currency trading

Forex Trading – Tuesday Morning Update

Forex Kong 4 Comments

I’ve “scooped” 3% overnight in a number of “long USD” trades, the largest of which being NZD/USD ( you were alerted to on Sunday night, then again via twitter last night ) as well long USD/CAD and short GBP/USD.

These pairs are still very much in play , only that these days when I see money on the table – I just flat-out take it. The short-term tech will kick in here soon, as we again can likely look to Thursday as the market pivot.

The Yen (JPY) has shown considerable strength in the past 24 hours, as every JPY related pair has seen reasonable moves ( a couple 100 pips even ) over the past few days. I still hold a couple trades ( still in the weeds ) long JPY.

The Insanity Trade is still holding as well, and in case any of you looked into following this pair (EUR/AUD) over the past week now – I hope you’ve seen “the light”. Dipping as much as 150 pips in a matter of hours, then back again etc….still hanging in profit but a wild ride if you’ve leveraged / are trading too large. Insanity Trade 2 has still yet to get picked up.

Otherwise…..another hum drum Tuesday on deck here today, as SP/ U.S Equities have certainly “come off” but nothing to write home about.

Gold continues to grind anyone silly enough to think they can actually “target an entry price” on an asset worth 1300.00. 30 dollar moves are nothing, and pointless to debate.

Good luck out there.

 

Trade Ideas For NZD/USD – Overbought

Forex Kong 2 Comments

I’ve got my eye on the “Kiwi” regardless of which pair, for the pure reason that it looks severely overbought.

Overbought –  A situation in which the demand for a certain asset unjustifiably pushes the price of an underlying asset to levels that do not support the fundamentals.

Now, The Bank of New Zealand has recently made mention of a possible “hike” in interest rates (which has most certainly been the tail wind behind the latest advance) but the Kiwi still represents a “risk related currency” and is subject to large moves when appetite for risk wanes.

Have a look at the daily chart and see how “84.00” looks like a solid area of resistance.

NZD_USD_SEPT_2013_Forex_Kong

NZD_USD_SEPT_2013_Forex_Kong

Now, “86.00” doesn’t look completely out of the question, but with the usual “staggered mutli-order” approach, I’m seeing the risk vs reward looking pretty good for a short up here.

Another full day’s downward movement will likely trip the Kongdicator ( as I am free wheeling here on this one so far ) so we’ll keep our eyes peeled for that.

Kong….gone.

 

It's A Currency War So – War On!

Forex Kong 5 Comments

It’s easy to get caught up in the day-to-day “up’s n downs” of the markets.

A couple of days go by, you make a buck , then you lose a couple. Then slowly but surely the intraday / micro stuff “becomes your world”. Obsessed with the tiny “zigs and zags” that make up your charts, confounded by the “barage” of daily news – you’ve lost touch. You’ve lost your focus.

Have you forgotten?

Have you forgotten that we are smack dab in the middle of one of the most vicious currency wars of the past few decades – let alone your entire lifetime??

And you wonder why thing aren’t going so well.

A number of prior posts come to mind, in particular: https://forexkong.com/2013/01/31/2013-you-will-never-trade-it/ but that’s beside the point. The point is…..you’ve got to get a handle on you environment before you go running off into the sunset!

The zigs and zags will always be there. It’s the environment that changes.

Do you get all excited about going fishing in the rain?

That being said Japan has no idea what to do with respect to the Fed’s move yesterday, as markets are clearly stunned. My printing press , your printing press etc.. It’s “war on” people – no question about it.

In general we are seeing “all fiat currencies” falling, and it’s only a matter of “which is falling more” when considering your trade plan.

There is no “strength”.

Insanity Trade 2 – Updates And Add Ons

Forex Kong 7 Comments

In case you’ve forgotten about it. The “insanity trade” is still very much alive. So much so in fact,  that I want to (not only bring you up to speed) – but also introduce……..Insanity Trade 2!

Not much different from the original “insanity trade” we’re talking about EUR/NZD this time.

Ok. Wrapping your head around the “reasoning” or the “fundamentals” behind these trades is a stretch for even the most experienced of traders. Pitting the Euro against AUD and now NZD?  What the hell? Why? How? What could you possibly be thinking about “fundamentally” to consider such a bizarre trade / pairing? Now?

I’m not going to tell you.

These are the Insanity Trades remember! You need to be insane to take them, and possibly insane to understand them!

I am placing an order long EUR/NZD a full 100 pips above the current price action – my order to buy is at : 1.6260

The current insanity trade is currently sitting EXACTLY BREAK EVEN at 1.43 ( what? you think I sold / freaked on the Fed? Hell no! ) – It’s an insanity trade.

That’s it. Do not try this at home.

Kong….in”song”?

QE5 – Rain On My Parade

Forex Kong 19 Comments

It’s wet here today. Really wet.

Like there’s a two foot deep lake out front of my place…with cars stalled in it “type” wet.  Hurricane “Ingrid” blew thru early in the week, and a smaller tropical storm has now developed in her wake. As with the weather here in the Yucatan “so it goes” in financial markets as well. Having missed one of the largest one day moves in USD in the history of my career “sitting out” – I can honestly say ” I’ve had better days”.

So there it is. Rain on my parade.

Bernanke “toes the line” and doesn’t even blink with the smallest suggestion of tapering. Zip. Zero. Nada.

The U.S Dollar absolutely crushed with one of the largest one day moves lower I’ve ever seen ( all be it sitting here looking to smash my computer screens to bits). Epic dollar destruction. Continued printing. Ponzi scheme “on”.

You’d expect that anyone in there right mind would perceive this as “very , very , very bad news” as obviously, if the U.S cannot afford even the “tiniest of tapering” you’ve gotta know the trouble runs far deeper than most imagine. This is bad news. It’s bad, bad , bad news – but what’s a guy to do?

You’re supposed to go back to work , mind your own business, but stay tuned to that T.V for further updates on the destruction of your economy and currency.

If I was “modestly bearish” some time ago, I’m now OUTRIGHT growling now, as this has now passed “all levels of reason”.

Trade ideas to follow but as it stands….we’ll wait to see reaction to this over the next “day or two” and stay open to the idea of a solid dollar bounce.

 

Commodity Currencies – Trade Up

Forex Kong 24 Comments

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.

 

Forex Daily Market Commentary – Not

Forex Kong 4 Comments

Daily market commentary gets a little dry for me.

With Wednesday’s Fed announcement looming, it makes little sense delving into too much else – short of suggesting patience, patience, and oh yes…….a little more patience.

The news of Larry Summers dropping out of the running for the “New Fed Chairman” has hit news headlines across the globe, yet I’ll bet you 50 bucks you had absolutely no clue “who he was” – or would have cared much anyways. Me neither frankly.

When we step back and consider that Ben Bernanke has pretty much filled the role as ” the most important and influential man on planet Earth” for some time now – would you want that job?

Kong appointed Chairman of the U.S Federal Reserve – could you even imagine?

Forex trading is stressful enough at times, and I’m always up for a new challenge – but could you actually imagine walking into the office on your first day as Fed Chairman and just picking up the ball and running with it? No thanks.

As it stands, the word on the street is that this “Janet Yellen” is all for the printing presses ( surprise , surprise right?) so obviously she fit’s the bill quite nicely. After all – why on Earth would the Fed ever jeopardize loosing their biggest client ( the U.S Government) to some “half cocked Obama boy” like Summers. NEVER GONNA HAPPEN.

This gal is deep , deep , deep in someone else’s pockets – and I don’t mean that in a good way ( could that be in a good way? ).

Personally, I’m not particularly “thrilled” with things being on hold here any longer. The gap in USD action has provided a couple of scalp opportunities  but has also done a great job of further “blurring” further USD direction. Most charts / asset classes I follow suggest “some kind of USD bounce” but this tempered with the fundamental fact that Yellen is 100% on board with money printing.

The market’s reaction on Wednesday is really only a small part of the puzzle, as debt ceiling / default issues come next.

When does it end?

It doesn’t.

Raise Cash – Don't Be A Hero

Forex Kong 17 Comments

I’ve touched on this a couple of times before.

When trading ahead of what we in the biz refer to as a “risk event”, you’ve seriously got to question “why” you’d look to take on any additional risk in “getting it wrong”. The fact of the matter is – you’ve got absolutely no clue how it’s going to pan out, and you’ve got no good reason to “trade it” if not looking at it as a complete and total “roll of the dice”. You want to gamble – fine. Take a small percentage of your account, have fun with it, take your chances and hope for the best.

That’s “NOT” how I roll.

This Wednesday’s Fed meeting, and expected announcement of reduced stimulus,  is undoubtedly the most highly anticipated and potentially dangerous “risk event” we will have seen in markets in at least the last couple years.

You cannot afford to be on the wrong side of it.

Reading/researching over the weekend , I’ve come to the conclusion that the bond market has clearly priced in the news, but that U.S equities haven’t moved a muscle, and that forex markets are hanging in wait.

I will look for any “and every” opportunity over the next 72 hours to eliminate exposure, take profits, reduce positions, sell into strength etc in order to “ideally” be as close to 100% cash for Wednesday afternoon’s announcement.

This is trading not “fortune-telling”, and I don’t give a rat’s ass which way the market decides to go “post Bernanke” – only that I’m going along with it.

We’ve got fron Sunday night til Wednesday afternoon. Raise cash – don’t be a hero.

U.S Employment Numbers – A Real Shame

Forex Kong 4 Comments

Once again we find ourselves here on Thursday morning, awaiting  the release of “the unemployment claims” data out of the U.S. I know the number will be dismal, there’s no question of that………only the question of how markets will interpret the news.

If history is any record, it really doesn’t seem to matter how many “more people” get in line to file unemployment claims each week as U.S equities continue on their grind.

I would “like to think” – this time will be different.

A disappointing number “should” propel USD upwards and U.S equities down but of course….that’s what “should” happen.

Overnight’s “risk off trade” gathered some traction with JPY moving higher, and a brisk sell off of AUD – as expected.

I am 100% out of USD related pairs as of yesterday / last night, and well in profit on the “insanity trade”.

We’ll let the dust settle here this morning….and continue forward with a “now USD long bias” starting to materialize across several currency pairs.

More trades….later.

 

Old School Correlations – Late Night Thoughts

Forex Kong 7 Comments

I’ve been watching the market like a hawk these past 2 days.

I’d spotted the weakness in USD, then in turn the Japanese “Nikkei” pushing up to its prior level of resistance…then it’s rejection, discussed the likelihood of the Japanese Yen (JPY) taking on strength in times of “risk aversion”, and just in the last few hours suggested that commodity currencies are under pressure.

I’ve taken on the “insanity trade”, and have been actively posting just about everything I can ( here and via Twitter, Google+, Linkedin and Facebook) over the past 48 hours as to what I’m looking at – and what I’m up to.

So what the hell  – here’s another nugget.

I’ve exited all “USD short” positions, and am currently looking at “risk off” type positioning via “long JPY” ideas, as well a couple other “crafty variations on risk” short AUD as well NZD.

The one variable I’d not really not “nailed down” this time around, was weather or not USD would “fall along side risk aversion” ( as it has several times these past 2 quarters ) OR if the old school correlation of “risk off = USD up” might rear its ugly head once again.

Global “risk aversion” WILL have USD as well JPY shoot for the moon as “safety is sought” on a macro / awesome / unbelievable / nut bar / chaotic / monumental level – while “risk is sold” in equal fashion.

I’m pleased to be free of any USD related trades, and almost hate to say it but…….we “could” ( and I do say “could” ) be close.

Kong “debating long” USD.

JPY pairs are most certainly rolling over here as suggested with Nikkei making it’s daily “swing high”. Commods look weak so that’s pretty much a given trade. What remains to be seen is where we fit the good ol US of D. My “hunch”? – We’ll have to wait a day for that.