Trade The Risk Event – Sitting On Hands

As much as I hate reminding you, the Fed meeting runs through today – with announcements expected tomorrow so…….you know what means.

Risk event ahead – as the statement will be released Wednesday at 2 p.m.

Obviously these Fed announcements are what the market’s hinges on these days, as the possibility always exists ( as the Fed has proven in the past ) that they “might” say or do something shocking. Tomorrow’s announcements may provide clearer language on “tapering” – but I doubt it. I’m going to assume they move forward with the continued stance that “tapering will remain data driven”.

The debate is pointless, but what is important is how you choose to position yourself prior too, and then of course “after” the news is out.

From a technical perspective “risk” could easily make one more “little jump higher”, as equities still look “alive” all be it exhausted, the U.S Dollar still appears to be trapped in its downward spiral.

I would look to “sell” any possible “uptick” USD takes tomorrow ( if any at all ) PENDING they don’t announce a tapering, as this should just keep USD steadily on its way to the basement.

“If” by some wild stroke of insanity – they “do announce tapering”, it will require more than just a couple of hours tomorrow, to get an idea of what markets will do with that, and I would suggest to anyone looking to trade it……..let things settle out / calm down BIG TIME before even thinking about entering.

I’m back from a short ( but wonderful ) holiday and ready to go here again. I’ve got a few tiny irons still in the fire, but am for the most part – sitting in cash. As much as one would love to “get in there” and take advantage of “whatever pans out tomorrow” the responsible thing to do is to wait.

Wait I shall.

26 Responses

  1. eb01ri December 17, 2013 / 10:18 am

    Kong – could I please trouble you for your views on GBP/USD and USD/CAD in the medium-term i.e. through to the end of next year?

    GBP/USD has been forming an ascending triangle since 2009 and, after a breakdown earlier this year, has managed to close back inside. Would you expect this to resolve higher out of the triangle on further USD weakness, and what kind of target might one expect?

    As for USD/CAD, i’m not sure really what I see in the chart from the last few years, just a lot of chop. It seems to be testing resistance around the current level, but what would you expect from here? Weakness in the USD, along with (dare I say) possible strength in metals would force this pairing lower, but it seems to have marked out a fairly substantial base at 0.95….?

    • Forex Kong December 17, 2013 / 10:26 am

      USD/CAD ranges yes…and frankly is a pain in the ass pair to trade. You’ll often see USD show overall weakness across the board, then have it rising vs CAD, then the next week the complete opposite. The pair likes to “sprint” up to resistance – and just sit there for days on end etc….

      I see it poking around at the top end of said range, and I’ll expect to see the pair move lower moving forward. I’m not looking for any coorelation to the metals in USD/CAD no.

      GBP looks good to me – moving forward I’m bullish. I actually see it as GBP “breaking out” at 162.40 area up to 164.40 ish now backtesting support.

  2. Deano December 17, 2013 / 7:44 pm

    Good to see you back and rearing to go for 2014 Kong. You’re dead right as usual the taper debate is pointless and even though we see the outcome differently we definitely see the trading positions the same way – I ain’t going anywhere near the market until the news release and the associated volatility has settled. I think because this is one of the most anticipated releases in some time the market will go nuts for a time no matter what happens. I won’t jump into the pit with the crazies and will differ to the medium / long term trends that have worked well so far this year. Cheers.

    • Forex Kong December 17, 2013 / 8:20 pm

      Bang on as always Deano. Trade’em as we see’em!

      Tomorrow should go down in the books for sure, and we don’t make a living “guessing” so…….

      I’ve seen a million of these come and go ( or so it feels ) as……….we’ll just get “past” it – and make decisions from there.

      Go Deano Go!

      • Careydina December 18, 2013 / 9:38 am

        Hi Kong,

        Heard that your short trip was cool! Waiting for the news to come today!!! Exciting about it haha… I have gbp/usd and eur/usd positions open 🙂

        • Forex Kong December 18, 2013 / 10:55 am

          I like both here Carey D…but will wait until after the “shakeout” to put on a couple trades myself!

  3. JSkogs December 18, 2013 / 9:23 am

    Looking at yen contract mar14 its looking pretty likely that a bottom is in place and the rest is chop until drop. All I have in the game before this meeting is a very small CADJPY short that I just entered this week..

    • Forex Kong December 18, 2013 / 10:51 am

      I’ve in short CAD/JPY as well – otherwise really eyeing those GBP pairs again…..

      I need to find those currencies that are “on the move” these days as even with USD weakness, many pairs sitting doing nothin.

      Let’s get this bullshit outta the way – and get rolling!

      • Careydina December 18, 2013 / 11:07 am

        I entered this afternoon (I mean my time here, so it shld be mid night in mexico hehe)
        Getting excited~~~ Long both pairs… Will eur up to 1.4? Before ny or after ny? Err… let’s see it

      • Careydina December 18, 2013 / 11:18 am

        Yeah another 40 minutes to go. Are you looking for long or short?

        • Forex Kong December 18, 2013 / 11:54 am

          I’m looking for short usd so……..no taper announced – but as I trade for a living…I rarely take chances. Things can “always” surprise you.

          I will let the news come out…..and then get busy.

      • Careydina December 18, 2013 / 12:03 pm

        Is it another an hour to go from now… Tiring… 2am here ha…

        • Forex Kong December 18, 2013 / 12:06 pm

          I’m not “expecting fireworks” but I guess you never know.

          What I do know for sure is….there WILL BE VOLATILITY around this release – no question so……

          I’m going to plan and “pick off some good entries” after the dust settles.

      • Careydina December 18, 2013 / 12:20 pm

        Actually i was thinking about to close my gbp position as it’s positive 150 bucks. Thinking… thinking… haha

        • Forex Kong December 18, 2013 / 1:35 pm

          GBP looking great here as……even with this announcement – USD “still” can’t catch a bid.

      • Careydina December 18, 2013 / 1:40 pm

        Kong,

        I didn’t close it eventually. Closed when the price was 1.6420. Didn’t manage to wait a bit longer as i am exhausted! Must get some sleep… Good luck to you!!!

  4. robert December 18, 2013 / 1:53 pm

    Taper and boom everything goes up except poor old USD??? unbelievable

    • Forex Kong December 18, 2013 / 2:03 pm

      You’re really coming along Robert as……

      Exactly!!

      TLT and bonds still heading lower……USD can’t even catch a penny etc………….

      It doesn’t even matter what this pea brain says anymore as markets “do what they do” – and this market thinks the USD is toast.

      • robert December 18, 2013 / 2:11 pm

        Its the yen again… when is it going to strengthen

        • Forex Kong December 18, 2013 / 2:32 pm

          It will be the last to go here at this junction – but do keep in mind where we are at longer term.

          Japan is very likely where this may all come apart, as the monetary policy experiment reaches it’s limits.

          We are currently looking to trade a counter trend rally in “getting long JPY” so…..in perspective – its always a tougher trade.

          What I’ve learned is to “not get too attached” to a single trade idea, considering how complicated a single “plan” may be.

          If a year ago you’d have told me I’d be “actively trading GBP” against any number of other currencies as a trade plan “today”? No idea.

          I try to “follow the money” around, and maximize opportunity.

          Long JPY here has been flat out tough.

          Long GBP here has been flat out easy.

  5. robert December 18, 2013 / 2:58 pm

    i had to open my mouth…. and here goes USD flying up…. -.-

    • Careydina December 18, 2013 / 8:32 pm

      USD strengthen a lot now huh? Well my positions all closed therefore i can go for a nice dinner tonight without look at the screen.

      • Forex Kong December 18, 2013 / 8:46 pm

        I see all kinds of excellent trades developing as that was “quite the action” there today!

        Sit tight over night and we’ll see……..I’m still of the mind set the US Dollar “pop” will be short lived.

      • Careydina December 19, 2013 / 5:13 am

        Kong,

        You are still looking at short usd? Taper 10B, tapered isn’t strengthen for USD? If you’re pretty much look at short on usd, gbp/usd would be good. Move like a skyrocket. Can be violent-scary. Haha…

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