERVICE tab.
CURRENT PREMIUM SERVICE PERFORMANCE:
MONTH TO DATE: +406 net pips
YEAR TO DATE: +7,062 net pips
Further information can be found by clicking TESTIMONIALS, PART-TIME TRADERS and FX PROMOTIONS tabs on my website www.weeklyfxdrivethru.com
To subscribe to THE PREMIUM SERVICE, you will require a valid credit card.
4.2: CURRENT SUBSCRIPTION PROMOTION:
If you would like to be in the monthly draw to win a “FREE 30 DAY SUBSCRIPTION” to the PREMIUM SERVICE, valued at CAD$150.00, all you should do is subscribe to receive this FREE NEWSLETTER on my website www.weeklyfxdrivethru.com
This can be done as follows: -
On my welcome page just below my cube logo is where you complete your subscription.
4.4: PREMIUM SERVICE – SUBSCRIBER CONTENT AREA:
(Only SUBSCRIBERS to the PREMIUM SERVICE can view this section of the BLOG)
4.4.1: TRADING REVIEW, INSIGHTS and SUMMARY:
What a week last week was.
I was distracted on several occasions with having to be away to take care of my Jeep’s service but more importantly issues with my new webhost regarding bulk email delivery. The only effective workaround is not to use my WordPress connection through my website but to use my database via constant contact.
From a trading perspective, I have changed views with the cable. I have gone into some detail in “THE SOAPBOX”.
I tweeted last week after the BOE Super Thursday that I would look for GBP trades into this week, as we were into Friday trading session but especially with the missile launches out of North Korea it made sense to wait. I did not, and frankly no-one could have predicted the comments from Gertjan Vlieghe BOE MPC member. He basically sent his own missile under the GBP. His comments are in a different tone from Carney and we should not get too carried away but that detail would not stop the market reaction. It has been an absolute stellar move across the board.
I added a good total of net +406 pips in the past seven days which is great but it was a difficult choppy week. Ranges are tightening again (GBP pairs excepted). This is what happens when we are about to have a market SHIFT.
Market correlations are just not sitting properly. One day they are trusted the next morning when I check charts the previous alignment has drifted apart. The geopolitical tensions have a great deal to do with this as this directly affects safe havens such as GOLD, plus the JPY and CHF currencies. I must mention though after the missile launch last Thursday, my reaction was complete caution, the market was to shrug it off within a couple of hours. Something is going to give with this and it will be ugly when it happens.
The geopolitical events when added to the changes taking place with Central Bank policy throughout the world is also fueling the uncertainties, correlation issues and non-alignments across markets. Central bank uncertainties on future policy timing (FED and ECB), the dovish approach in general changing into a hawkish policy approach (BOC and BOE) and uncertainties in delay by trying to maintain a neutral policy stance over a more hawkish stance (RBA and RBNZ).
Add all these factors together and its quite a mixing bowl of ingredients. I am just not convinced on everything FX at the moment, I am fearing the worse. I know that I am slow and steady at this but so much complacency to me is just mental.
Back to trading…
Looking forward with trades, I will continue to press forward building a CORE CAD POSITION. Obviously short term NZD/CAD due to election will be restricted, CAD/CHF and CAD/JPY I will watch more closely than before vis-a-via flight to safety. In addition, given the situation with cable I think that GBP/CAD could be tougher unless we see a USD/CAD fall into the 1.1800’s.
The CORE NZD position will have to take back seat until the election is over. Friday last week my AUD/NZD took a beating, but as you know for the last 2 years I have been basically long this pair, it is have given some great returns and I will stick with it. My total position size a sizeable broker account is only 40% of a full-sized position. I could ride this pair substantially lower beyond its monthly ATR on STOP LOSS levels, if required, and still not exceed my risk parameters.
I need to see the election outcome and reaction before committing more trades. My plan this week it to exit NZD related trades ahead of the vote.
With regards to the single currency, I am looking to build a CORE LONG POSITION with the EUR. As you know I have started with EUR/USD, to which I will add more set ups and I need to look at the cross rates this week and add. I have a EUR/CAD short that I entered on a SELL STOP below previous good support. It has given me a nasty rebound spike higher. I extended the STOP to stick with this pair as will follow USD/CAD moves. Annoyingly at the moment the USD/CAD is consolidation before resuming its move lower with the trend. Bounces have been minimal so far.
I have made many references to cable. I will be posting several pullback entries from the get go this week.
There will be quite a bit of LIMIT ORDER activity in the early part of the week.
We have the FOMC this week as you are aware, it is the draw of the news events. As you have seen, I have adjusted my entry tactics more of late to using momentum as a means of trade entry by using BUY STOPS and SELL STOP orders. These are NOT my preferred means of entering trades but they are working more times than not. I will continue with these for the time being, they should be of use around the FOMC.
Whilst I am very positive on my trading to obtain results at the moment I do have market concerns as you know and I have raised them again in the blog. I will try tot to get SPOOKED but we ready for mass exits of trades should the ARMAGEDDON situation arise.
4.4.2: MARKET SENTIMENT:
4.4.3: USD: MY SUPPORT & RESISTANCE LEVELS with TRADING CHARTS:
The charts below contain commentary (my thoughts and views), these are the USD major charts that are reflected in the spreadsheet above.
Please note that now that these charts are PREMIUM SERVICE subscriber only, I am now able to have them focused to existing trades and limit orders as well as future intentions.
4.4.4: EXISTING & POTENTIAL CORE TRADES:
Basically, I am bearish the CAD and NZD and the two currencies are dominating my thoughts, trades and limit orders at the moment.
Currently, I am live the following: -
CAD/CHF – long
USD/CAD and EUR/CAD – short
Plus: - I have SELL STOP limit orders and standard limit orders in position for the USD/CAD.
I am adding on pullbacks and getting prepared. I see the BOC raising once more this year as they take aim at the housing bubble and personal lending increase’s.
I am still targeting much lower levels sub 1.2000 with the USD/CAD. This level if broken should drag all CAD pairs stronger.
A Couple of weeks ago, ScotiaBank released its latest batch of currency targets and thoughts vis-à-vis the markets. It has another rate hike in the mix for Q4 2017 and two more in 2018. If they were all 0.25% rate increases, that would make a grand total rate of 1.75% by the end of 2018.
It is a brave call, but I can see it as well given the fundamentals.
MY PLAN: Is to add more USD/CAD trades this coming week and to continue to build a CORE SHORT POSITION that enables me to add to and take pips and $$$ from trades as the CAD strengthens.
Currently I have 4 x live long AUD/NZD trades and a NZD/CHF short trade.
Plus: - One more long AUD/NZD limit order trade, a NZD/JPY short limit order and a EUR/NZD long limit order trades waiting in the wings.
MY PLAN: I am going to reduce NZD exposure this week given the fact that the New Zealand General Election takes place on Friday. I will then look at the market sentiment next week to review my future plan.
EUR/USD: I have placed multiple LIMIT ORDERS based initially on my thoughts that we would see a larger pullback with the single currency from its break above 1.2000. this materialized only as far as 1.1840.
MY PLAN: I am going to look at adding more LIMIT ORDER set ups over the coming days. I still believe that the EUR/USD is going back towards 1.3000. The rhetoric out of the ECB has been calming, but it is questionable that the market is believing anything that comes out of Frankfurt at the moment.
I will also look at some EUR crosses once again.
Nothing is in position yet. I believe that there will be some excellent pullback opportunities to enter GBP related trades across the board and I will be looking for these opportunities this week. The only pairs that I am uncertain about are GBP/CAD and GBP/CHF. However, all other crosses should have great potential.
- THE SOAPBOX:
CARNEY COMES OUT OF THE CLOSET
(BOE NOW HAWKISH)
On BOE “Super Thursday” last week interest rates remained on hold but the HAWKISH tone of the Monetary Policy Statement sent the cable on a tear. Later in the day Mark Carney (BOE Governor) was on the wires fueling the statement content further by openly stating that the next move higher in cable would be upwards and sooner than expected.
Having moved about 150 pips on the statement release, Carney’s added comments only placed about another 40 pips on top. It was the comments the following morning (Friday) by BOE MPC member Gertjan Vlieghe, who came out and stated that the increase would be soon and more than a one and done which Carney had intimated the prior day. These comments sent the GBP/USD above 1.3600.
From 1.3150 to 1.3600 (450 pips) in basically 24 hours was what you call a substantial shift in sentiment and a stellar move.
The comments from Carney, that he has finally let go of the dovish sentiment and admitted a hike was required after months of denial has brought him out of the closet and the dove has now turned hawk.
By coincidence upon receipt of the comments from the BOE, but with no closet involved, I have also changed my GBP bias. I am no longer bearish cable in the short / medium term. I am bullish primarily because with cable above the 1.3450 - 1.3500 levels we are now in a bullish trend. The market is now focused on BOE interest rates rather than the political gaffs surrounding BREXIT.
I still have massive BREXIT reservations and concerns. Theresa May’s government’s handling of the BREXIT negotiations appears poor and not planned. The Tories have a paper-thin majority in the House of Commons.
However, even with this backdrop it looks like that even without a single BREXIT agreement reached and mass confusion reigning over the negotiations, UK households are going to have more cash pressures placed upon them.
Personally, I think that this rate increase should it happen is a recipe for disaster. Never trust accountants in deciding these matters. I have said it before, these pen pushing, desk sucking, jotter blotters do not get out much, they live, breathe and survive on historic data and do NOT take into consideration facts in the reality of the present day.
You can bet your bottom dollar that any rate increase will be 100% passed on the mortgages and credit card debt. Households that are currently feeling the effects of inflation are about to get a kick in the nuts as living costs are about to move higher. Look out for defaults on loans, mortgages etc. on the increase in the coming months and for “Vlieghe” to intimate multiple interest rate hikes was reckless as it could start something more than just defaults.
I know some of you will think that the mere fact that the GBP/USD exchange rate is increasing that this is deflationary, and, I agree, but it is a year away at least to feel the deflationary effect. The debt default issues are bubbling under right now beneath the surface prior to adding more pressure through interest rate increases.
In addition, do not forget trade will be effected by rate increases. The balancing act is a difficult one to maintain but I am astonished that the pen pushers have gotten their way. Given all the uncertainties on the economy and with BREXIT I would have ran with higher inflation in Q2 2018.
There are still a couple of “not sures” emanating from the BOE statement and comments that followed.
- Slow rate increases like the FED?
- Tapering through Balance Sheet reduction of the QE program when will this commence?
There is a BOE inflation report due in November, this looks like the date for the first rate hike. So, we do not have detail but the markets have basically already started to price in a 0.25% rate increase.
Whilst I can see the move by the BOE and the sentiment change, I can also see the other side. This is a risky decision if they go ahead.
Starting Monday I will be hunting down GBP long trades based off pullbacks through Fibonacci retracements. All GBP pairs are overbought, EUR/GBP oversold, but there will be some great trading opportunities in the near term to take advantage of.
The BOC obtained almost $0.13 cents on their move higher, if cable were to match this, it would be close to 1.4450. Whilst I cannot see that given the money flows I can see a challenge of 1.3870 the 61.8% retracement from the pre BREXIT June 2016 highs (1.5034) to the December 2106 lows (1.1994).
What happens now if we have a catastrophic BREXIT announcement or a leadership battle in the Tory party or another election is called in the next couple of months?
Interesting times ahead.
- CLOSING THOUGHTS:
Nothing more to add here, I have said enough except,
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.
The Pip Accumulator
BLOG VERSION: #251 FREE NEWSLETTER
September 17th, 2017