$USD Weakness – Here's Your Chance

I wish things moved a lot faster at times too, as that I wouldn’t continue to sound like a broken record here….but it is what it is.

You may find yourself watching the daily levels on a given stock market index as means to gauge how things are going, or perhaps you watch bonds. Unfortunately for me, the U.S dollar with its predominant role as the world’s reserve currency is something I need to remain focused on. It does get a little boring at times – no question about that BUT! If you’ve tuned in over recent months – the accuracy of trade entries and market timing has been strong enough to keep in beers and tacos through some pretty rough patches.

Here we sit.

As suggested yesterday my eyes are keenly focused on USD, and in turn every other asset class as these days “even more than ever” – a lot hinges on where we see the dollar going. In fact – EVERYTHING hinges on it these days.

Hopefully I can find more interesting things to talk about in coming days, as USD looks to be doing exactly what I expected it to do here at these levels. USD is reversing and if today’s action is any indication – of the correlations / options I laid out yesterday – Stocks look set to reverse along with it.

I’ve held a number of short USD trades for several days now as my “round 1” entries where at least a couple of days early. I’ve traded very small and have every intention of just letting this run it’s course – and adding to existing positions as my direction confirms.

You are going to see some very, very , very strange moves in Forex markets here on this turn as a number of “cross currents” come into play – that will challenge any measure of logic. Imagine USD heading lower as well stocks in what would appear to be a risk off move…coupled with AUD and NZD moving higher? That is nuts.

20 Responses

  1. tio July 1, 2013 / 7:40 pm

    sooo nut .. and strange if this really happen. I already bought aud and nzd against USD but if usd and SP500 going down, what commodity yen ross will move. I thing aud/jpy and friends will move up .. may be ? Other thing that i consider is eur/jpy and chf/jpy will move up also. Wait your comment Kong,

    • Forex Kong July 1, 2013 / 7:47 pm

      I am still not making a move on JPY crosses until we see how this turn goes……as well – both EUR and CHF are tricky.

      You are looking at all the right things Tio, and what we need to do in this instance – is just be patient.

      I don’t need to “nail the turns”. In fact…….I could really care less ( only that my short term tech “does” do this anyway ) as the point is.

      There is loooooots of room to make money “after” we see the direction establish itself. Then I step on the gas.

      These turns in Forex are frustrating as hell, as they can take weeks to play out. Discipline! Patience!

      • timfrec July 1, 2013 / 8:08 pm

        thanks Kong, may be my nuts (unconciously) is to try “nail the turn” every time. Need to clear this demon myself. Where are my patience ?

        • Forex Kong July 1, 2013 / 8:33 pm

          Yes it takes time….and human nature has it that “we want to get it EXACTLY RIGHT”.,,,so you are not alone.

          Trade small in the corners……and then step on the gas out on the highway!

  2. tio July 2, 2013 / 12:26 am

    there’s bull hammer candle (monthtly) on eur/jpy, but its accuracy has 50/50 chance for success. Better wait for tomorrow

  3. schmederling July 2, 2013 / 12:27 am

    WTI continues to show strength during this turning process – not looking for the 100 handle to last the week as we over-take & rise with the remainder commod’s following….. WTI is the tell in my books!

  4. Gus July 2, 2013 / 5:00 am

    Whats your ‘out’ if USD weakness doesn’t appear? Where will you exit and what will be the indicator you use to hit that good old stop out button?

    • Forex Kong July 2, 2013 / 6:58 am

      Great question Gus…for the most part my stops are mental – as Ive only got stops set so far out of current price range, in case of flash crash type occurance….or “flash spike”.

      Since my order entry is staggered (even at this point) I’m not even half near full on “short usd in blah blah blah” and not expecting to nail it at a single level – this is a fools game.

      At this point what would it take to have me close positions and consider that I’m completely wrong?….hmmmmmmm…tough one as it so rarely happens. I’d need to hear / see something fundamental in a news release or world event to put my mid term analysis off track.

  5. kevin1959 July 2, 2013 / 11:16 am


    A question, I made a rookie mistake and missed a stop on a 6A long position. I woke this morning to a 90 point loss. Should I bail now or do you think I should hold and If i hold where do I set the stop. Thanks for the info and the blog.

    • Forex Kong July 2, 2013 / 6:41 pm

      It really depends on your position size and account balance Kevin.

      What pair?

      I take -90 pip swings like I eat cereal – at least every second day so……..its nothing in my general trade strategy.

      • kevin1959 July 2, 2013 / 9:03 pm

        Futures contracts no pair. The size and account are okay. It stings a little but not that big a deal. I was curious if you think the Aussie has a chance to recover some of the losses from today or if it time to bail
        Thanks for the response

  6. devilyell July 2, 2013 / 11:51 am

    Hi Kevin1959,

    I’m 1952. How did we get to this age??!! in more ways than one.
    Sorry to hear about your 6A underwater.
    I’ve been at this 15+ years and I still have a list of chronic sins & mistakes.

    I hope it is helpful if use your situation as an example. I’m guilty of the same thing but just not lately. It is also likely that your current situation is a rare one.

    >> “Should I bail now or do you think I should hold and If i hold where do I set the stop?”
    Been there, done that. Like I have done on some trades, I didn’t have a plan for that trade. I’ve found it essential to have a plan even if I use a mental stop. I offset that risk by trading a teeny until the market proves me right.

    While I’m preaching, recent comments reveal more of my chronic sins and mistakes. Kong & other smart folks here have also addressed these issues.

    1. Most markets do not turn on a dime most of the time. Therefore, my expectation is ultimately correct but I enter too soon. I smell profit and I go nuts.
    I offset that goof by trading a teeny until I’m proven correct.

    2. Adverse moves are a fact of life. Almost everyone can spot an established trend regardless of the time horizon. The broker/market-maker is usually your initial counter party. He also knows the right direction so he resents you for making him buy when the direction is down. He punishes you by facilitating a small up move so he can get right and add profit to the spread he makes. The big fish also need buyers if they want to sell (and vice versa). They use some ammo to facilitate an adverse move and then use the big guns to take positions away from little fish that are caught the wrong way or have stops too close.
    The cure…That pesky teeny yet again so your stop is beyond the obvious place.

    3. Averaging is fine as long as you still believe in the trade and you are not over leveraged so the accumulated risk is no too large for your account (teeny to start). Kong does it every day and so do I. It’s a relief to not die a thousand deaths on every tick against you.

    You are in the right place. I learn a lot here thanks to Kong and the many savvy posters.

    • kevin1959 July 2, 2013 / 12:55 pm

      thanks to much for all the helpful advice
      Take Care

  7. devilyell July 2, 2013 / 10:00 pm

    I’m sorry Kevin. I tried to direct you to other resources that might help you get your ducks in a row. However, it has become abundantly clear that censorship is alive and well on this blog and most other blogs and forums.
    I have had my comments censored and deleted several times on this blog. I’m surprised that Kong would tolerate such a thing.
    I don’t know who the culprit(s) is (are). It’s sad that First Amendment rights do not extend to the digital world. It is probably more lefty lip service that most people swallow, digest, defaecate and then swallow again. Advertising revenue is advertising revenue but free speech is precious.

    I am just about done with all the bullshit that goes with forums and blogs. Death to the tyrants!!!!!!

    • Forex Kong July 2, 2013 / 10:14 pm


      What are you guy talking about?

      If you’ve ever taken up starting a blog of your own, with any hope of it succeeding you’d understand. The daily barage of “spam” is so great that even at present I can see over 300 posts sitting in the “spam que” for only the past week.

      I can’t go through it all on my own, with any hope of keeping up along with trying to write content so…certain “filters” are in place.

      Im not promoting anything here, and don’t offer an opportunity for others to so so either….so any outbound links OR email addresses or self promotion of any kind – is out.

      I’ve yet to “ban” a single person.

  8. devilyell July 2, 2013 / 10:55 pm

    Hi Kong,

    I don’t speak for Kevin, or anyone else, except myself.

    I tried posting URLs and email addresses several times. All of them are free and run by altruistic people such as yourself. All of you deserve credit for your contributions and efforts. None are competitors for the ad revenue that make this blog (i.e. it’s host) go ’round.

    My goal is/was to help folks by pointing them to resources I believe are helpful. Again, no fee, no cost, just good guys like yourself that want to help others. On every occasion the messages never appeared.

    So it is my ignorance about “filters” that is the problem. The filters, which are ahead of you in the pipeline, do not differentiate between the good, the bad, or the ugly. I count myself among the ugly.

    You are the second person to tell me about the egregious task of hosting a blog and/or forum thread. I don’t doubt it for a minute. If wasted bandwidth was money, the wannabes would be millionaires. So many “traders” are pitiful and desperate as they try to make it work. They clutch at anything that offers a ray of hope. That is why “gurus” and snake oil vendors thrive and prosper. God damn every one of them. I feel for the struggling, and I want to help, just as you do. The proviso is that they must be willing to pay their own dues and do their own homework. I have observed that most do not. It’s all about “quick and easy love or money”. That is why the biggest buildings are on Wall Street and Madison Avenue.

    My problem…..I care too much and I talk too much. Dang me, dang me, they oughta take a rope and hang me.

    • Forex Kong July 2, 2013 / 11:20 pm

      Im sure you’ve found a home here at Forex Kong but yes….the filters are far ahead of me and will catch any and all outbound links and or email addresses and everthing pointing “outward”.

      Ive got it that this is a “destination” and not another one of these bogus sites filled with useless links to useless news etc..

      Im also confident that most readers here are pretty adept, and likely do alot of reading / researching on their own.

      Rock n roll Dev

  9. devilyell July 3, 2013 / 10:05 am

    Thanks Kong. You are correct.
    I do feel at home here and this has become the only place I visit except for an econ calendar. I mentioned before that you have attracted a terrific group of traders and posters. I’m highly motivated to carry my weight and a bit too eager. I also understand about filtering the outbound stuff. The innocent stuff would be swamped by the snake oil vendors in no time. I’m feeling much better now and I’ll dial back a bit. Great Independence Day and weekend to everyone!

    • Forex Kong July 3, 2013 / 10:12 am

      Bang on Dev – all is well in Kingdom Kong….and you are more than welcome to get on in here with everything you’ve got.

      The filter / outbound stuff is much needed so…..now that we are past that! Giver!

      You have a great weekend too!

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