currency trading

USD/JPY – The Only Thing You Need

Forex Kong 8 Comments

A bit of “make it or break it” mentality here this morning as The Nikkei has pushed higher ( with JPY now trading down to it’s “hard-line of support” ) with The U.S Dollar pushing near term highs – where it was turned back in both January and a February re-test.

This puts EUR at “its major line of support” at 1.34 as well GBP “just hanging around” the upper sloping trend line ( daily trend still very much up ) near 169.50

A significant junction to say the least, as correlations across currencies suggest “a move” is certainly pending.

Currency markets should likely make a solid move here in coming days – breaking the summer doldrums.

Transports have clearly broken below support suggesting further decline, and The Dow is now under the “previously suggested top” at 16, 950.

I’ve essentially had this boiled down to a “risk on vs risk off” mentality as of late considering all the larger geopolitical factors, coupled with continued “poor data” coming out of Japan. The Yen has been the largest driving force of this continued rally in risk, as the continued printing, then conversion to USD and purchase of U.S Equities works it’s magic. The Fed passes the buck to The Bank of Japan to do the heavy lifting.

Consider 200 billion per month in paper coming out of Japan, compared to the now “only 35-45 billion” from The Fed to put this in perspective.

JPY_Breakout_Breakdown

JPY_Breakout_Breakdown

 

Japan is where the money is coming from.

A close eye on the current “range” on currency pair USD/JPY is really all you’ll need.

Break out – or breakdown?

Feel free to check out how we’re trading it at www.forexkong.net

Equities Exhausted – USD Double Top

Forex Kong 6 Comments

It’s been a tough grind here as of late, with such low volume trading leaving so many asset correlations stuck in the mud. Traders looking for the usual “signals” in one asset class with hopes of “putting it all together” have been pushed around and pulled back and forth – left struggling to “find an answer” within the continued “day-to-day chop”.

A tough market to navigate with Central Bankers hiding behind every corner, and with such low volume it would appear that on many days…..the market just seems to be sitting there – doing nothing.

Oil looks to be heading lower here and USD appears tired now sitting at its near term “double top” ( as seen via $dxy ).

Gold’s pullback appears to be resolving itself – sputtering out at a pretty solid area of support around 1292.00, while U.S Equities ( as well EU equities and Japan ) look weak, tired and exhausted.

Does anyone else expect that next weeks “U.S GDP report” will disappoint? And that perhaps markets are “finally considering” things aren’t nearly as rosy as the U.S Media continues to suggest?

It would have to have been “some kind of amazing quarter” ( the past 90 days only ) for the report to make up for the incredible ” -2.9 % loss in growth”  reported in the first quarter now wouldn’t it?

Stars would clearly align with USD moving lower, gold moving higher and “global equities” finally taking a break after the SP 500 has made it nearly 800 days straight without a meaningful correction.

Food for thought moving into next week. Perhaps you’ll want to take a peak at your computer / trade account a little more regularly.

Have a good weekend everyone. Enjoy the sun!

 

 

Forex, Stocks And Gold – Trading The Week Ahead

Forex Kong Got something to say?

The updates trade table offers little in the way of “new trades” here as of this morning, as last Thursday’s “drop” and in turn Friday’s “pop” has left the higher time frames unchanged, and more or less “yellowed the waters” shorter term.

Weekly_Forex_Overview_Sunday_July_20_2014

Weekly_Forex_Overview_Sunday_July_20_2014

 

What may be of particular interest to you this week will be USD, and “yes once again” the debate as to which way she’ll go ( with conviction and follow through ) should we see this distribution environment “flip” to something with a little more trend / conviction either way.

We’ve got JPY and its related pairs under the thumb, with eyes on Nikkei if considering to “beef up / add ” to any positions under our current framework. Ideally we’ll want to see JPY “breakout” from it’s ascending triangle moving higher…as “appetite for risk” moves inversely lower.

NZD in particular remains weak here this morning, but Thursday brings with it “another possible rate hike” out of New Zealand. It’s my thinking perhaps they “hold off” on an additional hike here and perhaps markets have already suspected as much but….that’s just speculation.

Still no aggressive trades in EUR, GBP vs USD as I want to give it another day or so to see if  USD turns lower here as I expect it to.

A weak open here as Japan was weak overnight as well EU stocks so…..it remains to be seen of “the machine’s that be” will again step in at the U.S open and work their “usual magic” to keep this thing flying a little longer.

Comments from both The BIS ( Bank of International Settlements) as well the IMF “AND” even The Fed suggesting that it’s getting a little out of hand here – with public perception and the underlying fundamentals now clearly out of touch with reality.

Gold miners entries as of a few days ago remain strong, and the final “short SP 500” added at 1956.00 ( via Sept 191 puts ) appears to be holding its own.

 

Want to see what other irons we’ve got in the fire? Come join us in the members area for weekly reports, daily strategies, real-time chat and trading of “anything and everything under the sun” at: www.forexkong.net

U.S Debt – A Ton Of Debt, A Pound Of Growth

Forex Kong 4 Comments

The following article and series of charts / graphs should scare the living day lights out of you, if you don’t already have a general idea how artifically low interest rates and the “U.S debt situation” fit together.

http://www.zerohedge.com/news/2014-07-15/why-status-quo-unsustainable-interest-and-debt-what-yellen-wont-tell-you

Shocking when you consider that net interest costs will double in five years, and triple in eight.

So…….The Fed is gonna hold rates at zero forever then?

Impossible.

USD/JPY – A Pair You Can Learn From

Forex Kong 5 Comments

We’ve discussed how important this pair is with respect to it’s “drive in equity markets” ( with JPY being sold/borrowed then converted to USD in order to purchase equities ) and it’s interesting to note that:

Regardless of whatever fluctuations we’ve now seen around Yellen’s “slightly more hawkish” comments….USD/JPY refuses to break higher thru the downward sloping trend line that has contained it for so long.

What would appear as “USD strength across the board” really only manifests as a couple pips rise in USD/JPY.

This is because strength in JPY is even GREATER. With both currencies taking inflows only JPY taking MORE creating a net result of USD/JPY falling “lower”.

This may appear counter intuitive as one might imagine “well USD is going higher….this pair should also be going higher right?” WRONG.

Understanding the fundamentals behind this pairs movement can tell you a lot about market’s appetite for risk as “USD will be converted BACK to YEN as U.S equities are sold.

A stronger Yen correlates to “weaker U.S Equities” near 95%.

Something to add to your toolbox if  it’s not already in there.

I’m adding short USD/JPY here at 101.63

Second Quarter GDP – Reality Check Anyone?

Forex Kong 4 Comments

The “advanced estimates” for U.S GDP ( gross domestic product ) are to be released on July 30th, and promise to bring with them a “flurry of market activity”, with traders, economists, analysts and speculators alike clambering to find an edge, and get positioned for the news.

I pose a simple question.

With first quarter GDP coming in with  a devastating contraction of  – 2.9% growth ( consider for a moment that is the worst quarterly GDP report in 5 years….those last 5 years with the Fed printing billions per month ) what on Earth could possibly have occurred in the past 3 months ( the second quarter of 2014 ) to not only make up for the massive loss, but to suggest anything close to “positive growth”?

You’d need to see a headline like ” Second Quarter Growth Sky Rockets! ” a whopping 4% to even consider the United States is “not” heading straight back into recession ( never left actually ).

Impossible.

What “magical changes” could possibly have taken place in the past 90 days to produce a second quarter GDP number that “doesn’t signify recession”?

Answer: None.

With “consumer spending” accounting for more than two-thirds of economic output, how can people making $7.25 per hour ( minimum wage ) or just under 1200.00 per month pre tax  be expected to buy anything other than beans / rice and “hopefully” keep a roof over their heads?

The false sense of wealth created by The Fed and its ponzi / racket in U.S Equities has done absolutely nothing to bolster further growth of the American economy, and soon…..yes soon……..chickens will be coming home to roost.

2nd Quarter GDP disappoints, and “maybe” it’s reality check time.

 

 

 

Central Banks To Pop Bubble – IBS Says Do It

Forex Kong 4 Comments

With The Fed minutes being released this afternoon, it’s pretty fair to say we’ll be going “nowhere fast” here this morning. That’s fine – we’re used to that.

But I will be particularly interested in today’s “Fed minutes release” as something “very, very interesting” has developed here just recently.

The Bank of International Settlements ( also considered the “Central Bank of Central Banks” ) has “sounded the alarm” and has now more or less stated to its members to “pop this bubble now” to save yourselves even worse fallout later.

A few quotes from the recent report / statement:

“Few are ready to curb financial booms that make everyone feel illusively richer. Or to hold back on quick fixes for output slowdowns, even if such measures threaten to add fuel to unsustainable financial booms,” …

“The road ahead may be a long one. All the more reason, then, to start the journey sooner rather than later.”

Apparently a few “intelligent people” at the IBS who see the clear disconnect in current market valuations and “reality” are now flat our suggesting that the World’s Central Banking Community “just get’s on with it” – and bring forward the downward leg of the cycle.

So…..that being said, I think it warrants “lending an ear” here this afternoon as to even the “smallest hints coming out of Washington” that perhaps The Fed may drop, in order to keep itself on the right side of public opinion, whilst planning the next phase of the inevitable “boom and bust cycle”.

As I’ve suggested to you “countless number’s of times” this cycle being stretched to 5.6 years of upward movement now, with no real evidence of economic recovery – 2 years moving lower is really just standard fair.

Here’s more: http://notquant.com/did-the-bis-just-call-for-a-collapse/

 

 

Daily Forex Strategy – May 23, 2014

Forex Kong 4 Comments

” A snippet from the Members Site”.

We’ve stayed away from making any “big decisions” with regards to the U.S Dollar and for very good reason. Getting short the commodity currencies vs USD has been fine ( as these currencies have been falling against most ) but with respect to the EU related currencies – no trade has been “the best trade” over the past few days, as USD continues to “grind away” with little discernible direction.

As of tonight / this morning USD will have worked its way up to the 200 Day Moving Average ( on a daily time frame ) and looks poised to finally show us its “cruel intentions”.

The Japanese Yen is also “flirting” with its 200 Day as U.S equities continue to stretch / challenge the “near term highs” seen only days ago.

Talk about an inflection point.

As much as I understand that so many of you have “grown a custom” to seeing the various scenarios “outlined” in charts and “speculative commentary” across the various financial blogs – hunches are hunches and “speculation” has never really done much for my trading.

At this point it seems fairly obvious to me that the Japanese Yen has indeed fueled the majority of this “last leg up in risk” and NOT AS MUCH USD in that….we know the money printing in the U.S has provided dollars for a mirad of reasons / uses to support the current ponzi scheme – but no one can say for certain “where” the money has gone or “how” its been utilized by the Fed and major players.

As “ass backwards” as it may sound, it makes some sense to me that we see USD fall “along side” U.S Equities for the next leg down, as money flows back into JPY FIRST.

USD to fall, as commodity currencies fall “harder” with JPY the primary beneficary and the EU currencies also “rising” as risk comes off is scenario #1.  Nuts eh?

On the completely other end of the spectrum, can one imagine a scenario here where “risk on prevails” and we see USD rise along with Equities, as JPY gets pounded again with the EU related currencies dropping like stones? It seem’s far less likely to me but again…..you can see why “speculation” generally doesn’t do much for my trading.

Bottom line is – you can “think” about these things but “trading off them” is a fools game, and the “heart and soul” of the many bloggers and analysts out there searching for eyeballs in a sea of speculation. I continue to trade “what’s in front of me” and move in one direction “with conviction” until proven otherwise, with the worst case scenario being “I’m totally wrong” and just switch directions a trade later. No foul. No loss. Allowing markets to “do what they will do” then quietly following along.

This is no time for speculation. This is no time for “big bets”. All will be revealed in very short order, so we learn to exercise patience and continue to trade with caution. All the “arrows in the world” won’t change which direction things move tomorrow, as it’s pointless to even consider these “projections” as having any edge in todays “more than manipulated markets”.

Armchair analysts and financial bloggers can kindly take their “bags full of arrows” and shove them where the sun……( you know what  mean ) as it “all amounts to nothing” if you’re not trading it properly.

So today we wait.

Speculation is speculation. Trading is trading.

You want to be a speculator or a trader?

I’ve never really heard of anyone “making any money” contemplating the future, where as “trading the present” has worked out pretty well thus far.

More at www.forexkong.net

Japan Is Broken – Soon You Will Be Too

Forex Kong 16 Comments

We’ve been waiting for this for a considerable amount of time, and our patience will now be rewarded.

The Japanese Stock Market Index “The Nikkei” has now breached our “waterfall zone” dropping an additional -200 points here overnight in a surprising ( only in that it’s happened on Sunday ) move lower, this early in the week.

The flow of news headlines won’t make a single difference in the world ( depending on what they look to as the cause ) in that, this has been slowly developing over such an extended period…it was only a matter of time before she cracked.

It takes the big players “weeks and months” to move such large amounts of money “in or out”  of position, and the past few weeks have had “distribution” written all over them. Distribution is a market dynamic where over time, large players continue to “quietly sell” to retail as they prepare to “hit the exits” with profits in hand. You certainly don’t want to be the last one holding the bag looking to “buy the dip” once the big boys make the move.

You doubt me? Consider the entire past 5 months as purely “distribution” and now watch how quickly these “gains” are wiped from your portfolio. Weeks and even months of trading “evaporate” in a matter of days.

You can lead a horse to water but you can’t make him drink well…..again I am absolutely stunned that so-called “traders” continue to push the “green button” in the face of something so incredibly obvious.

I guess you need to lose 30-40% of your gains to finally get it.

Best of luck with everything “bullish” here this week and in the months to come. Gorillas are already nearly 100% in position and already in profit pretty much across the board – still just waiting on the final nail ( USD ) to make up its freakin mind so we can jump on that train too.

Long JPY is the way to go, with the commods continued weakness right on cue. SPY and QQQ shorts from “days” ago still performing well and a miriad of trades lining up in USD. More at the members site: www.forexkong.net

 

Intraday Charts – Like Kids With Crayons

Forex Kong Got something to say?

You can’t get down on yourself during times like these.

You’ve studied every “technical analysis” known to man, may it be “cycle theory” or “elliot wave” or “fib trading” whatever……yet things still aren’t lining up. You still can’t seem to “time this” and generate winning trades on a consistent basis well…….

You can’t get down on yourself during times like these.

Intraday charts currently look like they’re being created by a group of small children with a couple of boxes of crayons! A real mess to say the least, and hardly what I’d call “works of art”.

As traders you’ve got to learn to recognize when market “just aren’t behaving” in a rational manner, and adjust your trading accordingly. You can’t get down on yourself and throw into question everything you’ve work so hard to learn as..at times – It’s not you!

The market is at an inflection point. Period.

You need to step back. Keep yourself protected and learn from this….as you’ll be more than prepared for the next time.

Don’t let this thing get the best of you.

It’s important to recognize these are “unprecedented times”! Markets are nuts for a reason because for the most part……no one has a freakin clue what’s coming next. The entire thing “hangs in the balance” of Central Bank intervention and the realities of slowing global growth.

Not exactly an “ideal environment” for the new trader, in fact it’s a terrible environment for any trader! If you can’t step back and see the larger picture….then the “smaller pictures” will continue to confound. This is not a time to be “practicing”. This is not a time to be “taking chances”.

When I go fishing, I generally get up pretty early, but I don’t even bother loading the truck if it’s pissing down rain right? You don’t go “scuba diving” during a hurricane do you?

This is no different.  Forest from the trees type stuff – you know.

Sunday’s weekly report on tap this weekend, as well the daily strategies, trading table and intraday commentary and trading full steam ahead. Check us out in the members area and take a break over the weekend. Next week promises to be a whopper.