FEAR, GREED & FOMO BUT WATCH JPY: By Scott Pickering

  1. THE FIRST SHOT:

Welcome to the new look FREE NEWSLETTER version of the WEEKLY FX DRIVE THRU blog.

It is now more compact befitting a complimentary version of my market commentary blog post.

If you would like a more detailed commentary of my market thoughts, views, including my suggested trade set ups you will need to subscribe to the PREMIUM SERVICE. This leads nicely into my subscriber promotion which ends this coming Wednesday at 5PM EST.

“BUY ONE GET ONE FREE”

With a new trading year just started, there is another target of 10,000 pips for me to beat in 2018. I have launched a PREMIUM SERVICE promotion called, “BUY ONE GET ONE FREE”.

The details of the “BUY ONE GET ONE FREE” promotion can be found on my home page under the TAB “PROMOTIONS”.

I would point out that with the PROMOTION for CAD$800.00 you will have a one year’s complete subscription and hopefully be part of the 10,000 pips haul this year.

So far this year before the first month has completed the pips total to date is 1,453. This represents more than 14% of the annual objective!

 

  1. MARKET OVERVIEW – MY THOUGHTS:

FEAR, GREED & FOMO but watch JPY

Where to start?

Since starting to write FX related blogs in 2011, many people have said it’s all about the title, be out there, grab potential readers by the balls, give them a hook. I can guarantee you that this works. The two most read blogs since 2011 being the recent: –

“OOPS I DID IT AGAIN…TRUMP SENDS THE USD DOWN THE SH*THOLE”
followed closely by
“MERKEL GRABS DRAGHI BY THE TESTICLES”

Whilst both of these blogs had extreme titles that sucked in potential readers they also had valid FX points I wanted to get across.

Where am I going?

In this new format, I will use this section to make readers who are not subscribers think maybe this guy has ideas, thoughts, beliefs, and views and is a bit outside the box.

Here we go…

Mario Draghi’s “BIG DAY OUT” came and went last Thursday. He was on somewhat of a “MISSION IMPOSSIBLE”, on the basis that, faced with improving economic data in the EUROZONE, he was on very thin ice, in any attempts he thought he may have had of trying, to jawbone the single currency lower.

Being fair to Draghi, he said what he could have said without sounding too accommodative. The market did its own thing. Despite what was said, or what was handed out as copy of the statement, the market knows best. The basics of FEAR & GREED in FX are being displayed every second, of every minute, of every hour of every trading day.

We have had a FOMO (Fear of Missing Out) markets in equities for some time. The “BUY THE DIP” mentality is so entrenched in Wall Street, there are people working across the floors and in front of terminals who do not know about or have not worked in two-way markets. They have only read about it in books or heard about it in pubs on a Friday night when some old fecker talks about the good old days.

FX now has FOMO.

The constant USD selling has been insatiable. Going back to my economics days with regards to the indifference curve. We do not have a rationality in the market place and we have reached a state of non-satiety, which basically means the consumer cannot get enough of something even though it is over-supplied. In FX terms the USD. There is so much available the FOMO effect is like a rash.

We saw it in evidence after Draghi last Thursday.

Going backwards 24 hours pre- Draghi, U.S. Secretary Mnuchin basically, stated that he was in favour of a weaker USD, the markets loved it, sell more USD, sell more USD, it was a feeding frenzy at the zoo. Bit of a fu*k up from Mnuchin, these are things as U.S. Secretary to the Treasury you think and want but one keeps one’s gob shut.

After Draghi, 24 hours after Mnuchin’s comments, TRUMP went on CNBC and said that he was misinterpreted and that he (TRUMP) was in favour of a strong dollar and that it would get stronger. Thank God smelly vision has not yet been invented. Someone in CNBC should have been dialing 911 or 999 as the president’s knickers were burning on the back of this statement.

The upshot of this was a 2-3 hour USD rally, a huge snap back 200-250 pips in some cases. Then the market traits of FEAR and GREED took over once again and the FOMO effect kicked in.

However, the USD gains were reversed in the next two trading sessions in Asia and Europe, by the time US traders came back to their seats the USD gains were wiped clean.

How do you trade in a FOMO market?

I am NOT a scalper. I am NOT a short-term trader, but from time to time I will dabble, with mixed results.

If you are in a position and the train leaves the station stay on board, getting off really means from my TRADE PLAN that you can’t get back on, because we do not get pullbacks of any meaning, because they are very shallow. From a Fibonacci perspective a minimum in my TRADE PLAN is 38%. We do not even see a 23.6% pullback in these FOMO markets at the moment.

In my view, without sounding like a DRAMA QUEEN, jumping on board with some of these trades without a plan using or strategic entry is just gambling.

It is a pure one-way market, but with experience I know that the snap back could happen at any time and when it does it will be vicious, screen time has taught me this lesson. One requires patience.

One always looks for a catalyst of some sort. FX INTERVENTION, A CENTRAL BANK POLICY CHANGE or maybe A SELL OFF IN STOCKS.

My money is on the final one listed. Correlations in markets matter and they do count.

The JPY is NOT playing ball at the moment. As the US equities rise the USD/JPY should weaken, it’s getting stronger. It is also not reacting to US treasury yields either.

Last Friday the DOW, S&P and NASDAQ were posting record closes once again, OIL was a little elevated, metals were negative and US 10YR yields were up again.

The USD/JPY posted another low now sitting below 109.00.

Can you imagine what is going to happen to the JPY when there is alleged bad news in the markets if it cannot go up when times are good?

The USD/JPY has 105.00 written all over it if we get a major, major sell-off and if FEAR, GREED & FOMO take effect maybe even lower.

I know that may FX traders are gamblers, you win some, you lose some. But being patient and having a PLAN a STRATEGY also works and this can be done without as much RISK.

Make absolutely no mistake these moves are just crazy and in 10 years of trading I have never seen anything like it.

What to do now?

I have talked about the USD/JPY. The EUR/USD is heading higher, I think that we all get that, but it will NOT be a straight line move.

Therefore, the EUR/USD and probably many of the EUR cross rates pairs are “BUY ON THE DIPS” opportunities.

I think that we will have, or let me say, we SHOULD HAVE a period of consolidation. Recent moves have been crazy in the USD majors. It has been a one-sided market, impossible to enter on pullbacks. To me, consolidation makes absolute sense.

 

  1. USD SUPPORT and RESISTANCE with my BIAS:

 

 

 

 

  1. THE PREMIUM SERVICE TRADING SUMMARY:

PREMIUM SERVICE PERFORMANCE YEAR TO DATE:
(Incorporating the last 5 PREMIUM SERVICE TRADES)

 

 

  1. PREMIUM SERVICE SUBSCRIBERS:
    (This section is for PREMIUM SUBSCRIBERS ONLY)

5.1. TRADING REVIEW:

5.2. SENTIMENT, FUNDAMENTAL & MACRO THOUGHTS:

5.3. THE WEEK AHEAD:

5.3.1. ECONOMIC DATA RELEASES THAT INTEREST ME:

5.3.2. MY KEY EVENTS ON THIS WEEK’S CALENDAR:

5.3.3. HOW I WILL APPROACH and TRADE THE MARKET THIS WEEK:

5.3.4. MY “MACRO” TRADING PLAN FOR THE WEEK AHEAD:

5.4 SUMMARY – LONG TERM CORE TRADES:

5.5. CURRENT LIVE TRADES & LIMIT ORDERS:

5.5.1. CURRENT LIVE TRADES:

5.5.2. CURRENT LIMIT ORDER TRADES:

5.6. FX BROKER NEWS and MARKET FEEDBACK:

 

  1. THE FINAL SHOT:

Nothing more to add here, I have said enough except,

As usual…

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.

Scott Pickering

The Pip Accumulator
Twitter: @pipaccumulator

https://weeklyfxdrivethru.com/disclaimer/

BLOG VERSION: #267 FREE NEWSLETTER
DATE: 27th January 2018

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