I have been on and on about USD weakness broiling underneath the “gong show” of American monetary policy, as well the coordinated “media spin” aimed at liquidating your retirement accounts.
There will be no tapering. The Fed will increase it’s QE programs moving forward. Global growth is on the decline. The cycle has shown its “ugly face” – and Kong has enjoyed the absolute #1 most profitable day on record – booking a whopping 11% on combined trades ( built over time as per my entry strategy) based purely on the fundamentals and my short term tech doing its job.
I have little else to say this evening – only that patience and a keen eye on the “macro fundamentals” has proven a winning combination as of this moment.
Currency movement has again lead the way (with respect to forecasting future movements in markets) and has rewarded those “patient enough” to slug it out in the trenches.
It’s time for celebration on this end. All too deserving if one chooses to put in the time.
I truly hope that you have done as well yourselves.
Today marks the largest single one day returns of my entire career.
I hope yours as well!
Kong…………strong!
The Currency Revolution: Why USD Weakness Is Just Getting Started
Federal Reserve’s Liquidity Trap Becomes Currency Debasement Reality
The Fed’s monetary juggling act has reached its inevitable conclusion – they’re trapped in their own web of artificial stimulus. When I talk about no tapering, I’m not just throwing around market speculation. The fundamentals are screaming this reality. Employment data remains structurally broken, housing markets are artificially propped up, and corporate debt levels have reached astronomical proportions that require continued cheap money to service. The Fed knows that any meaningful reduction in QE will collapse the very house of cards they’ve spent years building.
This creates a perfect storm for USD debasement that smart currency traders can exploit. The dollar index has been living on borrowed time, supported more by relative weakness in other currencies than by any inherent strength. But when you’re printing money at unprecedented rates while simultaneously trying to convince the world you’re managing inflation, the math doesn’t work. The currency markets see through this charade, and that’s exactly why positioning against the dollar has become the trade of the decade.
Currency Pairs Positioning for Maximum Profit Extraction
The beauty of currency trading lies in relative value, and right now we’re seeing textbook setups across multiple pairs. EUR/USD has been coiling like a spring, with European monetary policy showing more restraint than the Fed’s money printing extravaganza. The fundamentals support a significant move higher as dollar weakness accelerates. Meanwhile, commodity currencies like AUD/USD and NZD/USD are positioned to benefit from both USD weakness and the inflationary pressures that come with excessive money printing.
GBP/USD presents another compelling opportunity as the Bank of England faces different structural challenges than the Fed. While both central banks are playing with fire, the dollar faces unique pressures from its reserve currency status being questioned globally. Smart money is already rotating into these pairs, building positions gradually rather than chasing momentum. This methodical approach – the same strategy that delivered my 11% day – allows traders to capitalize on major structural shifts rather than getting whipsawed by daily noise.
Global Growth Deceleration Exposes Central Bank Desperation
The global growth slowdown isn’t just another cyclical downturn – it’s revealing the fundamental bankruptcy of modern monetary policy. When central banks have already pushed interest rates to zero and beyond, when they’ve pumped trillions into financial markets, and when they’re still facing deflationary pressures, you know the system is broken. This desperation creates predictable policy responses that currency traders can position for.
The Fed will be forced to expand QE programs because they have no other tools left. Fiscal policy remains gridlocked, structural reforms are politically impossible, and the real economy continues to deteriorate beneath the surface of manipulated financial markets. Currency markets are forward-looking mechanisms, and they’re already pricing in this reality. The dollar’s strength has been an illusion maintained by coordinated central bank intervention and media manipulation designed to keep retail investors trapped in depreciating assets.
Technical Confluence Confirms Fundamental Thesis
When fundamental analysis aligns with technical patterns, that’s when the biggest moves happen. The dollar index is showing clear signs of technical breakdown after months of fighting resistance levels that fundamentally make no sense. My short-term technical indicators have been flashing warning signals about dollar strength for weeks, and now we’re seeing the follow-through that separates real analysis from market cheerleading.
The key is understanding that technical analysis in forex isn’t just about chart patterns – it’s about reading the collective psychology of global capital flows. When you see consistent selling pressure in USD pairs across multiple timeframes, combined with fundamental drivers that support continued weakness, you have the recipe for sustained directional moves. This is exactly what allowed me to build positions over time rather than trying to time a single entry point.
The patience required for this approach separates professional traders from gamblers. Building positions gradually, understanding the macro framework, and having the conviction to hold through temporary volatility – these are the skills that produce career-defining trading days. The currency markets are entering a new phase where traditional correlations break down and fundamental analysis becomes more important than ever. Those prepared for this shift will prosper while others chase yesterday’s trends.
Hey Kong, I wonder how the traders on FF are feeling after this? Considering the vitriol you copped try not to smile too much! lol. I also had a good day shorting the USD but longer term this is only going one way. Cheers 🙂
I’ve given it considerable thought over the past evening – and have come to a decision.
In true “Kong fashion” I plan to put 100% of my energy into making FF all that it could be and all that it “should be”.
At first I thought “hey what’s the point?” then reconsidered as I believe many readers there will “ultimately” see the light at the end of the tunnel, and join in.
It’s a huge community and I’m planning on staking some territory. The guys from last night feel bad……real bad….super bad…..totally bad….
Yet 1000 buks says they’re currently here reading – right BaitUp? hey Gustav? yo! Jagonzalaz! You follwing me on Twitter yet?
Clowns.
Great call Kong, and congrats on trading your plan.
A long and lonely road for ol Kong….
But Kabam!! That’s what I call a pay off.
Thanks for the good word John….I hope you are doing well too.
What is FF? Thank you
FF: Forex Factory. Its a place where poor lonely traders go to die, but also where good traders pick up new ideas and bounce off each other. The discussions can certainly be robust so if you go there wear a crash helmet!
If there is no tapering and more and more QE, how does this affect equities? Risk-on and S&P500 goes up to 1900?
Hi Alex – this of course is the “golden question” then isn’t it? And as you’ve likely been reading elsewhere – everyone certainly has their own opinions.
My feelings are that markets will have heard enough / seen enough with the Fed’s continued “circus show” and that the next round of QE will create some kind of short term bounce – but then will largely be ignored.
Each round of QE provides lesser and lesser results, and as we move through the remainder of 2013 and into 2014, I expect “risk off” to take a larger part on the center stage. China’s cyclical slow down approaches, Australia will look to further lower interest rates, EU Zone is still an absolute mess.
I’m of the mindset ( as per many , many prior posts ) that the U.S equities market has already topped. Period – topped, with “perhaps” another attempt here at the highs – but not worth trading / looking at.
Then flat /churn to down…and then “well into down” as we hit 2014.
yup…. those that took in on the chin lately & stood their ground got a taste today…. 🙂 move on the Eur was impressive…. CAD moved nice & the Aussie….. this is just the start IMO…..
Congrats. You are the King of the Jungle 😉
Thanx Super P!
I hope your trading is going well also.
Yeah been ok. Im still long gold from a ridiculously good entry, long Nikkei but short the SPX. My shorts on SPX are going the wrong way.
Congrats Kong, that was an insane move! Your patience sure paid off.
A lot of that move was exaggerated as it took place during somewhat illiquid market conditions, the period between New York’s close and Tokyo’s open.
While I didn’t catch the ride up (on EUR, GBP, AUD, etc…), I did profit handsomely on the way back down (retracement). I noticed those spikes tend to retrace a fair amount and I scaled in and kept slowly adding as we continued to spike higher and higher.
Out of curiosity, do you usually book profits then reload after retracements in such cases when moves of that magnitude take place in such a short time?
Hi David – you bet.
Often what I’ll do when such a big move has been realized and profits have been booked – is wait….(obviously) as it always retraces a reasonable amount – and then look at how individual currencies have reacted ( some stay flat vs usd….others really jump back etc) and look at re entries on a “per pair” basis.
Then, even at that – I will consider relatively small positions ( as opposed to the larger ones that had accumulated previously ) and more or less consider re entry ” a % of the profits I already made “.
I dont trade it counter trend though – I wait for reasonable area to re enter in the same direction.
Awesome, luv your strategy.
As far as JPY goes, what are your current thoughts? We have a nice dip on USD/JPY as you’ve mentioned before that we would; are you thinking massive move lower, say to 90 for example? I know you’re more of a fundamentals guy with a longer-term mindset; with that said, even though it looks like QE will go on (bad for USD), I’d say JPY is still in worse shape longer-term.
Are you beginning to close USD/JPY shorts and/or scaling into long positions or just sidelining it until a huge possible tumble?
I’m personally buying this dip slowly and would actually like it to continue to move lower as I’ll still keep buying and then probably start trading in and out (to get a better avg price over-time while booking small profits).
Outstanding Kong!!!!
Your Fundies & Techies is a win/win combo and you prove it over & over.
I also like & do buying retrace dips after a spike up and selling retrace rallies after a spike down.
I like that the market has shown it’s stripes and then getting in to go that way.
FF?! I always felt bad after visiting there. “Go to die”…I love it!
Maybe there are better threads there? The most recent ones are grim.
Thanks Devilyell – feels great.
This one was a stubborn one as I’ve been chipping awway for a full week now, as things have just ground n ground n ground. Hitting pay dirt feels great. Conviction in one’s trade decisions an important element – thus the need for the fundamentals.
FF is a site for newbies, and offers very little in the way of intelligent conversation / market commentary.
I’m “attempting” to offer some solid trade advice there – but so far it’s a grind. I read news there, but the threads are a nightmare.
Wow upto your old guerilla tactics again eh? Nice call. Very well done Kong!
Thanx Nfx!
And they call me insane!!! Buhahahahaha!
better to forget FF completely, good trader in there almost always hibernate in the end. And the talk about trader conviction, i not know how to get it. Cause our experience is minimal. Is there any room for aud/usd and nzd/usd to go up from here.. sir. Already bought it … bought around the horn as usual with 0.01 lot X 50 troops
These two pairs have been an absolute pain in the ass! If you haven’t caught it exactly right – 15 minutes later you’re down -50 pips!…..then again…and again!
Zooming out to 4h I can see they’ve been consolidating and on a daily both at pretty key levels of support but man! I feel your pain, and have more or less decided to just let my lil positions in AUD sit a day er two, and then may just as well dump it.
I have very little conviction here Tio, as they have been such volatile pains in the neck.