As I am always a touch early……..short USD trades are looking very good here.
One can see that The Buck has had it´s day, and has now been soundly rejected at the 200 SMA.
You guys can look back and recall short trades in Apple – with the exact same set up. Very straight forward…when an asset hits the 200SMA from below, then gets smoked. A very large level of resistance, and generally a pretty clear indication that things will be headed lower.
USD Rejected at the 200 Simple Moving Average
You can look for a million different reasons, but fact remains that a rise in interest rates will blow this market up, and that if anything….further easing will likely make more sense, and that´s bad for USD.
You have to keep in mind that the big boys are ¨spinning the story¨ not sheepishly following along! Long positions by the big boys have already been sold to you, as the common man ¨reactes¨ to the trickle of silly news stories aimed at keeping you on the wrong side of the trade.
You falling for this shit? Grab a backbone. Get informed. Remember the days when The U.S Federal Reserve was printing like mad, and crushing the currency with hopes to boost exports and the economy?
So…..if you’ve only got a view of oh…let’s say just a small portion of the market ( maybe a couple of blue chips, gold) and perhaps the U.S Dollar “against” your own local currency well…..one might suggest adding a couple more “market indicators” to the pile.
I know you may find this incredibly hard to believe, maybe even IMPOSSIBLE to believe but….The U.S Dollar “spike” here in the wake of Brexit market madness will soon provide one of the greatest “short opportunities” of our time ( slight exaggeration perhaps ).
While you’re all drooling over the massive moves “upward” against both the EUR and GBP ( no kidding right? As the vast majority of traders got “wacked” by Brexit ) The U.S Dollar “continues to sink” against its arch rival ( or at times good buddy ) the Japanese Yen (JPY).
The two are now almost at par.
Now….for those with near term memory loss – do you remember the continued explanation here at Kong with respect to money flows on this planet? The safe havens / funding currencies such as JPY going absolutely “parabolic” during times of “risk aversion”? The money that comes “flooding back” to these this currency as large-scale “carry trades” are wound down? Well……if you think the U.S Dollar is strong right now……why is it getting its ass kicked by the Yen? Why is USD losing all support / falling like a rock against JPY?
That’s what I call JPY stength. That’s what I call “risk off”.
The U.S Dollar will soon follow….providing for large scale gains SHORT USD against any number of currencies.
I will again be waiting for a daily “swing high” in USD ( likely within the next 3-4 days tops ) for another joyous ride “back on the big short” – USD.
With over a month of inactivity short of holding the same positions, the same strategy as outlined here countless numbers of times – our old friend The U.S Dollar has done us proud.
The “dumb buck” has lost some 1000 pips v.s the Japanese Yen since markets topped some months ago, and has made an equally bad showing against the majority of its rivals.
This has only just begun.
You may recall chatter some months ago about China and a number of other countries moving away from use of The Dollar in international trade, and recent news suggests that now Iran ( with sanctions being lifted ) is looking to sell its oil in Euro only.
Unfortunately you just can’t have it both ways.
Things will only spiral further down the drain when U.S interest rates go negative ( where essentially they are already if you consider inflation ) and The Fed looks to launch QE5.
All those worthless dollars already printed…..and a shit pile more coming soon – to an unemployment office near you. This is no time to be disappointed or upset! Rejoice in your new-found knowledge that the entire “economic recovery” has been a complete and total sham, and be glad you made the realization early enough to survive.
Have you survived? I hope so.
And it’s really not too late…unless of course you are still of the mindset that “The Central Banks” have got your back well then…….one would think you’d of learned your lesson over the past month er so.
Earth is selling off hard. There isn’t a damn thing “they” or “anyone” can do about it.
Global stock markets are literally “tanking daily” and in my view things are just getting started.
From a technical perspective we’ve only just “shaved the top” off this mountain off bullshit, now with The SP 500 still hanging around the neckline area of support – but that won’t last much longer.
New lows…..then even “lower lows” to follow as The U.S Dollar plummets, Japanese Yen come flooding back to the country where they were printed, Euro and GBP remain elevated and the commodity related “currencies” trade flat.
A low in oil at some point ( correlating with the dump in USD ) won’t mean the markets will recover…not in the slightest as oil will then just bounce along said bottom for eternity. No immediate opportunities there.
People are flat busted, food prices are “out of this world” and global economic data is quickly turning from bad to horrific. This is not a blip. This is not a “correction”. This is not a drill.
This is 2016 baby….and it will be one for the books.
I took this graphic from “somewhere” as it’s a great visual representation of what is “really going on” with the U.S Dollar and international trade.
Don’t be a dope. If the arrows and numbers where pointed in the “other direction” then perhaps you could build a case. The numbers speak for themselves. The U.S “strangle hold” on the world’s reserve, and in turn “slice of the pie” generated via currency exchange ( in order to buy commodities ) is over.
Aside from the currencies, nearly every other thing I track / read / research suggests that this may not only be a strong area for “correction” – but the start of something much larger.
There has rarely ( if ever ) been a time in history when as many separate indicators / charts / graphs and info has been “this skewed” to suggest such divergence and risk of serious “downside action in global appetite for risk”.
Considering the current geopolitical backdrop and with U.S Equities still “clinging” to the highs, personally – I don’t see a blow off top scenario. To whatever degree that retail investors have “taken the bait” over the past 7 months….I believe they are “already in”.
The situation with Ukraine really only being the tip of the iceberg now as Putin’s “Gazprom” now announces “massive oil deal with China” again…bypassing the U.S Dollar in trade.These are tremendous blows to the U.S system, and make clear The U.S “true intension” in Eastern Europe.
They must save the U.S Dollar as world reserve currency – and will stage a war to do so.
The Nikkei rolled over a couple of days ago, USD looks set to plunge along with equities, and the entire currency market has more or less moved “risk off”, with USD/JPY “not breaking out”, falling back into range and expected to fall further.
The real-time trades in currencies, gold and silver as well U.S Equities, weekly reporting and daily commentary can be found at the members site: Forex Trading With Kong.
If you can believe it – the U.S Dollar has spent the entire last week “still hovering” near a well-known area of support, showing absolutely no interest in “getting off its ass” and making a move higher.
As forex markets have a tendency to move sideways for extended periods of time, this should come as no real surprise but in having held a number of small positions ( almost averaged out now ) “long USD” for some time now, I’m only giving it a couple more days before just “going with my gut” and likely pulling a “stop n reverse” – getting back on the short side of this dud.
The overall weakness and lack of any real “life” suggests ( as I’ve now suggested for some days ) that regardless of any “near term pop” – USD looks pretty much set on breaking support and continuing on its merry way – into the basement.
Considering the lack of movement ( in either direction ) scratching a trade that has consumed nearly two full weeks of trading doesn’t put a smile on my face. Not at all. If you consider the time and effort, and in turn the “lack of reward” you can easily see why we call this “work”.
I’ll give this dud a couple more days to “prove itself” but as it stands…..I’m a hair away from flat-out “stop and reverse”, wherein the probability of an actual “waterfall” exists.
It’s make it or break it time for USD. 4 days Max.
It’s pretty rare that I get excited about something like this as I don’t really spend a lot of timing thinking about – but in this instance, I’m really looking forward to learning more.
We’ve had some discussion in the comments section over the weekend, with a couple of very knowledgable participants really putting out some great info.
Deflation vs inflation…..the great debate.
I for one have thrown this around on occasion, only to find myself back where I started in the first place – time and time again. I hope I don’t create a “dead-end ” here (as I generally stick to spaceships, quiet time with ants, and the search for evidence of alien life on Earth ) and am certainly “not” an economist, but I hope we can wrangle these guys ( and whom ever else ) to shed a little light, on a an area of economics – often misunderstood.
Deflation is a “decrease” in the general price level of goods and services. Deflation occurs when the inflation rate falls below 0% (a negative inflation rate). Deflation increases the real value of money ie…..the currency of a nation or regional economy.
Deflation allows one to buy more goods with the same amount of money over time.
*Thank you Wikipedia!” ( what you think I rattled that off the top of my head?)
Inflation is a persistent “increase” in the general price level of goods and services in an economy over a period of time. When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation reflects a reduction in the purchasing power per unit of money – a loss of real value in the medium of exchange and unit of account within the economy.
So…..in a nut shell – looking at the value of a dollar in a given economy, and the reflection of “how much of what” that dollar is able to purchase at a given time – no?
Given the current monetary policy – Is the United States “currently” in an inflationary environment or a deflationary environment? And more importantly ( as we are all much more interested in the future )…..
Where do you see the United States headed next? And….(bumbuddabum bumbumbbumbbumb!!!)
Woohooo! I’ll do my best to chime in but in all honesty I’ve likely got little to add…other than my own “backward / flipped over / nutty way” of looking at it, which ultimately may not have to do much with economics as it does making money trading forex.
All opinions / views more than welcome!
Let’s get this thing licked! And thank you in advance to JSkogs in particular. A valued reader and contributor here at Kong, and from what I gather – a pretty all around great guy.
One of my computers called me about an hour and a half ago.
Plucked from the grasp of yet another “unsettling dream” ( for what ever reason I am continually plagued by dreams of having my teeth pulled / ripped / removed / taken in ever increasingly “bizarre fashion” ) I welcomed the alert, and eagerly leapt from the bed to silence the soft repeating tone.
Several trades had been picked up, and to my surprise – the U.S Dollar taking a relatively huge hit as the London sessions moved into their first couple hours trading. My surprise? Of course not – you know that. Everything moving accordingly to plan with the added bonus of still having every single tooth intact! How wonderful!
And with so many caught in nightmares of their own, gobbling up useless news stories of tapering and the assumed effect of a “much stronger dollar”.
EUR and GBP are obviously the biggest winners here as per trades in the comment section some hours ago as well a quick tweet.
The “tooth removal” dreams are extremely unpleasant, and it’s really no wonder I don’t sleep a whole lot. Thankfully I was “saved by the bell” here this evening, and rewarded with some fantastic trade entries.
In celebration I plan to eat 3 lbs of chocolate, a full tub of ice cream and as many stale candy canes as I can wrestle from the kids across the street.
I can fully understand that this must be moving way to fast for some of you as…..only hours later (in fact less ) I’ve already banked just under 400 pips across the board in 6 pairs total, and will now be looking for pull back on smaller time frames – and of course re entry.
When some of this goes down in the “dead of night” I don’t imagine there is much some of you can do about it , not having the alerts / computers chiming, the lifestyle ( never sleeping, no kids , no other job, likely insanity ) let alone the interest / dedication / commitment.