THE WEEKLY FX DRIVE THRU
INTRODUCTION:
This year is quite strange for several reasons. Over the past few days, I have spoken with several of my subscribers about the general markets, trading in these times, TRUMP, BREXIT, EUROZONE, GREECE, OIL, GOLD and overall geopolitical trading risks. I must say what a solid group of traders I have as subscribers. I am truly motivated having spoken for over 5 hours this week in one form or another about 2017. There is an article in the discussions that were had; a very good article.
In summary; we all saw significant market changes. Is change good? I suppose from my own viewpoint with the added responsibility of trying to capture trades with acceptable medium term risks attached for subscribers, change is a challenge. I am adapting; and whilst most saw the reasons behind this, a few with greater risk tolerances than my own, and that is saying something at times, felt that I should just sit out a couple of trades as ultimately given a larger / greater trade perspective the odds are well in my favour of the trade returning to profitability, I just need to give it more time. Why take on losses?
Some very interesting opinions were listened to and never to be one to sit back and plough on regardless I took on board some thoughts and views and I am applying these to LIVE trades that are currently in place.
It was good to have those conversations and it shows that trading often described “as a lonely business” can in fact offer up some real motivational boosts.
I think I wrote along these lines last week.
“Trading is basically a formula that needs “tweaking” every now and then but basically it is repetition based around a proven formula. Basically, at the outset of 2017. I tweaked (so to speak) to accommodate “THE DONALD”.
Everyone that I spoke to last week basically agreed with this premise.
Moving on…
I am not around next week. Monday 13th there will be no WEEKLY FX DRIVE THRU – LIVE and next weekend the 19th/20th there will be no “DRIVE THRU” blog. My wife and I are away house hunting in the wilds of Eastern Canada. The webinar will return Monday March 21st along with my full-time trading once again.
It’s all rather annoying really, the timing is poor as profit generation with $$$ and pips was starting to get its mojo going.
JANUARY: Pip Loss -673
FEBRUARY: Pip Gain +1,493
MARCH: Pip gains so far in 10 days +724
It was all starting to re-boot after an awful start to the trading year.
As mentioned over the past few weeks, I have been removing older trades and re-structuring my TRADE PLAN moving forward beyond Q1. I had given myself until the end of Q1 to exit all the trades I no longer wanted in my longer-term CORE POSITION plan. This I have done and at the same time I have reduced RISK across the board ready to re-boot after the FED meeting this week. Right now; there is just one trade that does no longer fit inside my TRADE PLAN and by the end of March it will be gone one way or another.
I am delighted to have almost achieved, ”Part one” of my objective so quickly without taking too much pain with losses. “Part two” is in the wings, I am just waiting for the FOMC meeting to be over and the reaction bedded in.
Moving on a bit further, well actually it’s back a little…
Last week’s news was rather predictable.
Draghi, did really well trying not to rock the boat and strengthen the single currency. He was doing a great job in his Q&A then he mentioned some “dovish language” that was removed from commentary of previous statements. Like a salmon out of a B.C. river the EUR leaped up. Unlike past times, it did not go far given all the geopolitical uncertainties and headwinds in EUROPE. I think moving forward we can take a note that 1.0620 is reasonable resistance. I say this because as the markets are mainly short EUR the opportunity for a bloody good squeeze was there for the taking; it did not happen.
Philip Lowe at the RBA delivered a bit more hawkish commentary but no real lasting effect on the Aussie. It did help me with my AUD/NZD trades.
ADP employment numbers were incredible, and that bloody idiot TRUMP took credit for them. Holy Mother of God, the US is a nonsense. It’s all going to implode, not sure what is going to be the catalyst but like the walls of Jericho it’s coming down.
I have a vision of an epic biblical movie directed by James Cameron or Steven Spielberg where we see a blonde syrup, nay mop, held in a clenched orange fake tanned hand emerging from the hypothetical bricks and rocks of the wall which lay strewn on the ground, and a voice heard muttering the words; this is the work of crooked Hillary I should have locked her up.
No matter how the implosion plays out it will not as far “THE DONALD” would be concerned, his fault in any way shape or form.
Non-Farm payrolls were a beat on the headline number, which was in line with the expectations given the blow out ADP numbers 48 hours earlier. However, the average hourly earnings once again disappointed missing forecasts at 0.2% instead of the 0.3% projected.
Following the data, the USD weakened, strengthened and then weakened and then strengthened… you know where I am going with this. The USD just chopped about not knowing what the feck to do and basically, I think that everybody’s mind is on the FOMC next week. Had “the hourlies” been in line or better I think we may have seen something but as they were not we got a Friday chop instead.
With regards to geopolitical news, the FRENCH ELECTIONS carry on with the usual scandals and accusations flying in all directions.
The DUTCH ELECTION is still showing populist leader Geert Wilders up there in the opinion polls. This Nazi style leader will go down a treat in Brussels. This could be just one reason why the single currency cannot rally?
Can you imagine Wilders and Le Pen in power, apart from the EUROZONE being no more the single currency, it could be well below parity as the Bundesbank have their printing presses working nonstop ready to re-launch the D-mark?
Oh, what fun, lies ahead and EUROPE is in denial about the whole lot of it!
Plus, I must say this somewhere and get it off my chest: –
IN THE NAME OF FECKING SANITY; GIVEN THE EUROZONE / EUROPEAN UNION HEADWINDS WHAT THE BLOODY HELL IS THE EUR/USD DOING TRADING ABOVE 1.0600.
THERE IS COMPLACENCY AND THEN THERE IS ABSOLUTE DENIAL WHICH LEADS TO PANIC.
I KNOW THE MARKETS ARE WHAT THEY ARE BUT COME ON LADS – GIVE ME A BREAK – WORK IN THE REAL WORLD!!
All this nonsense makes the ITALIAN bank funding a non-event and lets GREECE off the hook… there will be dancing in the streets in part of Europe, should these political changes come about.
Maybe I need a week’s break from the madness?
BREXIT took a bit of a back seat as Theresa May toyed with the HOUSE of Lords over the BREXIT bill paper through both houses in the UK.
Prime Minister May showed her determination and strength of leadership by sacking “the Mop”, aka former Conservative Deputy Prime Minister, now leader in the House of Lords, Michael Heseltine (My Dad thought he was great) because, he led a revolt to slow down the BREXIT passage through parliament by adding amendments.
Phillip Hammond’s budget came and went without much notice or fanfare to be honest.
More…
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THE FX MARKET PLACE – LOOKING FORWARD:
ECONOMIC DATA RELEASES:
MY THOUGHTS ON THE WEEK AHEAD:
Several items catch my eye this very busy week: –
But it is all about Janet Yellen and the FOMC interest rate decision. Everything else plays second fiddle.
- USD: It’s about the FOMC this week. The well-publicized rate hike that is 100% anticipated. Will it happen on Wednesday? WTF is going to happen if it does not!!
- GBP: We have jobs data and a BOE interest rate announcement as well as an updated policy summary. It’s all so knicker-gripping one can hardly wait.I am not expecting any changes in Carney’s interest rate or overview commentary.
- BOJ: I am not expecting any changes in policy. Still ultra-supportive.
- CHF: My buddy Thomas Jordan (of the wave good-bye to $10,000 on the GBP/CHF) fame is back in front of the microphone. I cannot see any changes being made to SNB policy whilst the EUROZONE / EUROPEAN UNION headwinds are so dominant…. Hang on; maybe that’s a reason to change policy?Seriously though, I am not expecting change.
As always bear in mind it has been news rather than economic data moving the markets so check twitter for tweets from “THE DONALD” and be aware of the BREXIT and EUROZONE possibility to deliver geopolitical news at any time totally unannounced.
USD MAJORS – “IMMEDIATE” SUPPORT & RESISTANCE with TREND:
The charts below contain commentary (my thoughts and views), these are the USD major charts that are reflected in the spreadsheet above.
EUR/USD:
GBP/USD:
AUD/USD:
NZD/USD:
USD/CAD:
USD/CHF:
USD/JPY:
THE SOAPBOX:
EUROZONE: IT’S A GAME OF SNAKES & LADDERS
When looking at the diary of Economic events at the start of this month there were a few standouts. The primary one was of next week’s FOMC meeting when to all intents and purposes the most publicized increase in interest rates of all time will take place.
Can you just imagine the fallout if the FED does not increase US interest rates?
The other was last Thursday’s ECB Press Conference.
One must say that Mario Draghi, has done a great job at the ECB. He has had to manage disloyalty, broken ranks on messages, interfering feckers from, in particular, Germany and Austria trying to dis-rail his pathway with ECB monetary policy.
Monetary reforms can only go so far. It is structural reforms that will shape the future of a EUROZONE if there is to be a future.
Looking country by country at the single currency members, it is so clear that a coordinated structural reform implemented approach across the board is just not an agenda item moving forward. The one size fits all approach cannot accommodate 19 EUROZONE members, with the same package and process at the same time.
Back to Draghi…
Last Thursday Draghi had to keep a lid as best he could on the EUROZONE improvements. Headline inflation was at 2% (the target) but core inflation is still weak.
EUROZONE improvements are so fragile and can fall back much more speedily than they moved up. It is like a snakes and ladders board game. There are many more snakes than ladders in EUROPE.
You must read between the numbers and dissect the verbage with all Central Bank Governors and Presidents. They are economical with the truth and use statistics whichever way suits them the best in the moment.
Draghi, like his peers, move growth numbers up and down as fast as a pair of hookers’ knickers. This time around, for once Mario Draghi had some good news on EUROZONE stats. Economic Growth forecasts were increased to 1.8% in 2017. However, things are so good in the EUROZONE, the growth predictions for 2018 falls back to 1.7%. These numbers are sucked in by the markets as if they were handed down from Sinai by Moses, when in fact they are to a large extent pointless as they move practically at every meeting based upon which way the wind is currently blowing.
Draghi took credit for removing the risks of DEFLATION from the EUROZONE. How did he do that? He needs to tell Kuroda how he removed DEFLATION. What is the secret sauce? The simple fact is he has no idea; there isn’t a Central bank in the world that knows how to remove or combat DEFLATION.
Basically, Draghi kept all the biggies unchanged, interest rate commentary, Quantitative Easing (QE) tapering starts next month and the main dovish sentiment in the statement remained. However, some dovish commentary was removed to do with a sustained period with urgency in taking more dovish actions, the markets heard this and the EUR/USD spiked.
From my perspective, this was Draghi’s day in the sun. From here on in until the end of 2017 he will have to react to major headwinds in the EUROZONE. He may have thought that he has climbed a few ladders to get out of the snake pit, but there are more snakes ahead and the EUROZONE could be back in that pit quicker than you can say, never mind spell Quantitative Easing.
We all know, or should know that elections in HOLLAND, FRANCE and GERMANY plus, Bank debt problems in ITALY and further GREECE bailout issues are all pending and then we have BREXIT.
At the end of the day, it matters not one jot about DEFLATION, should Geert Wilders and Marine Le Pen be elected in HOLLAND and FRANCE, as this would signal the beginning of the end of the EUROZONE.
I wrote last week about the fragility of the EUROZONE and how lessons never appear to be learnt moving forward.
From a trading perspective given all clouds over EUROPE at the moment I am literally gob smacked that the EUR/USD is trading above 1.0600, in fact at the close of trading last week it was closer to 1.0700 than 1.0600.
Sooner rather than later, in my opinion, we will have a series of huge down days with the EUR/USD. Reality must step in. We are in quite a wide trading range at the moment of 1.0490 to 1.0830.
I am sure that sellers will step in well ahead of 1.0830, but there does not seem the desire to press lower. Buyers seem plentiful around 1.0520-1.0540.
I never thought that with such major headwinds that this pair would be struggling to fall lower beyond 1.0490 and at least test the 52 week 1.0340 lows.
We are in a game of snakes and ladders and at the moment we are treading very carefully to avoid the snakes. This ability to dodge snakes will end soon and the reality of the geopolitical news that appears largely ignored will have to be reacted to.
If there was a poll: – EUR/USD 1.0490 first or 1.0830, which way would you vote?
CLOSING THOUGHTS:
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.
Take care, have a great trading week.
Scott Pickering
The Pip Accumulator
Twitter: @pipaccumulator
http://weeklyfxdrivethru.com/disclaimer/
BLOG VERSION: #53 FOREXTELL
DATE: 12th March 2017.
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