Apart from this being the first post following my short summer break from weekly blog posts, it is also “Papa was a Rollin’ stone day” (The Temptations song from way back in 1972 re-defined the opening to a song with an extended instrumental introduction. The first line of which was “It was the 3rd of September….”).
It is great to back in blogging mode once again and there are so many hot topics to choose from to be my first SOAPBOX article, BREXIT, the ECB, THE DONALD plus that fecking idiot in North Korea!
However, my excitement does not stop there; to keep matters spiced up, I have made a couple of amendments to the blog format and I am also pleased to announce a lower cost entry subscription fee to enable you to join to THE PREMIUM SERVICE, in fact, you can get the first 10 days for just CAD$10.00.
Moving on up…
When the last “DOUBLE IT UP” promotion was in place, I received several emails from potential subscribers who wanted THE PREMIUM SERVICE to offer a lower cost option to subscribe. After donning my thinking cap, I have come up with something that I hope will answer most, if not all the emails received, and, I am excited with the subscription options that are now in place (see section 4.2 below).
For added excitement, I have added a short “FALL” promotion as well to coincide with my return (see section 4.3 below).
PLEASE NOTE: As I am launching revised subscription plans and a new subscriber promotion for this week only the PREMIUM SERVICE SUBSCRIBER version will be open on all versions “FREE NEWSLETTER” version of the WEEKLY FX DRIVE THRU.
I have made some subtle changes to the format and running order of the blog and I have removed some content from the “FREE SUBSCRIBER” versions of this blog and added them to the “PREMIUM SERVICE SUBSCRIBERS ONLY SECTION”.
Finally, although having been away from blogging I have still been trading through the PREMIUM SERVICE and in August I added 2,189 pips to the annual total against my objective of 10,000 pips. This addition of pips is despite my continual remarks about trading difficulties. What is really annoying is, I walked away from about 1,000 pips via early exits of trades…argh!! However, one should never complain about banking $$$ and pips, regardless of the amounts or numbers.
Therefore, from the final four months of 2017 I require 3,669 additional pips to reach my annual objective. Should I achieve the 10,000-pip total it will be the 4th consecutive year to do so, in fact since the PREMIUM SERVICE started so far it has always met its objective. This year has been a real challenge though for one reason or another.
As I continually mention to my subscribers it is a difficult marketplace from within to trade, and, frankly I do not see it changing for the remainder of this year. With all the ups and downs, uncertainties and geopolitical issues plus the DONALD’S twitter feed, the way I have adjusted my trade style and the way I look at trades has altered, if I compare 2016 with today. Back in 2014 when I thought it was hard it was really a breeze! Basically, I am now more than happy to do a Steve Miller and “Take the money and run”, when in previous years I may have sat in trades a little longer. I do still sit in trades but frankly most of the time it is the “Grab and Go” approach that works best. It is just NOT my usual style and it annoys me to “Grab and Go” when on occasions many pips are left on the table.
Nevertheless, onwards and upwards the PREMIUM SERVICE goes and I am delighted.
- LAST WEEK – MY TAKE ON SOME KEY EVENTS:
In no particular order, here is what floated my boat last week.
USD: Non-Farm Payrolls data.
Firstly, ADP Non-Farm numbers released last Wednesday were blow out numbers, they were really good at 237k versus estimates of 185k. In previous months however, the correlation between ADP and NFP numbers being somewhat in directional alignment has just not happened. ADP has been a great contrarian indicator in recent months and it did not fail to live up to its new-found reputation as NFP missed.
The USD was crushed but then the DXY climbed back as the ECB fearful of strength returning to the EUR like a Forex Tsunami next week announced that Tapering would not be ready until later this year in December.
The cynic in me sees this as timing to coincide with a possible FED rate hike. If the FED were ever going to raise again in 2017 it would be December. This should negate some of the EUR strength if the FED raised US rates around the same time as ECB tapering
“Scott!” …. How can you be so cynical?
Really good data. I sit in the camp that the BOC will be raising rates once again before the end of 2017. I talk about this in greater detail in section 3.2 of the blog.
BREXIT negotiations appear to be along the lines of a west-end farce.
I am NOT surprised, and neither should you be, we are watching career politicians at work. They only know how to attribute blame; they are simply NOT negotiators or problem solvers. This hangs over the UK like the “Sword of Damocles”.
I remain bearish cable longer-term and I stand by everything I have written in earlier blogs about timings and FX targets. I am still to this day astonished by the continual reference to “HARD or SOFT BREXIT”. For crying out loud; there is NO SOFT BREXIT. The EUROZONE cannot afford a SOFT BREXIT because it could potentially create a CONTAGION.
I am now in the camp that there will be NO BREXIT deal achieved.
KIM JONG-UN will just not “bend the knee”. Even John Snow bent the knee!! This fecker could strike Guam despite all the political pressure and efforts pushed upon him. He is as much of a loose cannon, in fact probably a lot more if the truth be known than DONALD TRUMP.
Unlike OBAMA I believe that TRUMP will eventually act against North Korea. I think, and I hate to write this. it’s not “if” but “when” TRUMP acts. Commencing hostilities is a difficult decision with wide ranging ramifications especially as South Korea could come off the worst if missiles are fired in anger. At the end of the day something or someone has got to give.
After he fired missiles over Japan just after the Asian markets open last Monday, that session and the European session that followed sold off like crazy, they were very volatile sessions. From a Forex perspective, the JPY and CHF both strengthened to key support levels taking their crosses with them. The US markets opened much lower, the DXY was at critical support, but then as usual even with the political rhetoric flying left, right and centre, US equities shrugged it all off and rebounded off the triple digit lows to end the day in the green. The “Buy the Dip” mentality always seems to be a successful trade on Wall Street regardless of what is going on. We should trade in the full knowledge that this situation could escalate and kick off very quickly at any time.
It beggars belief that with a “nutter” like JONG-UN allowed basically a free reign, the markets carry on as if its birthdays and Christmas rolled into one. JONG-UN could not give a rat’s ass if hundreds of thousands of his people starve to death on the streets. As long as, he and his million people plus strong army are fed that all that counts. This mentality is beyond traditional negotiation. History shows that and JONG-UN knows that.
This whole situation is making me think that I need to look at placing ARMAGEDDON TRADES back in the frame.
- 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:
Economic data releases this week are a bit thin on the ground.
However, here are my picks of the upcoming week.
AUD: A very busy week for Australian data. We have the RBA Rate Statement, GDP, Retail Sales and the Trade balance all scheduled to be released.
If you study bank opinions, follow twitter posts and listen to the financial media, you should be in the same place as I am with regards to the AUD currency and that is; a state of confusion.
The RBA without doubt do not want to “Rock the Boat”. Philip Lowe, RBA Governor, has stated that the RBA do not want to start raising interest rates despite a housing bubble in Sydney and to some extent in Melbourne. He favours a status quo on monetary policy, by remaining very much neutral.
Economically however, data from Australia has been on balance good, although this good data has been fueling areas of the economy that the RBA does not want to fuel. Something has got to give.
From the AUD/USD perspective a break above the 0.8060 level would break above recent highs and would have the RBA toilets fully occupied in seconds as the committee debates the actions required to peg it back from appreciating too far.
GBP: Construction and Services PMi are the highlights for UK data. As always, I am in the camp of “Construction” missing and “Services” beating the market expectations. As long as the run of mixed but on balance poorer economic data continues in the UK combined with farcical BREXIT negotiations my FUNDAMENTAL views of GBP/USD at 1.2000 and EUR/GBP at parity remain. Coming back from vacation the hardest bit for me to do it to enter the trades I want at value prices for the GBP crosses.
PREMIUM SERVICE subscribers know that after NFP I was really frustrated that I could not achieve my targeted entry levels.
CAD: It’s a big, big week for the Canadian economy. Trade Balance, Jobs data and a BOC Rate Statement all feature this week. On the back of stellar GDP growth announced last week, it is heady times for the CAD.
I am not expecting an interest rate hike this month but I am preparing mentally for one before the end of 2017. I see the USD/CAD moving a lot lower. Out of the initial 0.25% hike in rates the CAD strengthened again the USD by about 10 cents overall. This next rate hike by the BOC bake to 1.0% could see a further 5/6 cents in my opinion, with the USD/CAD sitting below the psychological level of 1.2000 when it’s all said and done.
EUR: God help the poor fecker, Mario Draghi must liken his press conferences to being put in front of an attack by the Dothraki. His recent past public appearances have been improving but basically since the last ECB Press conference and his Sintra speeches he has been trying to climb out the hole he dug for himself.
Being balanced and defending Draghi for a moment what he had to do could be likened to trying to sell ice-creams to Eskimos. He was on a hiding to nothing. The markets are seeking cheap profits and the ECB is fair game as everyone knows that the ECB accommodative program is coming to an end very soon. No matter what Draghi says or does the markets smell blood.
Potentially, the EUR/USD could be at 1.2500 very quickly, indeed well before tapering starts, however in an interesting move around last Friday’s NFP release the ECB starting with Ewald Nowotny (Austrian CB Governor), started a series of planned (in my opinion) press releases about tapering and how the message needs to be delivered.
I am covering this in the SOAPBOX section later in blog (Section 5).
- 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:
AUGUST TOTAL: +2,189 net pips
MONTH TO DATE: +0 pips
YEAR TO DATE: +6,331 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: NEW SUBSCRIPTION OPTIONS:
4.3: CURRENT SUBSCRIPTION PROMOTION:
4.4: WANT A FREE PREMIUM SERVICE SUBSCRIPTION:
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.
This month’s winner of the 30 DAY PREMIUM SERVICE SUBSCRIPTION is: -
By the time the blog is posted David should be fully in position to take advantage of his FREE subscription.
4.5: PREMIUM SERVICE – SUBSCRIBER CONTENT AREA:
(Only SUBSCRIBERS to the PREMIUM SERVICE can view this section of the BLOG)
4.5.1: TRADING REVIEW:
Looking back on August, I know that I criticized the markets trading conditions a great deal. It was a hard month with lower liquidity and geopolitical news thrown in as well, nevertheless all things considered; to end the month with a net pip increase of 2,189 pips was a great feeling.
Breaking down the numbers, most income and pips were almost equal between FUNDAMENTAL and POSITION trades. I am still shying away from intraday trades via FLASH and RADAR trade set ups and this is indicative of how the market is playing in my opinion. I can only trade what meets my criteria and small day trades are not it, at the moment.
It was commodity cross rates that yielded most pips last month.
I posted to twitter last Friday the NZD/CAD bear flag trade, which completed as posted originally in trade FUN655 on August 1st. I took 280 pips profit from the 5 separate trades (FUN655, FUN669, FUN670, FUN684 and FUN694) on the measured move which from day one when the initial set up was posted was projected at 488 pips. About 60% of the move was achieved, but my point is the conditions were that I felt I had to cover and re-enter again. I could not just leave the trade running. It is these conditions that have increased administration time and overall research and desk time this year. This trade is typical.
The RISK MANAGEMENT approach that I am using this year to protect $$$ results in more trade activity, which means more ins and outs as the trade move progresses.
In August, the positive / negative trade ratio was 87% / 13% - happy bloody days!
Year to date the PREMIUM SERVICE is now bang on target at 75% / 25%
With regards to the straight pip by pip analysis comparison.
End of August 2016 = 9,200 pips
This year = 6,331 pips
Behind by 2,869 pips
Remember though 2016 was a 13,575-pip year well over the 10,000 pips objective.
I am on target to achieve 10,000 pips by the end of 2017…. God willing!!
I am looking at commodity cross rate pairs to generate a significant number of pips into the year end.
Despite the ECB comments I do still see the EUR appreciating in value above 1.2000 towards 1.2250. I remain stubborn but with huge belief in the basic fact that the cable is going lower and by default the EUR/GBP moving higher into the year end.
I was basically flat going into NFP and have added just a couple of set ups since NFP. Over the coming days I will be placing more set ups adding to CORE POSITIONS, primarily the NZD related pairs and will also be looking for GBP and CAD entries.
With regards the JPY. I have this issue. S&P is at highs. Why in all sanity isn’t the USD/JPY at 120.00, even 150.00? There lies the question and there lies my avoidance.
The CHF I am now ignoring unless we see a drop to the region of 0.9000 on the back of a North Korean situation. I believe that this will be the safe haven driver across the board.
Finally, EUR/USD. Yes, I am going to look for a long entry. As previously discussed I want to get long off the trend line support at 1.1680. Failing this the 1.1711 pivot. I had hoped for blowout NFP numbers to give me a shot at these levels. We know what happened there!!
Sorry, I updated the RISK MANAGEMENT / POSITION SIZING excel spreadsheet to take effect 1st September. Mostly just adding in some pairs that were omitted from the original version.
I have placed an updated copy on the NEWSBOARD inside the subscriber area of the website.
4.5.2: MARKET SENTIMENT:
4.6.3: USD MAJORS – MY SUPPORT & RESISTANCE LEVELS:
The charts below contain commentary (my thoughts and views), these are the USD major charts that are reflected in the spreadsheet above.
4.5.4: CORE TRADES:
Just a brief note this week as I was virtually flat going into NFP last Friday. Usually there are a total of approximately 20 trades either LIVE or LIMIT ORDERS to review. This week I only have 4 live trades going into the weekend.
As the long time subscribers will know. I have been basically long this pair for most of the past two years. It is now in breakout mode.
I currently reduced size to one position pre NFP and have a limit order in place. My gut feeling is that I will be adding a BUY STOP order as well as another LIMIT ORDER based off a smaller pullback to add to the current position.
Only one trade in play at the moment but the Head and Shoulders measured move means more will be added moving forward. Like a bloody numpty, I missed the shorting opportunity at 0.7200 post NFP…. argh!!
I will be adding primarily BUY STOP orders to the pair. I am still in the camp that the ECB will fail in talking back the single currency and that EUR crosses will benefit.
In the melting pot for moving forward…
EUR/USD and EUR Cross Rates:
GBP/USD and GBP Cross Rates:
4.5.5: PREMIUM SERVICE – CURRENT LIVE TRADES & LIMIT ORDERS:
CURRENT PREMIUM SERVICE – LIMIT ORDER TRADES:
- THE SOAPBOX:
DRAGHI GETTING PREPARED FOR THE DOTHRAKI
The one part of writing this blog that I really look forward to is this section Within “THE SOAPBOX” I can basically write about anything that is on my mind that I consider could be of interest directly or indirectly to trading currencies.
Having had a few weeks off in the summer, I am back and raring to go. If only the same could be said of “God love him”, Mario Draghi as he prepares this week for the ECB Interest Rate announcement and Press Conference that follows.
He is on a hiding to nothing. The ECB are scared shitless about the single currency appreciating too much, too far and too fast as it will screw up all the work undertaken so far to try and get in general terms, very, very general terms the EUROZONE economy back on track.
So far up their own arse’s the ECB have now taken to delivering pre-news updates about upcoming news events such as the ECB Press Conference this Thursday. This is an attempt to lower market expectations from what Mario Draghi will talk about and what the prepared statement will say. This desire to dampen expectations is understandable but the inevitable is going to happen.
If it looks like a pig, it's a fecking pig even if you dress it up in a skirt put a syrup on its head and paint lipstick on it. It’s still a pig. Draghi has his own squealer to deal with.
Being the ECB he is of course not helped by Ewald Nowotny (Austrian Central Bank, Governor), who only fans flames in these situations. He has already been on the wires stating Draghi needs effective communication and dialogue to plan the ECB tapering plans and how the ECB will return to a normalized interest rate policy. Easier to sell an ice-cream to Eskimo in my opinion.
So, let me keep this as punchy as I can from my own view and perspective. Draghi is f**ked. No matter what he says or does he is screwed. It is like standing in front of the Dothraki horsemen armed with a butter knife.
The good news and the bad news as I see it: -
- EUROZONE growth is up in 2017 and will likely be revised upwards.
- The strong EUR could influence core inflation lower into 2018.
- Business confidence is optimistic, in Germany at least.
- Elections this month in Germany and early next year in Italy.
- Populist fears for France and Holland never materialized.
- Inflation is still lagging.
What options does Mario Draghi have?
Around the time of the NFP release last Friday the ECB announced that any decision on tapering would be delayed until December. Now I am a cynical fecker at the best of times but December coincides with the time that if the FED was going to act on increasing US interest rates it would be then. This delay to the same time of the year if the FED does act, will negate some of the possible, or in my view probable EUR strength.
So, basically the ECB has bought three months during which time they hope to keep the EUR appreciation suppressed.
This is known as “KICKING THE CAN DOWN THE ROAD”
The ECB and EUROZONE are masters at this. If it were an Olympic event the EUROZONE would win gold with the ECB in the silver medal position.
The bottom end is that the ECB will have to address the issue of monetary normalization at some point in time. They cannot just exit. It will take time to do so with a timetable of events. The markets feed on the greed of that instant move and then it will settle down but the simple fact is that unless the FED are normalizing at a faster rate than the ECB the EUR/USD is going to 1.2500-1.3000 again.
I think that the ECB might use inflation as the reason and perhaps extend the QE period for another 6 months but taper down €20-30bn per month. With regards to negative overnight rates, these will probably remain in place but could be tapered in the first half year of 2018.
Draghi is consistent. He has always pointed out the requirement for continued monetary policy accommodation. It is the markets frothing like rabid dogs wanting movement on policy knowing that economic data is improving that has created all the euphoria. A sniff of improving conditions has the markets thirsty for blood.
I know I give a brief macro level opinion, but if you want more detail there are plenty of places on the web to find the detail.
Overwhelmingly, I believe the markets may buy a delay for a day but as soon as the next set of positive data hits the wires, all bets are off again. The markets have the memory and attention span of gnat.
From a trading perspective where am I?
The Forex market is a future pricing mechanism…. I read that in a book. The markets smell fear in the ECB and they are ready rip the single currency.
Yes, I want to long EUR/USD over the medium term and the fact that the ECB announced a December timeline last week has given me more time to pick my EUR./USD long entry. I like the 1.1680 entry just below 1.1711 pivot off trend line support. Will we go to that low? At the moment, there is nothing in my brain telling me that we will see a pullback to that level at the moment, so I may have to re-evaluate my thought process once again this week after the ECB Press Conference on Thursday.
With regards to the EUR crosses they are fair game at the moment which I will be looking to add to this week.
Therefore, this week I see Draghi saying all is on hold until the December. I see him shunning all questions on normalization and tapering, stating wait and see as it all being evaluated.
If he veers away from the text the EUR will rocket thru 1.2000 like a hot knife thru butter. Draghi cannot show fear, uncertainty or anxiety because, should he demonstrate any of those mannerisms he will get his feet cut from beneath him and he will have crawl out on his knees to leave the Press Conference.
- 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: #249 FREE NEWSLETTER
September 3rd, 2017