Author: Forex Kong

Largest One Day Gains Of My Career

Forex Kong 21 Comments

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 Ultimate Risk Off Trade – EUR / AUD

Forex Kong 5 Comments

Of all the currency pairs I track and trade – there is no more a beast than EUR/AUD ( The Euro vs The Australian Dollar).

This currency pair as well as it’s sister pair EUR/NZD makes some of the largest intraday moves of the entire currency world “if not” theeee largest moves, and hav the ability to devastate an account – literally within minutes.

Trading this pair takes acute knowledge of “fundamental under currents” in currency markets, as the pair functions as the “ultimate risk off / on trade”. Get it right, and you can see crazy profits practically overnight…get it wrong and watch your account go to zero. It’s truly a beast and commands the utmost respect. I would argue that this pair is the most volatile / high risk / strange / powerful / beautiful monster in the entire currency world. I love it. I fear it. I trade it.

NEVER TRADE THIS PAIR WITH A FULL POSITION AS THE DAILY VOLATILITY WILL WIPE YOU OUT IN A HEARTBEAT.

I am talking about several hundred pip moves ( up and down ) within a single days trading, and as much as “thousand point moves” weekly. Two hundred pip intraday action is totally normal, so for any of you “newbies” hoping to catch a quick buck – you can forget it. The stops needed to trade the pair are larger than your account balance.

Imagine EUR/AUD like a big red button you’ve been presented with, and asked if “you should push it or not” -the temptation is there, but equally the risk.

I am currently long both EUR /AUD as well EUR/NZD and suggesting that risk is – OFF.

 

Forex Trading In India – Rupee!

Forex Kong 6 Comments

India is about 1/3 the size of the United States, yet it is the second most populous country in the world, with a population of 1,166,079,217 – (wow that is packed). India is the largest democracy in the world.

The Indian Rupee has recently taken a considerable hit vs USD and looks to be setting up for a bit of a rebound.

I don’t trade it ( in fact my broker doesn’t offer the pair ) but I did find it interesting , to pull up a chart of USD/INR which does look very overbought.

There has been alot of talk that “forex trading” is actually illegal in India, but after doing some looking around I’ve come to learn that the actual “trading activity” isn’t illegal as such –  but that there are considerable restrictions on “how much” money can deposited and traded.

Apparently it “is” illegal to take Rupee out of India, but this is only loosely enforced.

For anyone out there that “does” have an opportunity to trade Rupee………Rupee!

 

 

 

Taper Talk – Believe It Or Not

Forex Kong 1 Comment

Doesn’t it always seem to go like this.

Just when you feel you’ve got things ironed out, and have put some larger plans in motion – sure enough (it never fails) something pops up that starts to get you thinking again – wait a minute….have I got this right?”

The Fed’s “taper talks” have certainly been working their magic in that regard, as the Internet now buzzes with new analysis on the U.S Dollar, fancy charts with arrow pointing up , up , up and suddenly (practically overnight) the U.S data is “all positive” and most certainly the Fed will begin “making its exit” in September. Done deal. As simple as that.

Ok – well…….what does that mean to the average investor?  Wasn’t it just last week that “more QE” is what the street was looking for? This being a “fed sponsored rally” does that mean the rally is ending? Or is “tapering” a good thing for markets?

The orchestration is truly brilliant in its design, and if you stopped to ask 10 different people on the street what it actually means to them – I’m sure the answers would be a resounding “I have no frickin idea” right across the board. Keep people confused. Keep things cloudy, and let the market do what it’s designed to do.

At this point it’s really a matter of “if you actually believe the talk or not” and how you would then go about positioning yourself. I for one am quite confident that it’s actually the opposite which is soon to take place – and the Fed will be introducing additional measures to keep interest rates from rising, and to keep the dollar tamed.

“QE 5” I’m calling it.

Either way you cut it – “Taper talk” is the current riddle to decode.

I wonder what’s next?

Big Price Moves On Low Volume – How?

Forex Kong 10 Comments

If you think about price itself being the “mind” of the market – consider that “volume” is the heart.

Try to think about volume as the amount of people behind a given move, or even the “emotional excitement” (or lack there of) surrounding  moves in a given asset. Volume measures the level of commitment in a move, and lets you know how many people are behind it.

When an asset makes a considerable move in price on very low volume ( as USD has now done over the past two “holiday” days ) we deduce that very few traders /investors  are actually involved (relatively speaking) – and that the movement lacks the commitment one would like to see when looking for momentum.

Simply put – if there are only buyers (and in this instance to “few” sellers) an asset can make considerable leaps in price with little actual participation. One could argue that on low volume days markets aren’t exactly balanced, so it’s not at all uncommon to see dramatic movements in price – even though fewer people are actually involved. Counter intuitive yes. Glad you’ve now got it under your belt? Excellent.

A valued reader asked me just today,  if I was considering throwing in the towel on my USD shorts. A valid question considering the giant leap in price we’ve seen here today. Hopefully,  now that you as well have the ability to factor “volume” into your analysis – you’ll be able to ride out a couple of these instances and stick to your guns / trust your instincts and not let the market push you around.

All good in Kingdom Kong – I haven’t even blinked.

Have a great weekend everyone.

Kong…..gone.

 

Japanese Candle Sticks – Get To Know Them

Forex Kong 7 Comments

Every trader has their own “favorite type” of technical analysis to apply when viewing charts, and that’s great. However it’s been my experience that having only one “go to analysis tool” is generally not enough to get an accurate read on things – technically speaking.

You need to see things from several perspectives and apply your knowledge of at least a couple different methods of analysis in order to make sense of it all.

I follow price action almost exclusively – and have very little in the way of other “indicators” on my charts short of the “Kongdicator” (my proprietary short term tech tool) which “does” essentially follow pure price action.

Japanese candles are a very large part of my “graphical / visual” evaluation of markets action as with a simple glance, one is able to deduce:

  • The high of the given time frame
  • The low of the given time frame
  • The opening price of the given time frame
  • The closing price of the given time frame

*and even more importantly – the “difference / variance” in price over time – purely in a visual context.

So when you see a candle ( your eyes get so used to identifying them over time) that suggest to you “hey! in the last 4 hours price has jumped dramatically (or perhaps the inverse) – you take notice!

Google’em – there are piles of excellent websites outlining Japanese Candles – and how to use them!

$USD Weakness – Here's Your Chance

Forex Kong 20 Comments

I wish things moved a lot faster at times too, as that I wouldn’t continue to sound like a broken record here….but it is what it is.

You may find yourself watching the daily levels on a given stock market index as means to gauge how things are going, or perhaps you watch bonds. Unfortunately for me, the U.S dollar with its predominant role as the world’s reserve currency is something I need to remain focused on. It does get a little boring at times – no question about that BUT! If you’ve tuned in over recent months – the accuracy of trade entries and market timing has been strong enough to keep in beers and tacos through some pretty rough patches.

Here we sit.

As suggested yesterday my eyes are keenly focused on USD, and in turn every other asset class as these days “even more than ever” – a lot hinges on where we see the dollar going. In fact – EVERYTHING hinges on it these days.

Hopefully I can find more interesting things to talk about in coming days, as USD looks to be doing exactly what I expected it to do here at these levels. USD is reversing and if today’s action is any indication – of the correlations / options I laid out yesterday – Stocks look set to reverse along with it.

I’ve held a number of short USD trades for several days now as my “round 1” entries where at least a couple of days early. I’ve traded very small and have every intention of just letting this run it’s course – and adding to existing positions as my direction confirms.

You are going to see some very, very , very strange moves in Forex markets here on this turn as a number of “cross currents” come into play – that will challenge any measure of logic. Imagine USD heading lower as well stocks in what would appear to be a risk off move…coupled with AUD and NZD moving higher? That is nuts.

Trading The Week Ahead – Forex, Gold , Stocks

Forex Kong 32 Comments

This is going to be a huge week and you’ll need to be ready.

Regardless of which asset class you’re currently trading or holding – I strongly suggest that you’ve got your eyes open and your “fingers on the button” as my expectations for the coming week include fireworks, tidal waves , meteorites and circus clowns.

As early as Tuesday, I’ve got it that things are going hard in one direction or another, and at break neck speed may clean out your accounts or make you filthy rich. If the week goes by trading flat – I will post video of myself eating an entire handful of raw Habanero peppers, and subsequently dieing shortly there afterwards.

The most significant concern will be that of the “existing correlations” and weather or not this “proposed turn” will have them turn on their heads – or continue as they have recently.

Let’s have a look.

  • USD is going to turn lower here, the question is “will stocks turn lower along side USD”?
  • USD is going to turn lower here, and another question is “will that in turn have JPY move higher”?
  • USD is going to turn lower here, and yet another question is “will gold finally find support and move higher”?

I think you’ve gather how I feel about the U.S Dollar – as I have absolutely no question at all that it will head lower, but am concerned that the “flipside” of this move “could” go like this as well:

  • USD down and US stocks up ( if a “true” risk rally develops then we’d also see commod currencies head for the moon too.)
  • USD down AND JPY down ( if a “true” risk rally develops then BOTH safe haven currencies will be sold and again the commods will head for the moon.)
  • USD and Gold up ( in this case if a “true” risk rally develops then the normal correlation as to the value of gold in dollar terms may finally make a showing.)

So – all eyes on the U.S Dollar here as everything else will quickly come into focus as soon as we see the turn.

Frankly, I’m on the fence about it and can’t say for certain which way things are going to go – but will be watching very, very closely and will post / tweet literally at the very second that I confirm the move.

 

 

Should I Buy Gold Kong?

Forex Kong 6 Comments

I get this question a lot – a whole lot. Should I buy gold? Is gold going back up?

Interestingly, if you zoom out to a much longer time frame chart (maybe a weekly and even a monthly chart) you’ll see that Gold has suffered recently – yes…..but is “still” in an uptrend (pending it slows down and looks to reverse in and around this area sometime soon).

I would have to consider 1155.00 as a level of considerable importance and significance.

But please keep in mind (as we’ve discussed with respect to long-term charts) that turns on a weekly chart can take “literally” weeks, and weeks to stop then consolidate and finally turn to reverse course. Even at that ( considering we are looking at an asset that costs 1190.oo dollars) a hundred dollars here, a hundred dollars there – these aren’t “large swings” percentage wise. Putting an exact number on it is a fools game.

More important than the question of “should I buy gold?” would be the matter of “how do I buy gold?”

Don’t charge in there looking to call it a “trade” as you’ll likely miss on nailing an entry, but rather “build” a position over time “smoothing out” this volatility and not sweating the 50 buck swings.

Patience is your greatest asset here. You really can’t rush this one.

Sideways Trading – How To Survive

Forex Kong Got something to say?

You can pull up a chart of virtually any JPY cross but lets look specifically at USD/JPY on a 1 hour time frame.

Looking back from  June 20 to present ( so lets say 5 or 6 full trading days ) you can clearly see that price has ranged “sideways” within a very small range of around 100 pips. If you’d have been lucky enough to “short” at the exact top of the range….or gone “long” at the exact bottom  – you may have been able to squeeze off a decent trade depending on your TP ( take profits) and who know’s maybe you grabbed 25 – 50 pips somewhere in there. Great.

What most likely happened ( as with any most trade systems ) is that you got confirmation to enter about 25 pips late on either side, and ended up entering either long or short dead smack in the middle – and have now spent a full week wondering daily – “Is this thing going up or down?”.

For the new comer there really is no easy answer here. The smaller time frames will grind both your emotions and your account to dust. The absolute best suggestion I can make is again -TRADE SMALL.

Now pull up a daily of USD/JPY – Is “that” trading sideways?

Here you’ve got alot more information to go on – a downward sloping trend line, horizontal lines of support and resistance, you’ve got lots of historical price action to look at, as well all the  longer term moving averages and indicators you may also have on your screen.

Trade small over time and look to the larger time frames for direction –  and ideally you WILL survive the dreaded “sideways”.