Fed Announcement – Time To Face The Music

As you all know, The U.S Federal Reserve Meeting winds up this afternoon with the announcement due out around 2 p.m.

Speculation as to “what the Fed will do or say” is pretty much a fools game at this point as they’ve thrown investors for a loop a couple of times already, having “said they where going to do one thing”….then doing the complete opposite.

I really can’t imagine them “pulling the taper” before the taper has “officially” even started ( as meaningless as the amount is ) but will be on the lookout for any “language” that might suggest the possibility down the road.

My medium term trade plans would see things continue lower through February and into March, before the Fed might “flip the switch” along with the Bank of Japan increasing it’s QE – should things get too wildly out of control.

As if things aren’t getting wildly out of control already…we’ll really want to watch this correction closely as it “should” mark a significant turning point, with respect to the rest of the world’s expectations, and interest rates “planet wide”.

If the Fed is truly going to commit to “turning off the spigot” of free money / liquidity (which again I have a very difficult time believing) then it would appear that the party is over, and many, many countries ( including the U.S ) may quickly find themselves  – facing the music.

The obvious trade is still “long USD” if indeed the Fed continues in the same direction as stated last month. Should the Fed pull another fast one here ( with perhaps some “tricky language” or a “taper” of the “tapering” ) I will literally drop every open trade in a heartbeat, then re evaluate.

It’s painful “being held hostage” (yoJSkogs!) yet again with the Fed’s movements essentially dictating market direction but……this is the world we live in now, and trader’s just have to accept it, adapt and continue to find strategies that work.

41 Responses

  1. Farhan Nasir (@FaniNasir) January 29, 2014 / 5:46 am

    Just a thought ,,
    Everybody knows, CB governors are regularly phoning each other to coordinate policy. Basci (turkish CB) knows that Fed will continue to taper, therefor had to raise interest rates the way he did….
    what do you think ,,

    • Forex Kong January 29, 2014 / 7:27 am

      Things already moving in my direction in EUR/USD as well GBP/USD as well USD/CHF

      AUD/JPY and CAD/JPY too. All in profit.

      • Forex Kong January 29, 2014 / 7:49 am

        I’m also taking very small trade long EUR/NZD.

  2. Careydina January 29, 2014 / 6:54 am


    Are you still holding short gbp/usd?

    • Forex Kong January 29, 2014 / 7:26 am

      Yes Careydina!

      Holding and adding! I’ts just getting started!

  3. JSkogs January 29, 2014 / 7:59 am

    I like what’s happening. I’ve got small positions in eurusd and audjpy. Happy with the green so far

    • Forex Kong January 29, 2014 / 8:07 am

      Man I gotta say….you are bang on as usual.

      You know…I’m sitting here today literally “pacing the floor” as the trade almost looks “too good / obvious” moving into this Fed meeting.

      I don’t want to think they will “pull the taper”, and don’t think they will TODAY.

      So I’m going to lean into this one pretty hard.

      USD strength as a result.

      Good luck man – this could be a whopper.

      • Franky January 29, 2014 / 8:31 am

        What’s happening to USD now? USDX going straight down for last hour… didn’t see any news.

        • Forex Kong January 29, 2014 / 8:34 am

          Complete “pre market” welcome to th U.S Session rinse job!!

          100% back to support in a matter of minutes yup – no fun for short term traders with tight stops etc – impossible to stay in the action.

  4. JSkogs January 29, 2014 / 9:47 am

    Perhaps I am missing something but what is USDJPY telling us about the possibility of taper? Wouldn’t it be rising the most given Japan’s easing? Just profit taking and fear of the unknown so the yen is getting the money?

    • Forex Kong January 29, 2014 / 10:03 am

      USD/JPY can be a very interesting pair as it’s movement isn’t nearly as “obvious” as I think most people imagine.

      I’ve always used a funny little saying I made up some time ago – that’s served me well in the past.

      “what ever USD does…..JPY does it more”. Not always the case, but look at it this way…

      If USD and JPY are BOTH gaining strength ( on safe haven flows etc.. ) then you see that JPY is gaining more…

      So as it’s reflected in USD/JPY – both “gaining” – but JPY gaining “more” with a net result of USD/JPY moving LOWER.

      It’s wack man….took me years to learn / decide “how to trade it” and more importantly “when” given what ever market dynamics are in play.

      If USD moves higher ( man…….it better! ) that tells me TAPER ON. SAFETY SOUGHT.

      • JSkogs January 29, 2014 / 10:10 am

        Gotcha thanks. A little counter intuitive but makes sense.

        • Forex Kong January 29, 2014 / 10:15 am

          A bit of a mind bender at times yes.

      • illutionz January 29, 2014 / 10:47 am

        You can definitely explains it more eloquently than I can. This is exactly why I stopped doing USD/JPY. Way too tricky

        • Forex Kong January 29, 2014 / 10:49 am

          I rarely look to trade two safe havens “against” one another, but will still be looking to buy USD/JPY as low as I can get it here in coming months….oddly – based on an entirely different “economic principal / hunch ” moving forward.

  5. JSkogs January 29, 2014 / 9:54 am

    And yes thank you…..good luck to you and anyone else that has trades in the game during a fed meeting. We all know it can be a gong show!

  6. Farhan Nasir (@FaniNasir) January 29, 2014 / 11:16 am

    well EURO/USD got back where it began this morning ,, thank God hot out when it came down to 1.6310 thinking of shorting it again ,,
    2 more hours till the FOMC tic toc tic toc

    • Forex Kong January 29, 2014 / 12:17 pm

      You see what I’ve been saying about “short term trading”?

      Without a longer term / fundamental view guiding you – a hundred pips can move in 15 minutes “either way” and still not affect the trend in the slightest.

      Trade “smaller” and “wider” and you’ll stay in trades long enough to see them start paying off.

  7. slimpickens January 29, 2014 / 1:01 pm

    OK Kong, I’m still working on my “pip”-ology….went with UUP calls.

    • Forex Kong January 29, 2014 / 1:23 pm

      It’s too bad with those damn ETF’s in that a pure “forex play” captures huge moves as opposed to the couple of pennies you’ll capture via UUP.

      When I look at that thing’s chart….even if it pops to the complete other side of the range…it’s only .20 cent or .40 cent move.

      I wish I had more to suggest as far as “synthtetic plays” via the stock market but…nothin comes close to forex.

    • Forex Kong January 29, 2014 / 1:25 pm

      I still can’t beleive how “lame” this move is right out of the gate!

      I would have expected USD to “blast” higher!

      It’s still more or less just sitting there….common ! lets roll!

  8. JSkogs January 29, 2014 / 1:16 pm

    Kinda looks like the market anticipated a fair bit of this announcement.

    • Forex Kong January 29, 2014 / 1:32 pm

      Regardless – USD is right where it needs to be “holding” before moving higher…

      This is odd to say the least, as it’s already “stalled” and traded flat for a full 3 days. I would have just assumed this to the confirmation / catalyst to put the move on!

      Let’s go! Let’s go!

      • Farhan Nasir (@FaniNasir) January 29, 2014 / 1:36 pm

        gonna wait one more hour to see if market takes any turn or anything ,, if not then off to bed as its 12:35 am here 😀
        and will keep the trades on to take their course

        • Forex Kong January 29, 2014 / 1:49 pm

          I’m gonna wait too, but I’ll tell you what….

          No way in hell I’m goin “negative” on any of this short of dumping it and looking at it again later.

          This action is completely “wacked” and off the top of my head – I don’t like it one bit!

          We all know how completely manipulated this market is so….here we are again in a situation where “you expect something” …and it’s just not the way you imagined.

          I’ve got like…..8 – 10 trades all sitting about “5 pips” on either side of break even – lame.

      • JSkogs January 29, 2014 / 1:47 pm

        Ya man I’m surprised. I kept my eurusd but closed audjpy for now. I’m very eager to see the reaction at these lows before I get rockin again.

        • Forex Kong January 29, 2014 / 1:54 pm

          Bank of New Zealand meeting / announcement in 10 minutes….if they “raise rates” I’ll take a hit on NZD related pairs gees….

          Just one thing after another. As Fed stuc with the program who knows – RBNZ to raise rates too!?


          • Forex Kong January 29, 2014 / 2:05 pm


            Nice move on short NZD….whew!

          • Forex Kong January 29, 2014 / 2:14 pm

            Wow….EUR/NZD – blasting higher.

            Holding! I’m holding! holding here!

  9. Franky January 29, 2014 / 1:19 pm

    What a slooow reaction on FOMC,…is everybody just waiting for clear market direction? 🙂

  10. JSkogs January 29, 2014 / 1:25 pm

    Spy maybe 175 or 176 and a bounce? That channel has held up for 2 yrs. No reason to think we wont get at least a bounce.

  11. JSkogs January 29, 2014 / 3:49 pm

    Funny thought….How stoked is Ben Bernanke that he is done? Very I would assume. What I nightmare job. Think of when he took office! Total disaster. Whether you liked or disliked his actions, he had balls to do something big….real big.

    And hell I have to thank him for giving me a start in life with buying gold not long after his QE plans……and selling dx futures. Thanks Ben! haha…..sort of

  12. pecuniae January 29, 2014 / 4:10 pm

    Don’t get too frustrated. In terms of news-driven volatility, I would stick with shorting the Asia-Pacific pairs tonight and switch over into Europe pairs tomorrow ( both against the yen…of course 😉 ). But, I’m keeping positions light until 101.78 falls on the usdjpy pair because I’m terrified of a double bottom here. IMO, both the euro and pound are looking for a better reason (besides tapering) to sell-off, because they have upward momentum on their side, and I believe tomorrow will give us that catalyst/reason.

    What are your thoughts on the AUD/NZD pair (extremely oversold longer term) after today’s failed rate hike? Stick with an audjpy short or switch over into shorting nzdjpy? I’m just itching to catch the eventual aud/nzd rally and hopefully on the back of kiwi short.

    • Forex Kong January 29, 2014 / 4:31 pm

      Ya….I’m sticking short both AUD as well NZD so…..trading AUD/NZD not “particularily” interesting to me here, but if I do…I’d still look at AUD falling faster / further than NZD.

      I’m short both vs JPY as well USD.

  13. schmederling January 29, 2014 / 7:00 pm

    I think currency debasement is in full flight – race to debase – they will try rate increases with little to no effect….. then they all move all in with massive printing across the board – LOL

    • Forex Kong January 29, 2014 / 7:09 pm

      I’ve got late March as full scale panic / get back on the printing presses like no tomorrow.

      The U.S Fed can NEVER stop printing so…..just as the huge rise / pump in stocks was coordinated and very well planned, as will this pullback and further printing.

      They’ll need things to “tank” to justify stepping back in. Funny thing is things only “tank” when Fed and Wallstreet say so right?

      Wallstreet has been selling to retail for months now…and now that the charts “finally reflect the turn” – Wallstreet will just be looking to dump further on retail , and buying more when “press print” gets back on track in a few months.

      If the “algo’s are now sell” ya…..it’s all the retail investors who actually just bought!! – Right.

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