THE WEEKLY FX DRIVE THRU
Another week and another ride at “Six Flags”, “Alton Towers” or “Universal Studios” whatever theme park you choose.
I am finding this market exceptionally frustrating. We are seriously range bound almost everywhere except with the JPY pairs which are bearish.
I had a little chuckle to myself earlier. I hate trading the GBP, in addition, I had a really bad experience with the JPY a couple of years back so I am not a fan…. still. Now the NZD is what can only be described as a pain in the ass. Pretty soon I will not be able to trade anything!!
Art Cashin one of the CNBC contributors has a quote “The market’s goal is to make most people miserable”. Goal achieved… great success.
We are range bound, the market does NOT know which way to turn and there is no leadership, hence the annoyance and frustration. I am looking at RED numbers and minuses most of the time at the moment and every time they go green or positive I should just take a few pips and $$$ an run for the hills…. but I don’t as I am seeing big, grand moves in the making. Most long time traders will completely get this following statement, “If I were to take the few pips and $$ when I get some, as soon as I do that the big move I am expecting will happen”. Is this FEAR & GREED at work?
I am banking $$$ and pips but it is hard work given the hours that are being spent at the screens.
Most of my profitable trades emanate from POSITION style (longer-term) trading at the moment. The shorter-term trades are just lost in the chop; it is very frustrating and annoying.
If you have been struggling in the 2016 chop fest, you are NOT alone… I am in there with you.
I thought that it would be fun to show a typo that I made on a trade set-up that was posted out this past week. It was on an AUD/CHF trade that was cancelled, as the engulfing pattern did not carry over. Instead of the set-up being titled FUNDAMENTAL TRADE it was titled DEMENTAL… this may just be my humour but given the week MENTAL it was.
THE FX MARKET PLACE:
LAST WEEK’S NEWS – MY THOUGHTS:
Remember Meghan Trainor’s song, “It’s all about the base” one of the worst songs I think I have ever heard. Well if she was singing last week it would have been…
“It’s all about the YEN”.
What a fall, about 600 pips in a week, HMOG (Holy Mother of God). I do not like trading JPY pairs, I had a really bad experience a few years ago so most of the time I am just a voyeur trader, watching and tracking the relationships to see if the correlations remain intact, as correlations in Forex is a big thing for me as it gives confirmation.
When 110.00 broke I thought here comes the MOF/BOJ…nada. Then at 109.00 I thought here we go… nada. Then at 108.00 as it seemed initially well supported at that level nada again. It posted a low of 107.66 according to the mean average of my brokers and then recovered.
What are fantastic to follow, are the levels, at which the market experts expect the BOJ to intervene. Over the past 24-30 hours since the 107.66 was touched, I have read lots of articles where 110.00 was believed to be a crucial psychological number, then the same people now say 105.00 or 100.00. Technically from the charts, 106.50 is the 38% Fib from the 2011 to 2015 rally, maybe this is the level but somehow I do not think that BOJ look at Fibonacci levels. Maybe they do, who knows. I think big round numbers work; having said that I thought 110.00 and was wrong, so do not ask me where I think the BOJ will intervene.
Did the YEN strengthen because of the FED dithering on interest rate hikes? So is the YEN strength purely attributed to USD weakness? Certainly US bond yields have tightened and there is a very, very strong JPY relationship in place there.
The FED policy move certainly did no favours to the BOJ or the ECB.
At the end of the day, trying to get to the bottom of this is way above my pay grade, so if you can work it out great, if not, do not worry, because as I say as a trader it is what it is – just get on with it.
Last week we also had the RBA interest rate announcement and statement. A very cautious affair indeed no jawboning, however, in a way Glenn Stevens (RBA Governor) kind of had a dig at the FED when referring to “International situations”. There was only the line “The rise in AUD could complicate the adjustment underway in the economy” that made any sort of reference to the exchange rate position.
The FOMC meeting minutes were hawkish of sorts, in my opinion, but the market reaction was once again pure chop, chop, and chop once again.
WHAT’S BIG ON MY MIND:
EUROZONE CHAOS STARTING TO BUILD
European news is never far away from the headlines. Granted there are many reasons for this but one has to remember that the fact that there are 27 countries grouped under the EU member status, it is hardly surprising that at least one is always making the news for one reason or another. Some current issues are:
- The ISIS issue in Belgium and France.
- The debt crisis that never really goes away in Greece.
- Political corruptness in Italy and Spain.
- BREXIT fears.
- Refugee crisis in Greece.
One would never think that the Dutch would be next.
Last week however, the Dutch people had the opportunity to vote on the “Association agreement with Ukraine”. The result was not binding in anyway, as the Dutch parliament and the other 27 EU members had already ratified the agreement.
Those of you who are sticklers for democracy should note that in Europe when the single-currency “the Euro” was introduced, despite claims of losing sovereignty most EU countries included the vote to accept the Euro as part and parcel of another vote that would have been crazy to say no to, so it was a underhand acceptance vote to lose ones currency of years and accept the Euro.
So for governments to ratify on behalf of the people on big issues and then offer a vote that would appear at firsthand to be pointless is nothing new in Europe. This Dutch vote was one of these, but given the timing with what is going in in the European Union it actually carried more weight than one might think.
Basically 61% voted NO to the agreement.
What happens now? Nothing really, although the vote was to be noted by the Dutch coalition government it means nothing.
Hang on I can hear you say. Yes exactly, means nothing my arse.
This is a yet another example of the European Union and/or EUROZONE acting way beyond what the voters actually want. The pot smoking liberal Dutch society may appear a soft touch to outsiders but like every country in the EUROZONE they have their own culture, their own beliefs, there own standards and their own way of accepting change.
These facts are lost on Brussels, which is manned at the centre by a gang of desk sucking, paper swatting, jotter blotters.
This is a no confidence vote by the Dutch people.
It will be grabbed by the “BREXIT Brits” as another example of interference by Brussels that simply does not have the ability to see beyond the end of its nose.
The Dutch seeing that Associated agreements are already in place with Georgia and Moldova do not want Putin and his interference in Ukraine on their doorstep. A point that was lost by Brussels completely, or rather probably wasn’t lost but the 27 member countries went ahead anyhow.
Europe is full of political extremes. Just as the way the U.S. presidential circus has Donald Trump as the protest vote candidate, inside every country in Europe the fringe parties are waking up to the fact that there is unrest. Established politicians are only interested in themselves and close to elections they will try to buy votes.
Back in the day in 2005, the Dutch rejected the European Constitutional Treaty, then the French also rejected it and it had to be re-written. From that came the Lisbon Treaty, but no lessons were learned. The EUROZONE does NOT learn from errors or mistakes it kicks cans down the road and plunders on from one catastrophe to the next.
What this Dutch no vote has done is give the doubters inside the EUROZONE further ammunition to latch onto regarding the abilities within the EUROZONE collectively.
Whether there is a BREXIT or not, whether the Dutch coalition government fails through this NO vote being seen as a no confidence vote is food for today and for the next couple of months. Whilst all this has been debated, the refugee crisis leads into new areas of problems, plus the ISIS on-going investigation in Brussels and Paris continues. The problems in the so-called “UNION” just keep amassing.
The protest vote political parties have their feet in the doors across the EUROZONE. Every time they receive their sound bytes on TV the existing governments are too stupid to understand why their opinions are being not just listened to but are being taken seriously by growing numbers of the population.
The political disconnect is worldwide, not just in Europe and America but all over the world and whether this is just because we are better educated or informed, I am not sure. I do know that we now live in an instant gratification, social media world and if we are not happy we can let everyone know pretty quickly.
In Dutch law, I think its just 300,000 signatures that can force a referendum. With social media this is an easy target in today’s world. I can imagine the Dutch parliament trying to change that law sooner rather than later. Right now they have egg on their faces and they need to do a patch job or jump ship.
However the facts are the people are NOT happy. And this is another brick in the wall as far as I am concerned that is going to place the EUROZONE front and centre once again very soon.
COMING UP THIS WEEK:
THIS WEEK’S FOREX NEWS THAT INTERESTS ME:
(There are many more news items related to the Forex Market other than the ones listed below. These are the ones that interest me. You can go to www.forexfactory.com and www.tradingeconomics.com for a more comprehensive lists of all news events that are Forex related).
TUESDAY: CNY – Trade Balance.
WEDNESDAY: USD – Retail Sales & Core Retail Sales.
WEDNESDAY: CAD – BOC Rate Statement and Press Conference.
WEDNESDAY: AUD – Employment Data.
THURSDAY: BOE – Bank Rate and MPC Summary.
THURSDAY: USD – CPi and Core CPi.
THURSDAY: CNY – GDP.
FRIDAY: CAD – Manufacturing Sales.
THE USD MAJORS – MY THOUGHTS (A REVIEW):
(In this section I have as usual kept my charts as minimalist as possible. With regards to charting in my opinion less is more!! I hope that they are clear. All readers regardless of level of experience should be able to follow my thoughts from my comments to the levels on the charts with ease)
My comments are contained on the charts. If you have difficulty getting them to expand please let me know. Sometimes word press is difficult.
EUR/USD – Weekly Closing Price: 1.1393
GBP/USD – Weekly Closing Price: 1.4121
AUD/USD – Weekly Closing Price: 0.7549
NZD/USD – Weekly Closing Price: 0.6801
USD/CAD – Weekly Closing Price: 1.2987
USD/CHF – Weekly Closing Price: 0.9532
USD/JPY – Weekly Closing Price: 108.05
MY CLOSING THOUGHTS:
After a plethora of Aussie news last week, that, in reality didn’t do much at all in my opinion, we move on.
This week my home country’s currency, the CAD comes into play. Stephen Poloz (BOC Bank Governor) has a policy statement and a press conference to deal with.
What do I think?, there will not be any change in my opinion, as we are still too close to Justin Trudeau’s first budget release, which was late March around the 20th.
I would be surprised to see a cut, although I do think that one, maybe two are on the way. The CAD had blow out job numbers last Friday as well, and given the backdrop of all the negative news about oil this was a bonus.
No matter what, we are still in the chop fest. So be careful trading. I am stuck in several trades that are just consolidating. I am, what you would call, just sitting. Would I prefer to be in cash observing instead? Yes…. but what would I get up early for each and every day? Right now it’s boring, but that does not mean that you let down your guard. It will change and when it does it will be with a splash.
As always, be savvy…
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
DATE: 9th April 2016
BLOG REFERENCE: #24 FOREXTELL VERSION