currency trading

Back To Trading Forex – War Averted

Forex Kong 1 Comment

Trading forex in the coming week should prove to be volatile to say the least. We’ve got all kinds of data coming out, as well whatever “monkey wrench” the U.S cares to throw into the mix “war wise”.

Overnight China’s manufacturing Purchasing Managers’ Index (CPMINDX) was 51.0 in August, a touch better reading than expected – which could give AUD a boost. Similar reports are expected from both the Eurozone as well U.K, as well the European Central Banks policy meetings on the 5th.

Assuming that “no war” should be generally a positive for markets, I’m sticking to the theory that we will see continued weakness in USD in the coming week, leading into the “war decisions” scheduled for September 9th.

I imagine that whatever decision U.S Congress makes – this should provide an excellent “pivot” in markets, and likely provide the “needed catalyst” to get things moving in a more decisive manner.

In line with my originally suggested time line “mid September” looks to be an excellent time for USD to make a reasonable bounce, lining up quite perfectly with the typical flow “towards US Dollars” in times of extreme fear / risk aversion.

Trade wise my expectations are relatively low next, as I will likely be taking profits on just about anything and everything as I see them come in – looking to get to 100% straight cash for September 9th area, then “possible reversal” of intermediate time frame and “possibly” even fundamental market view.

YOU DON’T WANT TO GET CAUGHT SHORT THE U.S DOLLAR IN TIMES OF GLOBAL RISK AVERSION, AS THE MOVES CAN BE VERY SUDDEN AND VERY LARGE.

USD Surge – A Test Of My Resolve

Forex Kong 1 Comment

There will come a time in our “not so distant future” that I will shift my trades and longer term strategy to consider a strong USD. Not today though.

I ‘d originally posted / suggested that perhaps some time late Sept, that USD would finally find its near term low – and “do what currencies do” making a solid move in the opposite direction. The surge in USD buying over night will have taken out a large number of smaller players , and has also left me in the red on a couple of outstanding trades. Is this the start of the “real move” higher in USD? I don’t think so.

Yes we’ve seen a trend line breached, and yes the “likelihood of war” could certainly be the event that spurs true safe haven positioning ( of which USD still acts as the world’s reserve currency so…. ) – this still remains to be seen.

Does the “suddenly positive” data released this morning on U.S GDP as well unemployment claims have anything to do with it?

Would the fact that “gold has swung low on a monthly chart” ( a fairly significant dynamic when price has moved higher than last month’s high) provide an interesting point / price area to “shake the tree” a bit? Makes sense to me.

The key is not to make any big decisions until the picture is made clear. If a single day’s trading doesn’t go your way, drastically affecting your account balance – you’re trading far to large / leveraged.

We don’t do that around here.

I’ll let this “sell back off” and see where things sit later in the day / evening. My “hunch” is we’ve seen a lil surge/wiped a pile of small traders off the map, and that things will continue in the same direction.

 

 

Fed Buys 5.1 Billion And Market Tanks

Forex Kong Got something to say?

Seriously.

The U.S Federal Reserve just made 5.1 BILLION DOLLARS in treasury/bond purchases today alone…….5.1 BILLION DOLLARS worth of straight up “funny money” injected into the system today alone.

Markets tank.

Short and sweet here this morning.

If you’re buying this I’ve got some primo swamp land in Florida I’d love you to take a look at!

I’m up 4% on “risk off” here.

How you stock bulls makin out?

Getting smashed….and don’t let’em tell you otherwise.

Central Banks Love Wars – Syria No Different

Forex Kong 4 Comments

If there was ever a way for Central Banks to “rake in the dollars” it’s assisting / financing governments in going to war. Central Banks love war.

History shows us that “The Rothschild’s” of London where very much involved with financing “both sides” of the civil war in America, not to mention ( some dare say ) “creating” the war itself as means to divide this “prosperous” new economy.

I’m no historian but you can google it to your little heart’s content – I’m not making this stuff up.

What better way to “bring in the bacon” than finance a war don’t you think? You’ve got the people rallied behind you, you’ve got the “bad guys” up against a wall – and you’ve got all the military backing to really make a show! Only thing is……..you’re flat busted!!

How on Earth can one even phathom the costs to the U.S “above and beyond” the ridiculous “balloon of debt” currently hanging overhead? Oh and by the way “we forgot to mention” – we are now going to war.

Who’s chipping in the gas money?

This has gone past ridiculous, as the “ultimate excuse” for continued printing has now reared it’s ugly head.

Lets go to war.

Unreal.

There Will Be No Taper – Stop Listening

Forex Kong 4 Comments

The Fed will not start tapering its bond purchasing program in September, just as they will likely find reason to continue  or even “expand the program” come December. You’ve spent a considerable amount of time contemplating this as suggested by your local T.V / media / CNBC / clowns but now please….just put it to rest. There is not a single shred of data that could support the Fed stepping away from markets as soon as Sept or Dec for that matter.

Take today for example where the Fed has made 1.5 Billion dollars in outright treasury coupon purchases, and the freakin market can barely even keeps its head above water. 1.5 BILLION DOLLARS JUST TODAY!

Here’s the Fed’s “purchase schedule” link – you can see for yourself.

http://www.newyorkfed.org/markets/tot_operation_schedule.html

If Ben had called in sick this morning, and was unable to make it down to the exchange with his suitcase of 1.5 BILLION DOLLARS in bond purchase confetti where would the market be today?

There is NO ONE ELSE BUYING!

What remains to be seen is what investors reaction will be “now” when the Fed announces “No Tapering”.

Personally – I’d “like” to see the true reflection of such continued actions and would look for markets to interpret this as “things are still 100% totally screwed” and sell like mad but I’m likely dreaming.

Anyway you cut it – it’s bad for USD. It’s bad for USD short term….and it’s very bad for USD long term. Medium term?? – You’ll really need to be careful there.

Kong……..certainly not long.

 

 

More U.S Data Disappoints – Nothing New

Forex Kong 5 Comments

More horrible data out of the U.S this morning as orders for U.S “durable goods” fell further than expected.

Of particular note Aircraft orders were off 52.3%, for example after rising 33.8% in June. How ridiculous can you get? Orders for new aircraft “up” 33.8% in June then “down” 52.3% in July. I guess when you’re only selling 3 planes one month then 1 the next your numbers might vary so wildly. No…..I guess it would be 2 planes sold in June and only 1 in July for a 50% reduction. Who cares – the numbers mean nothing as  the entire thing is still just sitting there……stuck in the mud.

I need to make light of a prior post, and a graphic illustrating the “complete and total disconnect” of actual macro data , and the current levels in U.S stock markets. Again – ridiculous.

https://forexkong.com/2013/05/19/the-fed-gold-stocks-and-usd-explained/

These kinds of situations are always tough on a fundamental trader as you “just can’t step on the gas” when you don’t have these fundamentals lined up as straight as you’d like. This summer’s trading has been at considerably lower levels of exposure, and with modest expectations so – I’m most certainly looking forward to the fall.

U.S debt ceiling talks are up next as “once again” (short of an extension) the U.S is officially broke.

I remain short USD here as of this morning – looking for another solid leg down.

 

 

Currencies In Perspective – Risk And AUD

Forex Kong 13 Comments

The value of the U.S dollar (USD) is currently at the exact same exchange rate with the Japanese Yen (JPY) as it was back in April.

So, in case you hadn’t been back n fourth to Japan several times over the past 5 months – you wouldn’t have a clue as to the fluctuation in these two currencies value ( in relation to one another ) in that,  absolutely nothing has changed.

Broad stroke….a person holding USD “hit’s the currency exchange window” at the airport, lands in Tokyo and buys a chocolate bar for the exact same price as last time – 5 months earlier.

Now if your business partner was Australian, he wouldn’t have had it quite so easy. Back in April the “Aussie” could be exchanged for 1.05 Yen ( JPY)  and those chocolate bars at the airport appeared “cheap”  – where as today ( only a short 5 months later ) that Australian dollar only yields .89 Yen (JPY). That is a pretty massive change in such a short time don’t you think??

Let’s stop and think about this for a moment.

Japan has embarked on the largest “Quantitative Easing Program” known to mankind in efforts to “devalue” Yen (JPY) and lower the prices of its export goods ( if Yen goes down in value then “you” with your Canadian or U.S dollars would be “incentivized” to buy Japanese goods as they appear more affordable) yet EVEN AT THAT – THE AUSTRALIAN DOLLAR HAS LOST CONSIDERABLY MORE VALUE!?!

That is some serious , SERIOUS , business in the land of currencies where at “one time” the Aussie dollar was considered the “go to currency in times of risk appetite”.

Some “major players” have been sneaking out the back door here over the past 6 months selling AUD aggressively, and this stuff just doesn’t exist in a vacuum.

…………..more over the weekend.

 

A Day A Trend – Does Not Make

Forex Kong 9 Comments

Getting away from your computer and the markets for a day or two, can provide much-needed perspective and a fresh outlook on return. It’s easy to get caught up in every little squiggle the market makes, not to mention the never-ending stream of “massive headlines” – threatening to take you out at a moments notice.

As well ( and very much like fly fishing ) you need to be able to read the current conditions and evaluate where “and when” to cast your line, as we wouldn’t all rush down to the river in the middle of a rainstorm right?

Forex_Kong_Fishing_And_Trading

Forex_Kong_Fishing_And_Trading

Markets are no different. I don’t try to wade across rapid flowing water well up over my knees, just as I don’t go “all in” on some silly headline during the last couple weeks of summer. Years and years of experience, and countless hours of practice have it that I may not go fishing as often – but I most certainly catch more fish.

Leading into the Fed Minutes here around 2 o’clock – I see that very little has changed here in the short-term, and will likely let the dust settle then “re-enter / add” to a few existing positions – still centered on further USD weakness.

If by some absolute “bizarre shift in the universe” Bernanke actually “says taper” or actually “says” what the plan will be moving forward (as opposed to just sticking to the same ol puppet show) I will most certainly re-evaluate.

I see little to “no chance” of this happening.

A Country At Your Fingertips – Via ETF's

Forex Kong 6 Comments

The symbol “EWJ” is the Ishares  Japanese Index Fund tracking the movement of a handful of Japan’s most popular stocks including Toyota, Honda, Hitachi and a host of others. The ticker itself acts as a reasonable “surrogate” for trading the Japanese stock index the “Nikkei” much like the symbol “SPY” closely tracks the U.S SP 500.

I don’t trade these ETF’s but understand that for those of you who don’t trade forex directly – a list of these types of “equity products” could prove valuable,  as a number of my trade ideas/concepts can be mirrored through these “surrogates”.

The Ishares “family” of these “country related” ETF’s include a wide range including:

  • EWA for Australia
  • EWZ for Brazil
  • EWC for Canada
  • EWP for Spain
  • EWU for United Kingdom

These ticker symbols track a handful of the “top companies” in each countries stock index – not the currency!

Often ( but certainly not always ) the correlation between a particular countries currency and its “stock values” exists as an “inverse correlation” as the value of a given countries currency moves lower for example – the “price” of its stocks inversely reflect “higher prices” and move upward.

For a real time example – you may see that I am looking to “get long” JPY , where a corresponding/inverse trade would be to “short the Nikkei” via the ETF “EWJ” ( which trades at just $11.52 )

Keeping a watchlist of these “country related” ETF’s is a great way to get in touch with some “big picture” movement, while still being able to place an affordable trade through your average day-to-day brokerage.

SHORT TERM TRADE TIP:

I am still looking at further weakness in USD and see opportunities to enter “short” via several currency pairs here again today ( if you’re not already in the trade).

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As well I see the recent “drop” in Yen as providing several low risk entries “long JPY” if indeed risk comes off here.

Trading Monday's Open – Be Patient

Forex Kong 4 Comments

Forex markets get started late afternoon on Sundays (as Australia and the Asian sessions get rolling) so I always like to get a head start on things – considering it “back to work time” Sunday around 4:00 p.m

The trade volume on Sunday leading into Monday is always very light, and many charts will often see “gaps” in price action. These “gaps” can provide for some interesting trade opportunities, as for the most part price action will almost always move to “fill the gap” before the larger volume trades kick in during London’s session as well the U.S come Monday morning.

In general I “usually” don’t initiate trades on Sunday night but will most certainly look to follow price action into the early morning on Monday – and even put on a couple “probes” if I see something that works.

This morning in particular I see that several USD pairs have made reasonable moves “counter trend” and with the continued framework of “further USD weakness” still very much in place, I do see some excellent entry points. BUT…..

Knowing the market as I do, it’s almost ALWAYS A BETTER BET TO WAIT A FULL HOUR AFTER THE OPEN ON MONDAY as  over excited “newbie traders” rush through the doors bright and early – only to be met by our dear friends on Wall Street and their usual “host of surprises”.

Trust me – you will not miss a single things as far as “timing your perfect entry” if you can just hang on an extra hour or two to let the “Monday morning fleecing” run it’s course – then take another look and see where the dust has settled.

Patience is a huge part of Forex trading, as time and time again I find myself doing a lot more “waiting” (with my money safe in hand) than I do actually “trading” with a pack of hungry wolves on a Monday morning open.

Personally I see the tiny “pop higher” in USD here this morning as a great re-entry “short” via several pairs.

Looking long AUD/USD as well NZD/USD as well (gulp) EUR/USD as well short USD/CHF and USD/CAD.