Commodity Currencies – Trade Up

In case you haven’t noticed  – commodity currencies are strong across the board this morning. The Kiwi , Loonie as well the Aussie all making reasonable moves upward against nearly everything under the sun.

Generally associated with “risk” I do find it interesting that these currencies are exhibiting relative strength a short 24 hours ahead of the Fed’s Announcement. Further “blurring” the markets expectations of a “modest taper”, a “super taper” ( highly unlikely ) or no taper at all , seeing these currencies on the move could be perceived a couple of ways.

  •  Ramp job into tomorrow’s announcement ( with consideration/expectation of “selling at higher levels”) and selling the news.
  • Heightened expectations that “everything is gonna be just fine” and money flowing into these currencies early.

Unfortunately it requires “speculation” as to which way things are gonna go tomorrow as the market isn’t “giving it away” that easily. Low volume is also a contributing factor as price moves are exaggerated.

The Kiwi in particular is on a real tear this morning but “just now” bumping into its resistance zone.

I’ve stopped out on a couple of scalps from the night prior, as I’ve no intention of holding anything “for fun” under the current market conditions. JPY longs are a long-term hold regardless, and I’m out of all USD related pairs, more or less 85% cash – looking for entry after Wednesday’s announcement.


24 Responses

  1. Jworthy September 17, 2013 / 10:34 am

    Thanks for the interpretation and update Kong!

  2. Warren September 17, 2013 / 11:00 am

    Cheers Kong, I’m sitting in cash right now also but licking my lips out how juicy some aud and nzd shorts look right now. Must be patient for uncle Ben to create more hot air.

    • Forex Kong September 17, 2013 / 11:12 am

      NZD in particular wow……I’m planning to watch it like a hawk across several pairs, and really just look at it for what it is. Overbought.

      Fundamentally NZ “wants” a weaker NZD , and man…. it’s made some serious moves upward here in the last few days.

      I’ll post on in it specifically here in coming days as the “Kongdicator” should provide entry on smaller time frames.

    • JSkogs September 17, 2013 / 11:23 am

      Thanks Kong. Looks a little to me like the market is pricing in little to no taper which I’d say is likely

      • JSkogs September 17, 2013 / 11:44 am

        Not sure if you guys are already looking at COT data or even care but Yen specs/retail just went heavy short

        • Forex Kong September 17, 2013 / 12:29 pm

          2 Things ol pal….

          “just went”? – COT data is a week old on release so…..that’s always a touch misleading.

          As well when considering :

          Non-commercial/Large Traders:This group consists of large speculators such as hedge funds, banks and so on who use currency futures just for speculation
          Non-reportable/Small Speculators: This group consists of small speculators like retail traders.

          The “grey area” inbetween “who is who” as well as the “amount of time a particular trade is held open” really skews this in my view as….the “big boys” build positions over months, n months in order to get orders in and not have market price “rocket” against them so….week to week…I rarley glean much from it….but did spend quite some time watching it / reading it “way back when”.

          I think you’re getting at the fact that JPY longs look tough here, and that tomorrow’s Fed Chat could push “risk on” through the roof and blow the freakin doors off long JPY’s right? He he he… ( reading between the lines the best I can ) this most certainly could be.

      • JSkogs September 17, 2013 / 12:38 pm

        Thanks Kong that is good insight. I don’t think I will take much from these reports as it sounds like they can be a bit misleading or a bit tough to sift through so to speak. I am holding my JPY longs. I haven’t reached my risk tolerance yet and I feel a remaining risk on move will be very limited

        • Forex Kong September 17, 2013 / 12:46 pm

          I personally have never had any real luck with them and have actually challenged a couple other “guru’s” to show me an actual “trade plan” where data from “last week” has been effectively used. No takers on that one.

          Long JPY could be a real bitch here no question, as I have already conceeded to a certain extent – just holding the small positions I have until they come around.

          I held / added / made great coin last year on a trade that took 8 months! I can’t see getting “buried alive” with a couple piddly JPY longs should things push on “risk wise”.

  3. schmederling September 17, 2013 / 12:17 pm

    End then we move to auto-pilot LOL!!

  4. schmederling September 17, 2013 / 12:29 pm

    I have the DXY in set-ups from the 5ive to 1hr, daily & weekly… all looking like a NEG fire here & ready to roll-over into tomorrow…. 🙂

    • Forex Kong September 17, 2013 / 12:41 pm

      Ya I’m patiently watching from the sidelines here as the mix of signals / direction leading up to this “event” can easily get your head spinning.

      On a little larger scale / time frame I still have to question – regardless of “the taper” could we actually see “risk” bump up to like “an entirely new trade range / bust out smashing new highs / blow your mind type euphoria level”? or is anything like that even more evidence of a top?

      I understand where we are in the business cycle, and that “fumes” are still holding us there. Looking at risk currencies “pop” ok…so “pop some more then” but actual “reversal” and reaching for new highs – I dunno.

      As well with consideration for JPY. The printing and easing in Japan has pissed off a pile of it’s neighbors etc…further weakness ( in my view ) would likely be relatively temporary, as the scales just “can’t” tip “that for out of balance” for long.

      So it goes….and so it “will go”. A completely useless two weeks trading held hostage by the Fed.

    • Forex Kong September 17, 2013 / 1:00 pm

      Very interesting as always Schmed.

      I dumped my USD’s a day early and just can’t bring myself to sell down here. An inside candle here today, after like…10 days down, with nearly every currency on Earth pushed to overbought vs USD ( u see GBP/USD weekly chart )?

      I’ll sit it out.

      • schmederling September 17, 2013 / 2:37 pm

        Hey Dr. Kong… only if I get a Neg Fire signal will I enter & will watch it like a hawk…. yeah stretching this one down to the wire here but won’t enter until I get my confirmation…. it may just very well reverse here or fire & reverse so I will have the play jack be nimble jack be quick… LOL same with the USD/CAD pair…

        • Forex Kong September 17, 2013 / 2:39 pm

          It’s a real tough call “right here ” and “right now” so…….we just get tomorrow out of the way, and look to move in the right direction.

          Jack be nimble an understatement – u bet.

  5. schmederling September 17, 2013 / 12:37 pm

    I am prepping short USD/JPY pair here… If I get my 30min NEG fire…. set-ups from the 30min to 4hr here… 🙂

    • schmederling September 17, 2013 / 2:40 pm

      If the fire is positive I’ll just take the long side of each pair here….but with 3-4 TF set up in a squeeze should be worth something here LOL…

      • Forex Kong September 17, 2013 / 2:56 pm

        A wise man once told me ( or perhaps I dreamt it I can’t remember ) “Anything USD does….JPY does more”.

        While this makes little sense “literally” – we need to consider that both these currencies fullfill a similar “role” globally – that of a “safe haven”.

        Perceived “USD weakness” in the pair…..can easily be misunderstood… reality has it that BOTH are rising ( in times where safety is sought ) but that JPY is rising MORE.

        Just a lil nugget – some may use it, other not.

  6. GTFO September 18, 2013 / 1:13 pm

    R.I.P. US$, eh.

    • Forex Kong September 18, 2013 / 1:56 pm

      There she goes yes.

      Too bad I missed the entire freakin move sitting out the release – but I guess that’s how it goes.

  7. JSkogs September 18, 2013 / 2:06 pm

    Yen didn’t sustain much damage from this risk on move. Risk blow off? False constructive move? We shall see tomorrow or later today.

    • Forex Kong September 18, 2013 / 2:16 pm

      Good observations man…JPY barely budged.

      I’m still “sifting thru” and will get a post up here pronto.

  8. schmederling September 19, 2013 / 10:30 am

    Gold & Silver taking on another move up here with my 30min Squeeze fire which has gone off positive here…. hard to believe after the run yesterday…. the 1hr is also set-up in a squeeze this will be the next target looking for it to fire positive as well…. then I would expect a break …. we also have option exp. tomorrow!!

    • Forex Kong September 19, 2013 / 1:55 pm

      With a potencial USD bottom here, I wouldn’t be touching the PM’s until the “next” low.

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