Author: Forex Kong

Kong Gets Hitched! – World Stands Still

Forex Kong 9 Comments

With the current geopolitical landscape looking a little more interesting than that of the currency world ( even as the two are so interconnected ) being away from “the office” this entire last week has me “knee-deep in research” here this morning – looking to get caught up.

Wow. You step away for a single week to get married ( half thinking you’ll miss something “huge” ), your own life changes “completely” and the rest of the world just keeps spinning. Business as usual.

Or perhaps not.

I firmly believe that Russia will soon take further actions to take control of Ukraine, and that “seemingly docile markets” have yet to price this in. Or at least – the machines that make things “go”  are still very hard at work “making things go”.

I encourage everyone to spend a bit more time “digging past the usual headlines” to uncover what’s really going on with Washington’s interest in Ukraine – and how serious a situation is developing. Putin didn’t need to sit around a single minute knowing full well that a full military “showing” was what was required in order to keep the scales in balance.

I can assure you that we’ve only just seen the beginning of what will likely be a very a long, drawn out, and VERY serious conflict involving The United States, The EU, Russia and China.

China’s HSBC Flash Manufacturing PMI number is out later tonight and is expected to show continued contraction in China’s economy, and apparently we’ve seen the ol US Dollar take a bounce from a pretty solid area of support.

Talk of U.S rate hikes “any time soon” are completely ridiculous as the media machine continues to promote / suggest that everything there is “up up up” and all is coming along nicely.

It’s great to be back in the saddle here again, and also to have shared such a wonderful week with friends, family and my new bride!

Some pics to follow – and thank you to all of you who’ve stuck around / wished me the best!

We’re back baby!

Lets get this thing goin!

The Currency Wars Are Just Beginning

The machines might be keeping markets humming along, but underneath the surface, we’re witnessing the opening moves of what will become the most significant currency realignment in decades. While everyone’s focused on the headlines coming out of Eastern Europe, the real action is happening in the shadows where central banks are quietly positioning for a world that’s about to look very different.

USD Strength is Nothing But Smoke and Mirrors

This bounce in the Dollar everyone’s celebrating? It’s a dead cat bounce, plain and simple. The fundamentals haven’t changed one bit – we’re still drowning in debt, printing money like there’s no tomorrow, and pretending inflation is “transitory” while grocery bills tell a different story. The support level held, sure, but that’s exactly what you’d expect before the real move down begins. Smart money knows USD weakness is baked into the cake, and they’re positioning accordingly. When this thing breaks, it’s going to break hard and fast, catching all the retail bulls completely off guard.

The Real Game: Resource Currency Domination

Here’s what the mainstream financial press won’t tell you – this entire conflict is about resource control, and the currencies tied to those resources are about to become the new kings of the forex world. Russia controls massive energy supplies, Ukraine sits on some of the world’s richest agricultural land, and China’s been stockpiling commodities like they know something we don’t. The Ruble, despite all the sanctions talk, has actual hard assets backing it up. Compare that to our paper promises and tell me which one you’d rather hold when the music stops.

The Canadian Dollar, Australian Dollar, and Norwegian Krone aren’t just going to benefit from higher commodity prices – they’re going to become the safe havens when traders realize that all the QE in the world can’t create wheat, oil, or gold. We’re entering an era where having stuff matters more than having promises to pay for stuff later.

China’s Manufacturing Contraction: The Deflation Export Machine

Tonight’s PMI numbers are going to confirm what anyone paying attention already knows – China’s economy is contracting, and they’re about to export that deflation to the rest of the world. But here’s the twist: this isn’t necessarily bad for the Yuan. China’s been preparing for this moment for years, building alternative payment systems, accumulating gold reserves, and creating trade partnerships that bypass the Dollar entirely. When their manufacturing slows down, it’s not going to be the desperate scramble everyone expects. It’s going to be a controlled demolition designed to reset their economy for the next phase of global dominance.

The strategic reserves they’ve been building aren’t just for show – they’re the foundation of a currency system that doesn’t need Western approval to function.

The Fed’s Impossible Choice

All this talk about rate hikes is pure theater. The Fed is trapped, and they know it. Raise rates, and you crash an economy that’s already running on fumes. Keep them low, and you watch the Dollar continue its slow-motion collapse while inflation eats away at what’s left of middle-class purchasing power. There’s no good option here, which is exactly why they’re going to keep talking tough while doing absolutely nothing meaningful.

The political pressure from Washington won’t let them crash the party before the next election cycle, but the market pressure from international players who are tired of subsidizing American consumption is only going to intensify. Something’s got to give, and when it does, the currency implications are going to ripple through every portfolio on the planet.

The wedding’s over, the honeymoon period for Dollar strength is ending, and the real work begins now. This isn’t about picking tops and bottoms – it’s about positioning for a fundamental shift in how global trade and finance operate. The countries with real assets win. The countries with real problems lose. Pretty simple math, even if the execution is going to be anything but smooth.

War, Silver, AUD, Putin, China = Fun

Forex Kong 31 Comments

I feel I’ve gotten a little soft here during the past few weeks.

In not being as “overly thrilled” with the market as I normally am – the blogging has suffered as……if you don’t have anything good to say well……you know.

This tiny blip / risk aversion based on “at least two” of the black swans we spoke of last week restores some faith in the fact that markets are still markets, people are still people, and emotions are still emotions.

The Central Banks do all they can to lull you to sleep but in reality are relatively powerless against the “true forces” of fear and greed – where human emotion will always take the front seat.

Take for example the massive printing efforts in Japan – propping up the Nikkei. It’s all going to look pretty ridiculous as “only a matter of days” can erase “1000’s of points” in a heartbeat. Imagine when things really turn? ( as they will ).

Russia has put Obama back in his bunker with suggestion ( if not action already ) dumping U.S Treasuries as well US Dollar reserves alongside their good buddy China – essentially holding the capability to “level the U.S economy” without the use of a single missile. You gotta love that eh?

As suggested earlier Putin will not let these tyrants in Washington get their grubby little mits on Ukraine without a fight….and rightfully so (if you understood anything at all of the importance of Ukraine, and its massive network of natural gas pipelines that feed Europe).

Obama can kiss my ass. He’s beyond desperate, and essentially “toying with war” as Russia merely protects what it already has.

Me…..I’ve got important things to take care of over the next couple of days – “very” important things…so I will look for WWIII to start Monday at the earliest ………..and “never” at the latest.

Have a good weekend all – keep your eyes peeled late Sunday.

Short AUD – killer, and the long list of gold and silver miners entered “weeks ago” doesn’t hurt either.

Kong……..gone.

The Real War Is Economic — And Washington Is Losing

Putin isn’t playing games with sanctions and diplomatic theater. The man understands something that Washington’s career politicians refuse to acknowledge — real power in the 21st century flows through economic channels, not military ones. When Russia and China coordinate to dump U.S. Treasuries and dollar reserves, they’re not making empty threats. They’re executing a financial strategy that could cripple the American economy faster than any conventional weapon.

The beauty of this economic warfare is its precision. No need for messy ground invasions or air strikes when you can systematically dismantle a currency’s global dominance. Every Treasury bond sold, every trade settlement conducted in yuan or rubles, every bilateral agreement that bypasses the SWIFT system — it all adds up to death by a thousand cuts for dollar hegemony.

AUD Collapse Accelerates as Risk Appetite Dies

The Australian Dollar is getting absolutely demolished, and this is just the beginning. When risk sentiment turns sour — and we’re seeing the early stages of that now — commodity currencies like AUD get thrown out first. Australia’s economy depends on Chinese demand for iron ore and coal, but when Beijing starts prioritizing domestic stability over raw material imports, the math gets ugly fast.

My short AUD position from weeks back is printing money because this isn’t a temporary dip. This is structural weakness meeting cyclical decline. The Reserve Bank of Australia can’t print their way out of a commodities downturn, especially when their largest trading partner is simultaneously reducing dollar reserves. USD weakness creates a double-edged sword — while it might theoretically help AUD, the broader risk-off environment crushes carry trades and speculative positioning.

Gold Miners: The Smart Money’s Hedge

Those precious metals miners I loaded up on weeks ago? They’re starting to show their true colors as geopolitical tensions ramp up. When currencies become weapons and traditional safe havens like Treasuries come under attack, gold becomes the ultimate refuge. But here’s the thing most retail traders miss — mining stocks amplify gold’s moves by 3-to-1 or better on the upside.

The institutional money is quietly accumulating physical gold and quality mining operations while the mainstream media focuses on stock buybacks and tech earnings. They understand what’s coming. When confidence in fiat currencies erodes — and we’re watching it happen in real time — precious metals don’t just hold value, they explode higher. metal moves are often violent and swift, catching the unprepared completely off guard.

Central Bank Impotence Exposed

The Federal Reserve, European Central Bank, and Bank of Japan can print all the money they want, but they can’t print credibility. Every quantitative easing program, every emergency rate cut, every coordinated intervention just exposes their desperation more clearly. Markets are starting to see through the smoke screen.

When Putin threatens to weaponize Russia’s dollar reserves, he’s calling their bluff. The entire Western financial system depends on everyone agreeing to play by the same rules, use the same currency for international trade, and accept the same monetary authorities. But what happens when major powers simply opt out? What happens when they create parallel systems, alternative settlement mechanisms, and competing reserve currencies?

The Weekend Calm Before Monday’s Storm

I’ve got business to handle over the weekend, but come Sunday night and Monday morning, expect fireworks. This isn’t just another geopolitical spat that gets resolved with phone calls and press conferences. Ukraine represents a strategic chokepoint for European energy supplies, and Russia isn’t backing down. Neither is China when it comes to supporting their ally.

The market’s brief taste of risk aversion this week is nothing compared to what’s brewing. Those comfortable with their long equity positions and short volatility trades are about to get a reality check. The Central Banks have created the illusion of stability, but underneath, the fault lines are spreading.

Keep your powder dry, watch the overnight action Sunday, and remember — when everyone else is panicking about war, the smart money is positioned for the economic aftermath. That’s where the real profits get made.

JPY Surges – Weakness In Risk Appetite Showing

Forex Kong 4 Comments

Big surge in JPY ( and we all know what that generally means right?) as commod currencies ( in particular AUD he he he… ) make a pretty dramatic turn – downward.

The Nikkei has also fallen “below” it’s bear flag / sideways pattern from the last 2 months so…..what’s left?

Good ol U.S Equities broke trendline a couple of days ago….now backtesting and wait for it…….wait for it…..

We may have to “wait for it” a little longer as one really can’t say for certain here but – weakness across the board.

 

The Convergence Trade Unraveling — What Smart Money Sees

This isn’t your garden-variety pullback. We’re witnessing the systematic unwinding of one of the most crowded trades of the past year — the anti-JPY convergence play. Every hedge fund and their grandmother has been short yen, long risk assets, betting that Japan would stay trapped in their monetary policy corner forever.

Wrong.

The JPY Surge Isn’t Random — It’s Calculated

When the yen moves like this, it’s not because some tourist decided to buy sushi. Institutional flows are shifting, and fast. The Bank of Japan has been telegraphing intervention for months, but the real story is deeper. Japanese repatriation flows are accelerating as global uncertainty rises, and carry trades built on cheap yen funding are getting liquidated at warp speed.

Look at the speed of this move. AUD/JPY didn’t just decline — it fell off a cliff. That’s not retail panic selling. That’s systematic unwinding of leveraged positions that got too comfortable with the “yen will always be weak” narrative. The machines are cutting risk, and they don’t care about your feelings or your stop losses.

Commodity Currencies in the Cross Hairs

AUD taking the biggest hit here isn’t coincidence. Australia’s economy runs on China’s appetite for iron ore and coal, and China’s economy is showing more cracks than a sidewalk in Detroit. The correlation between AUD weakness and broader risk-off sentiment is textbook — when global growth fears spike, commodity currencies get executed first.

But here’s what most traders miss: this AUD weakness isn’t just about China. It’s about the unwinding of the entire “reflation trade” that’s been propping up risk assets. Commodity currencies were the poster children for the “everything’s fine, buy risk” mentality. Now reality is knocking, and the door is getting kicked in.

Nikkei’s Technical Break Signals Broader Carnage

The Nikkei breaking below its consolidation pattern is the canary in the coal mine for global equities. Japanese stocks have been the darling of international investors betting on corporate reform and cheap yen exports. When that trade reverses, the spillover effects hit everything from European banks to emerging market ETFs.

This isn’t just a chart pattern breaking — it’s a narrative breaking. The story that Japan could export its way to prosperity while keeping the yen artificially weak is crumbling in real time. As USD weakness accelerates globally, Japan’s export advantage evaporates, and their equity market gets repriced accordingly.

US Equities: The Final Domino

So we arrive at the main event — US equities hanging by a thread after breaking their trendline. The backtest is happening right now, and this is where fortunes get made or lost. The pattern is clear: Asia leads, commodities follow, and US markets bring up the rear with their usual arrogance intact until the very last moment.

But here’s the thing about waiting for confirmation — by the time US equities decisively break lower, the easy money will already be made in currencies and commodities. The smart play is positioning ahead of the obvious, not chasing it after CNBC starts talking about “market volatility.”

The weakness is systemic, not isolated. When JPY surges this aggressively, when commodity currencies crater simultaneously, when Asian equities break key technical levels — that’s not random market noise. That’s institutional repositioning for a very different macro environment than what we’ve been living in.

The convergence trade is dead. The question now is whether you’re positioned for what comes next, or still fighting the last war with strategies that worked when central banks were printing money like it was confetti. As market bottoms form and shift, the players who adapt fastest will capture the next major move while everyone else is still wondering what happened to their “sure thing” trades.

GBP Set To Explode – Higher

Forex Kong 22 Comments

Don’t ask me why.

It’s really not that important…for now at least.

Step on up, place your bets, cover your ass.

Boom!

The Great British Pound………London banksters…..need I say more?

 

So…..I’ve been short the Australian Dollar for several days now and now suggest you have a good look at GBP. Let’s learn something about forex  here……

I’m “short AUD” and “long GBP” so??? How about trading the pair “GBP/AUD”?? LONG! YA!?

P.S….this thing falls into the category of “face ripper” as it’s volatility is nuts ( it can swing a couple hundred pips in the blink of an eye kinda nuts) so…….please don’t go bet the farm.

GBP/AUD: The Volatility Monster That Separates Traders From Tourists

This isn’t your grandmother’s currency pair. When I tell you GBP/AUD can rip faces off, I’m not being dramatic — I’m being conservative. This beast has humbled more traders than any other cross in the majors, and that’s precisely why it’s perfect for those who understand what they’re dealing with.

The beauty of this trade isn’t just that we’re long GBP and short AUD. It’s that we’re riding two massive institutional flows that are converging at exactly the right moment. London’s financial machine is waking up to opportunities that Sydney’s commodity-drunk market is completely missing.

Why the Pound Is About to Steamroll Everything

Forget the Brexit noise. Forget the political theater. The GBP is positioning for a major move that has nothing to do with what the financial media is feeding you. The Bank of England is playing chess while everyone else is playing checkers, and their monetary policy divergence with the Reserve Bank of Australia is about to create a gap you could drive a truck through.

Sterling has been quietly building strength while traders have been obsessing over USD weakness and missing the real story. The pound isn’t just recovering — it’s preparing to dominate. And when it moves, it doesn’t ask permission.

Australia’s Commodity Delusion Is Cracking

The Australian Dollar has been living in a fantasy world, propped up by commodity dreams that are about to meet reality. Iron ore isn’t going to save you. Coal isn’t going to bail you out. China’s appetite for Australia’s rocks is shifting, and the RBA is about to find out what happens when your entire currency strategy depends on digging holes in the ground.

The aussie’s weakness isn’t temporary — it’s structural. And while everyone’s waiting for the next mining boom to save the day, smart money is already positioning for the slide that’s coming.

The Swing That Breaks Accounts

Here’s what you need to understand about GBP/AUD: when this pair moves, it doesn’t give you time to think. We’re talking 200-pip swings that happen faster than you can blink. This is why amateurs get destroyed and professionals make fortunes.

The volatility isn’t a bug — it’s a feature. But only if you respect it. Risk management isn’t optional here; it’s survival. Position sizing becomes everything when you’re dealing with a pair that can gap overnight and leave you wondering what happened to your account.

Timing the Monster Move

The setup is almost too perfect. We’ve got fundamental divergence, technical alignment, and institutional positioning all pointing in the same direction. The question isn’t if GBP/AUD is going to rip higher — it’s how violent the move is going to be when it finally breaks.

This is where the rally momentum becomes critical. Markets don’t move in straight lines, but when they do move, the acceleration phase separates the prepared from the panicked.

Watch for the breakout above key resistance levels. When this thing starts moving, it’s going to attract momentum traders, algorithm buying, and institutional flows that will push it far beyond what anyone expects. But remember — this is a professional’s game. The same volatility that creates massive profits can wipe out entire accounts in minutes.

The trade is clear: long GBP/AUD, but with respect for what you’re dealing with. This isn’t a set-it-and-forget-it position. This is active warfare in the currency markets, and only the disciplined survive.

Seeing Any Cracks People? – Copper Demolished

Forex Kong 3 Comments

For as many years as I’ve been trading and analyzing markets I’ve been told time and time again….watch copper.

If you want to get a good bead on global growth / demand just make the simple connection between “that” and the obvious need for copper.

You can’t build a building without it, you can’t build a car without it, and you can´t produce anything “electronic” without it so…..I guess that about covers it.

It’s been widely correlated with “China’s growth” as a general bellweather for continued expansion and development.

Nice chart below. I guess the default of China’s Chaori Solar Energy may have caught a couple of peoples attention. Smart people anyway.

Copper_Forex_Kong_March_2014

Copper_Forex_Kong_March_2014

The Aussie Dollar ( my synthetic “short China” play from a few days ago ) getting hammered as we speak.

And who’s saying that saying a keen eye on the fundamentals doesn’t do much for their trading?

Not me.

The Copper Connection: Reading Global Demand Through Base Metals

Let me be crystal clear here – when copper starts selling off like we’re seeing now, it’s not just some random commodity taking a hit. This is your canary in the coal mine for global economic demand, and right now that bird is looking pretty damn sick. The fundamentals don’t lie, and neither does the price action we’re witnessing across the base metals complex.

China’s Credit Crunch Spreads Beyond Solar

The Chaori Solar default wasn’t an isolated incident – it was the first domino. China’s credit markets are tightening faster than most analysts want to admit, and when credit dries up in the world’s largest commodity consumer, guess what happens to demand? It evaporates. The construction sector, which drives roughly 40% of China’s copper consumption, is already showing cracks. Property developers are scrambling for liquidity, and new project approvals have slowed to a crawl. This isn’t temporary weakness; this is structural demand destruction happening in real time.

The Aussie Dollar: Your Perfect Proxy Play

Australia’s economy lives and dies by China’s appetite for raw materials, which makes the Aussie Dollar the cleanest way to trade this thesis without getting into the commodity pits. The correlation between AUD/USD and Chinese growth expectations has been rock solid for over a decade, and right now it’s screaming recession. When you see copper breaking key support levels while the Aussie simultaneously tanks, that’s not coincidence – that’s confirmation. The USD weakness we’ve been discussing doesn’t apply here because this is about China, not America.

Industrial Metals Paint the Same Picture

Look beyond copper and the story gets even uglier. Aluminum, zinc, nickel – they’re all telling the same tale of weakening demand and oversupply concerns. The Baltic Dry Index, which measures shipping costs for raw materials, has been in free fall. When it costs less to ship commodities around the world, it means there’s less demand for shipping capacity. Basic economics, people. Global trade is contracting, and the metals markets are pricing in a prolonged slowdown that could make 2008 look like a minor hiccup.

Trading the Breakdown: Strategy and Timing

Here’s where the rubber meets the road for traders. Copper’s breakdown below $3.00 opens the door for a test of $2.70, which represents a critical psychological and technical level. If that fails, we’re looking at sub-$2.50 copper, which would be devastating for resource-dependent currencies and emerging markets. The play here isn’t complicated – short the commodity currencies, particularly AUD and CAD, against the majors. The technical setup supports this thesis, but more importantly, the fundamental story is rock solid. China’s slowdown is real, and China’s strategy is shifting away from infrastructure spending toward domestic consumption.

Smart money is already positioning for this reality. Hedge funds have been building short positions in base metals for months, and the commitment of traders reports show speculative longs getting absolutely demolished. When the specs capitulate, that’s usually when the real move begins. We’re not there yet, but we’re close.

The bottom line? Copper doesn’t lie about global growth, and right now it’s telling us that the world economy is in for a rougher ride than most expect. Trade accordingly.

China Tanks – But No Trouble In U.S?

Forex Kong 13 Comments

The biggest story in the financial markets this morning is the weakness in Chinese assets.

The Chinese Yuan sold off aggressively, experiencing one of the largest one-day declines since December.

Chinese stocks were hit hard with the Shanghai Composite dropping more than 2.8%. Although a significantly weaker trade balance triggered the selling, China’s central bank has been actively allowing the Chinese Yuan to weaken.

Chaori Solar Energy was allowed to default on its corporate bonds ( as suggested some days ago ) and is currently in the process of “selling its solar farms” in order to pay up.

Markets “appear” calm here this morning in a general sense but don’t get too comfortable as this has got some pretty far-reaching implications.

Emerging Markets “EEM” continues its downward trajectory, as the Japanese Yen looks to steady / make a move higher.

Shakey ground here “globally”……but of course – no trouble in U.S Equities.

How’s “short AUD” looking now suckas??

The Ripple Effect: When China Sneezes, Emerging Markets Catch Pneumonia

This Chinese Yuan weakness isn’t happening in a vacuum. We’re witnessing a coordinated unwinding of the carry trade that’s been propping up risk assets for months. When the People’s Bank of China deliberately weakens their currency, it sends a clear signal: export competitiveness trumps currency stability. That’s a massive red flag for anyone holding emerging market positions.

The Chaori Solar default might seem like a footnote, but it’s actually the canary in the coal mine. China’s willingness to let companies fail marks a fundamental shift from their previous backstop mentality. This is structural change, not cyclical noise. The implications cascade through every risk asset from here to São Paulo.

The AUD Short: Textbook Risk-Off Mechanics

That “short AUD” call is playing out exactly as expected. The Australian Dollar lives and dies by Chinese demand, and when Beijing signals weakness, the Aussie gets demolished. We’re seeing classic risk-off behavior: money fleeing commodity currencies and hunting for safety in the Yen and Swiss Franc.

The correlation between Chinese manufacturing data and AUD strength has been rock-solid for years. Now we’re watching that relationship work in reverse. Every tick lower in Chinese industrial production translates to AUD selling pressure. This isn’t a dip to buy – it’s a trend to ride.

Yen Strength: The Unwinding Begins

The Japanese Yen’s sudden steadiness tells us everything about global risk appetite. When traders start unwinding carry trades, the Yen becomes the beneficiary. We’re seeing the early stages of a massive deleveraging cycle that could run for months.

Bank of Japan intervention becomes less likely when global risk sentiment is driving Yen strength rather than speculative attacks. This creates a perfect storm: USD weakness combines with risk-off flows to push JPY higher against everything.

U.S. Equity Disconnect: The Final Frontier

The fact that U.S. equities remain unphased while emerging markets crater represents the last bastion of American exceptionalism. This divergence can’t persist indefinitely. When Chinese growth slows, global supply chains feel the impact within quarters, not years.

We’re witnessing the early stages of what could become a full-blown contagion event. The Shanghai Composite’s 2.8% drop might seem manageable, but it’s the velocity that matters. Single-day moves of this magnitude in Chinese assets historically precede broader market dislocations.

The Trade Setup: Positioning for Global Slowdown

Smart money is already repositioning for a world where Chinese growth disappoints and market rallies become suspect. The trade here is simple: short risk, long safe havens, and prepare for volatility.

Currency pairs to watch include USD/JPY for downside breaks, AUD/USD for continued weakness, and EUR/USD for European contagion effects. The Chinese Yuan’s managed decline gives Beijing export advantages while creating headaches for every other emerging market currency.

This morning’s “calm” in global markets is deceptive. Institutional flows take time to develop, and the real selling often comes after initial weakness creates technical breaks. We’re seeing the opening act of what could become a multi-month theme.

The key insight here is recognizing that Chinese policy makers are choosing competitiveness over stability. That decision reverberates through every risk asset, every commodity, and every carry trade currently on the books. The dominoes are falling – the question is how many will go down before we find a bottom.

If I Where A Terrorist…..

Forex Kong 2 Comments

You know…..if I was a terrorist I’d likely start with….well I dunno…maybe I’d start foreclosing on people’s homes and pushing them out into the street where they’d be much easier targets.

Then I’d likely put considerable effort into devaluing their currency making it even more difficult to survive and provide for their families, all the while outsourcing all the manufacturing / factory jobs overseas, choking off any opportunities for employment.

At that point it only makes sense to make health care completely unaffordable, and perhaps I’d allow my friends running the insurance companies to just get away with murder there as well.

I’d kill education and even if education “was” available it would be far to expensive as….you can’t have “smart people” running around now can you?

Terrorist hate smart people.

Then if that wasn’t “quite enough” I’d likely look to monitor every single cell phone and email correspondence country-wide, looking to gather that information and use it to the best of my abilities to “really put it to em”.

Then…..just sit back in some overly priced leather chair…..write myself a big fat bonus ( somewhere in the 7 figure zone ) grab a little popcorn and watch the show.

Or maybe if I got bored, I’d throw darts at a map and look to find some other country to go and do the same in.

Sound at all familiar?

I encourage any and all to pass this one around a bit as what the hell……..perhaps I’ve now made the list on some “surveillance opp” having used the word “terrorist” in the title.

No wait……no “real terrorist” would ever be so dumb as to do that.

I imagine I’m ok.

Forex_Kong_Face_Book

Forex_Kong_Face_Book

The Economic Warfare Playbook: Currency Debasement as the Ultimate Weapon

Let’s cut through the noise and talk about what’s really happening here. This isn’t some conspiracy theory—it’s economic warfare played out in broad daylight, and the currency markets are ground zero. When you systematically destroy the purchasing power of a nation’s currency, you’re not just affecting numbers on a screen. You’re strangling families, businesses, and entire generations who thought they were playing by the rules.

The Dollar’s Final Act

The USD has been weaponized for decades, but every empire’s currency eventually meets its match. We’re watching the endgame unfold right now, and USD weakness is becoming impossible to ignore. Central banks worldwide are quietly diversifying away from dollar reserves, and smart money has been positioning for this shift for months.

The Federal Reserve’s money printing circus has created a house of cards that’s starting to wobble. Every quantitative easing program, every emergency rate cut, every bailout for the banking buddies—it all comes at the expense of regular people who watch their savings evaporate while asset prices rocket out of reach.

Gold: The Anti-Terror Currency

While the financial terrorists play their games with paper currencies, there’s one asset they can’t manipulate indefinitely: gold. Central banks are stacking precious metals like their lives depend on it, because they know what’s coming. China, Russia, and other nations understand that when the dollar-denominated system implodes, you better have real money in your vault.

The manipulation in gold and silver markets is getting harder to maintain. Every paper contract, every futures market dump, every coordinated smash—it’s all becoming more obvious and less effective. Physical demand is overwhelming the paper games, and metal moves are going to catch most traders completely off guard.

The Employment Destruction Strategy

Outsourcing manufacturing wasn’t an accident—it was strategic economic sabotage. When you gut a nation’s production capacity and ship those jobs overseas, you’re not just chasing cheap labor. You’re creating dependency, destroying communities, and ensuring that an entire generation grows up without the skills to build anything meaningful.

The service economy they sold us as a replacement? It’s a joke. You can’t run a superpower on coffee shops and social media companies. Real economic strength comes from making things, mining resources, and producing energy. Everything else is just shuffling money around while the foundation crumbles.

Trading the Collapse

As traders, we can either pretend everything’s fine and keep buying the dips in a rigged market, or we can position ourselves for the reality that’s unfolding. The currency wars are intensifying, commodity shortages are becoming routine, and the central bank circus is running out of tricks.

Smart money is moving into hard assets, shorting overvalued paper instruments, and preparing for a monetary reset that’s going to catch most people sleeping. The signs are everywhere if you know how to read them: inverted yield curves, banking stress, geopolitical tensions escalating, and currencies swinging wildly as confidence in the system erodes.

This isn’t fear mongering—it’s pattern recognition. Every fiat currency system in history has ended the same way, and this time won’t be different just because we have fancy computers and slick marketing campaigns. The mathematics of compound debt growth versus real economic output don’t lie, and we’re approaching the inflection point where the whole charade becomes impossible to sustain.

Position accordingly, because when the music stops, there won’t be enough chairs for everyone still dancing to the central bank tune.

USD Waterfall – We All Knew This Was Coming

Forex Kong 10 Comments

At this point, having taken a lump er two holding a couple of USD longs, it’s an easy “stop and reverse” for a decent trade in the opposite direction.

We’re pretty much looking at the long anticipated “USD waterfall” here as of yesterday, and you’d not want to get stuck on the wrong side of that.

Pure play – a simple long both GBP/USD as well EUR/USD.

Otherwise, some great comments and ideas on AUD here overnight ( thank you everyone who’s contributed ).

As counter intuitive as it may seem I’m easy holding / adding short AUD while holding these two “new trades” for a shorter term rip. It doesn’t “appear” AUD has got much life left in her anyway.

USD looking to take out lows from October….and then some. Easiest play – long EUR and GBP.

 

The USD Waterfall: Playing the Reversal Like a Pro

When markets hand you a clear reversal signal, you take it. No hesitation, no second-guessing. The USD waterfall we’re witnessing isn’t some mystical market event — it’s pure momentum shift, and the smart money is already positioned. While retail traders are still scratching their heads about yesterday’s dollar strength, professionals are loading up on EUR/USD and GBP/USD longs like it’s Christmas morning.

This is exactly what separates winners from losers in forex. The ability to recognize when your thesis is wrong, cut losses fast, and immediately pivot to profit from the new reality. That “stop and reverse” mentality isn’t just trading jargon — it’s survival instinct in a market that punishes stubborn positions without mercy.

EUR/USD: The Clear Leader in This Rally

EUR/USD is showing the most conviction in this USD decline, and for good reason. European economic data has been quietly improving while US indicators start showing cracks. The euro’s been coiled like a spring for weeks, and now we’re seeing that energy release in spectacular fashion.

Technical levels are lining up perfectly for continuation higher. The pair just broke through key resistance that’s been holding it down for months. Every pullback is getting bought aggressively, which tells you institutional money is flowing in heavy. This isn’t some retail-driven squeeze — this is real money making real moves.

Target levels are clear: first stop around 1.0650, then we’re looking at 1.0750 before any meaningful resistance shows up. But honestly, if USD weakness continues at this pace, those targets might get hit faster than most expect.

GBP/USD: Riding the Pound’s Momentum

Cable’s been the surprise performer in this move, and that’s saying something. The pound’s had its share of drama over the past year, but when it decides to run, it runs hard. We’re seeing that classic GBP volatility working in our favor now, with each daily candle closing near the highs.

The beauty of trading GBP/USD right now is the clear trend structure. Higher lows, higher highs, and volume supporting every move up. The Brexit uncertainty that haunted this pair for years is finally in the rearview mirror, and traders are remembering why they used to love cable.

Risk management is still key here — the pound can reverse just as violently as it rallies. But as long as we’re holding above 1.2580, this uptrend stays intact. Next major level to watch is 1.2750, where we might see some profit-taking before the next leg higher.

The AUD Paradox: Why Shorting Makes Perfect Sense

Here’s where it gets interesting — holding short AUD positions while going long EUR and GBP might seem contradictory, but it’s actually brilliant risk management. The Aussie’s been living on borrowed time, propped up by commodities that are starting to roll over.

China’s economic slowdown is finally hitting Australian exports where it hurts. Iron ore prices are softening, and the RBA’s dovish pivot is becoming more obvious by the week. While EUR and GBP are benefiting from broad USD weakness, AUD is fighting its own fundamental headwinds.

This creates a perfect hedge scenario. If the USD waterfall continues, our EUR and GBP longs print money. If we get a surprise USD bounce, AUD likely gets hit hardest among the majors, protecting our portfolio. It’s not about picking sides — it’s about playing probabilities and managing risk across multiple scenarios.

October Lows: The Next Major Target

The technical picture couldn’t be clearer — USD is heading straight for those October lows, and probably beyond. When major support levels break with this kind of momentum, the follow-through is usually swift and merciless. This isn’t some gradual drift lower; this is liquidation-driven selling that feeds on itself.

Smart traders are already positioning for the move below October’s USD lows. Once that level gives way, we’re looking at a vacuum zone down to levels most analysts aren’t even discussing yet. The rally setup in risk assets makes perfect sense in this context — weaker dollar means higher everything else.

Bottom line: this USD waterfall is just getting started. EUR and GBP longs are the cleanest plays, AUD shorts provide the perfect hedge, and October lows are coming fast. Trade accordingly.

Storm Before The Calm – AUD Tornado

Forex Kong 5 Comments

You’ve really got to shake your head when the “poster child currency for risk” continues to move higher in the face of looming credit crisis in China, possible war in Eastern Europe and a “soon to be announced” USD debacle in the states.

Or do you?

Doesn’t it make the most sense to “those of us in the know” that things generally go “higher” before going “lower”?

I mean really…….markets don’t “crash” from the lows! Markets fall from the “highs”!

Currencies really being no different.

I imagine in a couple of days ( or perhaps even within a couple of hours ) you can look back on this and say “Ya ya Kong was early as usual…damn! That Australian Dollar really put up a good fight there near the end”.

And that will be that.

At Zero Hedge:

UPDATE: It’s happened – China has suffered its first domestic corporate bond default as Chaori fails to meet interest payments on schedule and rather more surprisingly failed to receive a last-minute mysterious or otherwise bailout…(read more)

The AUD Rally: Classic Pre-Crash Psychology in Motion

What we’re witnessing with the Australian Dollar isn’t market strength — it’s textbook bubble behavior playing out in real time. Every seasoned trader knows this dance by heart: assets climb their wall of worry right up until the moment gravity remembers how to work. The AUD’s defiant march higher against a backdrop of systemic risk signals we’re in the final innings of this particular game.

China’s Corporate Bond Disaster: The Domino Effect

The Chaori Solar bond default isn’t just another corporate failure — it’s the crack in the dam that reveals the structural rot underneath. When China’s miracle growth machine starts spitting out defaults, the ripple effects hit commodity currencies like a freight train. Australia’s entire economic model depends on feeding China’s industrial appetite, and that appetite is about to get a lot smaller.

Here’s what the mainstream financial press won’t tell you: this default represents a fundamental shift in Chinese credit policy. Beijing is finally allowing market forces to discipline bad debt, which means the days of infinite bailouts are ending. For the AUD, this spells disaster. Every iron ore shipment, every coal export, every LNG tanker heading to Chinese ports becomes a bet against China’s ability to maintain its construction frenzy.

Risk Currency Mechanics: Why AUD Always Falls Hardest

The Australian Dollar earned its reputation as the poster child for risk appetite through decades of reliable correlation with global growth expectations. When investors feel optimistic about the world economy, they buy AUD. When fear creeps in, they dump it faster than a hot potato. This isn’t coincidence — it’s mathematical certainty based on Australia’s resource-dependent economy and relatively small, liquid currency market.

Right now, we’re seeing the final euphoric push before reality sets in. Smart money is already positioning for the reversal while retail traders chase momentum. The USD weakness trade that’s been supporting risk currencies is about to reverse hard when credit markets start seizing up globally.

Eastern European Tensions: The Geopolitical Wild Card

Geopolitical risk has a funny way of making investors remember why they hold US Dollars in the first place. The brewing tensions in Eastern Europe represent more than regional instability — they’re a direct threat to the post-Cold War economic order that made carry trades and risk currencies profitable.

When bullets start flying, or even when they might start flying, capital flows reverse overnight. The AUD becomes toxic waste in a portfolio that suddenly needs safe haven exposure. History shows us this pattern repeatedly: geopolitical stress plus credit concerns equals currency massacre for anything that isn’t USD, EUR, or JPY.

The Perfect Storm: Timing the Reversal

Multiple catalysts are converging to create the ideal setup for an AUD collapse. China’s credit crunch, potential European conflict, and America’s own financial reckoning form a trinity of destruction for risk assets. The higher the AUD climbs now, the more spectacular the fall becomes.

Professional traders understand that markets make their biggest moves when the majority is positioned wrong. Right now, positioning data shows extreme bullishness in risk currencies just as fundamental conditions deteriorate rapidly. This disconnect never lasts long — physics eventually wins over psychology.

The smart play here isn’t trying to pick the exact top, but rather positioning for the inevitable collapse while everyone else celebrates new highs. When this reversal begins, it won’t be gradual or polite. Market bottoms require violence to shake out weak hands, and AUD is about to provide plenty of it.

The Australian Dollar’s current strength is borrowed time dressed up as market confidence. When reality reasserts itself �� and it always does — this poster child for risk is going to remind everyone why defensive positioning matters more than chasing momentum.

Emerging Markets Chart – Update On EEM

Forex Kong 6 Comments

Remember this chart from back in October?

EEM_Emerging_Markets_Oct_2013

EEM_Emerging_Markets_Oct_2013

I had suggested that the emerging markets ETF “EEM” was having trouble breaking out to new highs while the SP 500 was leaving most charts in the dust right?

So……now let’s have a look at it “again” while the SP 500 has “the October highs” way back in the rear view mirror.

In a healthy global economy, shouldn’t those emerging markets be moving higher / breaking out as well?

EEM_Emerging_Markets_March_2014

EEM_Emerging_Markets_March_2014

The “proposed taper” has obviously had an effect on EEM as we’ve discussed here several times before ( U.S dollars pulled out of these emerging economies in preparation for rising rates / economic contraction etc…) so…..the question begs to be asked.

Is the U.S Equities market “literally” the last one to fall?

This very well could be the “elusive blow off top” as not a single data point out of the U.S ( or the planet for that matter ) suggests any kind of meaningful recovery. 

I’m sure I’m guilty (as we all are) in  “seeing what I want to see” but seriously….how far can U.S Equities “diverge” from what’s “really going on”?

Food for thought if nothing else.

The Divergence Blueprint: What History Tells Us About Market Endgames

When markets diverge this dramatically, they’re screaming something most traders refuse to hear. The U.S. equities market isn’t operating in a vacuum — it’s operating on borrowed time. Every major market cycle has shown us that when regional markets start decoupling from global reality, the final act is already written.

The EEM breakdown isn’t just a chart pattern. It’s a canary in the coal mine, singing a song about capital flows that should terrify anyone still betting on American exceptionalism. Emerging markets are where the real money goes when growth is genuine. When they’re bleeding while the S&P parties, you’re watching artificial life support in action.

The Taper Trap: Why Dollar Strength Is Actually Dollar Desperation

The proposed taper created this mess, but the underlying disease runs deeper. Dollar strength isn’t a sign of health — it’s a sign of panic. When every other currency and market gets crushed while the dollar rallies, that’s not dominance. That’s the last flight to what looks like safety before the whole system implodes.

This is exactly what we saw in previous crisis cycles. The dollar gets stronger right before it gets absolutely demolished. The pattern is so predictable it’s almost boring, yet traders keep falling for the same trap. They mistake temporary strength for permanent power, and that mistake costs fortunes.

Smart money knows that USD weakness is inevitable when the fundamentals are this rotten. The question isn’t whether the dollar will fall — it’s how spectacular the collapse will be.

Emerging Markets: The Truth Tellers

Emerging markets don’t lie. They can’t afford to. When money gets tight, when growth gets scarce, when the global economy starts choking on its own debt, emerging markets feel it first and feel it hardest. They’re the economic equivalent of a seismograph, picking up tremors that the developed world is still pretending don’t exist.

The EEM chart is telling us that global growth is dead. Not slowing, not pausing, not taking a breather — dead. While U.S. indices climb higher on nothing but Fed liquidity and share buybacks, the rest of the world is already pricing in the recession that American markets refuse to acknowledge.

This divergence can’t last. Physics applies to markets just like everything else. What goes up without fundamental support comes down with fundamental brutality.

The Blow-Off Top Mechanics

Every blow-off top looks identical when you strip away the noise. Final phase buying becomes increasingly desperate and disconnected from reality. Volume patterns shift. Quality deteriorates while prices soar. The divergences multiply until the whole structure becomes unstable.

We’re seeing all these signals now. The S&P keeps grinding higher while earnings growth stalls, while international markets crater, while economic data screams recession. This isn’t strength — it’s the market equivalent of a cartoon character running off a cliff, suspended in mid-air for that brief moment before gravity takes over.

The smart money is already positioning for the fall. They’re watching these divergences and building positions that will pay off when reality finally catches up to price action. The market rally might have legs for now, but legs get tired.

What Comes Next: Preparing for the Convergence

When these divergences finally collapse, they don’t do it gently. The convergence will be violent, swift, and profitable for those positioned correctly. U.S. equities will fall to meet emerging markets somewhere in the middle, and that middle is a lot lower than most people want to acknowledge.

The signs are everywhere. International capital flows, currency pressures, commodity weakness, credit stress — it’s all pointing toward the same inevitable conclusion. The only question is timing, and timing in markets is always harder to predict than direction.

But direction? That’s crystal clear. This divergence will end, and when it does, being positioned on the right side of that convergence trade will separate the professionals from the tourists.