forex market analysis

The Countdown Begins – Greed Finds Its End

Forex Kong 11 Comments

Well this is it people – the countdown begins.

You can count yourself as lucky – no…..”very lucky” as to have some idea where / when the merry-go-round stops spinning – this being the “final turn” before the party ends.

We’re down to a matter of weeks now – if not days.

I don’t generally speculate on such short-term movements, but with respect to “this one” having such significance to the longer term / larger trend – I feel it’s reasonable to put something out there.

Let’s give it a full two weeks, 14 days ( give or take a day here and there )  before anyone “greedy enough” to still find themselves “hanging around” – finds themselves wishing they’d taken note.

This will mark the “final surge” in global appetite for risk, and the final push towards the highs, before the historical repetition of the typical “boom and bust cycle” takes effect once again.

The Fed meeting at Jackson Hole ( scheduled for Aug 21st ) will undoubtedly be the trigger, as Yellen suggests “for the very first time” that indeed it’s time for “risk takers” to exercise caution, or to be blunt – get the hell outta the way as fast as they possibly can.

In a matter of weeks “nay-sayers” will be left holding the bag, giving each and every one of you ample time to act accordingly – if you do so choose.

Currency markets have already made the transition ( with commodity related currencies smashed as of late ) as they will always lead, with safe havens catching the bid – suggesting the turn is already well underway.

You don’t want to be the last one out the door, and their will be ample trading opportunities on the “other side of the mountain” if you can just manage to discipline yourself to “get out of this while you can” and not get caught holding.

The countdown has begun.

Best of luck to all of you.

 

 

Curreny Wars Turn To Trade Wars – People Next

Forex Kong 2 Comments

From a purely geopolitical point of view things just keep getting hotter.

An expected “bounce in risk” ( considering the oversold conditions ) not as forth coming here as Putin pushes back with sanctions of his own BANNING EUROPEAN FOOD IMPORTS ( something which will further push Europe into a triple-dip recession ).

“Take that” then Obama / EU cronies.

Apparently the big boys in Washington and The EU are both completely shocked and outraged ( yet imposing sanction of their own is always Ok – right? )

Putin will not be bullied, now with the “supposed recovery” in The EU ( ya right ) hanging in the balance. Like it has anything to do “what so ever” with Putin or Russia.

This is now coming to a head as the West continues to do anything possible to provoke the “calm cool and collected” Putin.

The U.S must make war in order to retain “reserve currency status” and continue with the Ponzi at whatever cost.

Putin’s latest action keeps the game in check, and provides hope for those of us ( most of the planets population ) who look forward to a day when The U.S looks to concentrate on its own “completely f#&ked up situation”, starts taking care of its “own people” and keeps its big fat “overly indebted nose” out of other people business.

You’d think the people of The Ukraine were “made of gold” considering the amount of interest from Washington! No wait…….gas/oil – that’s it.

Currency wars turn to trade wars…….

Trade wars turn to “people wars”.

Hey – what’s up fellow traders? I know the flow of “daily trading info” has dwindled to a certain degree here at the public blog as it’s now “hopping” in The Members Area!

Things are really looking to pick up here in coming days / weeks with “The Fed news” late August as well current weakness in global equities assuring fireworks to follow!

Come check it out at www.forexkong.net

 

 

 

Navigating The Turn – 2 Years Without Returns?

Forex Kong 5 Comments

Considering that markets have more or less “skyrocketed higher” for such an extended period of time that the majority of investors / traders are likely convinced that this is just the “new normal” ( I can’t stand that expression by the way – as it reeks of complacency and “idleness”) and that dips should be bought, on and on, no worries, The Fed has your back etc etc…

It’s easy to understand, as even heightened geopolitical concerns continue to take the back seat, along side lowered global GDP forecasts, poor data out of Japan etc..It could easily appear to the casual observer that “nothing” can get in the way of markets just moving higher, and even higher.

But what happens when the turn is made? I mean…..we all have to appreciate that “nothing goes up forever” right? Historically speaking we can see the typical “boom and bust cycle” usually manifests in a “5 year up and 2 year down” type scenario – and we’re well past the 5 year up mark.

As investors / traders it would completely foolish to “simply ignore” these longer term patterns as I can imagine most of you…..have likely been caught doing that a time or two before right?

Tech / boom / crash 2000 maybe? Credit / housing / crash of 2007 perhaps?

I find it highly unlikely that many of you successfully navigated these “significant turns” to continue generating profits during the 2 year period following these incredible crashes in risk.

Take a look:

Market_Tops_Forex_Kong

Market_Tops_Forex_Kong

Market tops can be seen almost “to the letter” on a 7 year cycle with 5 years up….and 2 years down, with us sitting “right at the max” of this “extended 5 year move higher” based solely in the “money printing efforts” made by Central Banks.

The idea of going through this again ( as why would this time be any different? ) can’t possibly be appealing. Considering where you are in life, and the prospects of a “full 2 years” with your portfolio drawndown considerably – not to mention the mental and psychological end of things – who needs the grief?

You’ve come this far with your investing / trading decisions while the “good times have been good” so…..why not extend the same effort when ” the good times are bad”?

Suggestions to follow….

 

Yellen Gonna Prick Yer Bubble – Aug 21st

Forex Kong Got something to say?

I encourage investors and traders of all asset classes to just take a minute here  – and listen up.

As much as I understand you’ve likely got a BBQ to tend to or perhaps a Birthday party for your dog, this will only take a second.

The annual Jackson Hole economic symposium, a three-day conference in Wyoming begins on Aug. 21st where The Fed meets each year for the continued discussions of world domination,fashion tips for bankers,entertainment news, and of course – monetary policy.

This time it’s going to be different. You need to get this on your radar.

Risking complete and total repute ( if they’ve still got any left at all ) The Fed is finally going to “actually say something” with respect to letting some of the “hot air” out of this ridiculous stock bubble.

With the bond buying set to “end in October” Yes! END IN OCTOBER! This will only give investors a few short months ( more like 6 weeks ) to re-evaluate their current holdings / consider taking profits and head for the exits in an “orderly fashion” as interest rates are set to rise much sooner than most have been anticipating.

Now you ask me well……”How does this affect me Kong?” “I own Apple! One of the greatest companies on Earth…I can’t imagine anything The Fed says having much to do with them?

Listen.No stock survives on its own accord when “global risk for appetite” wanes. No stock.

When large institutional investors ( those that dwarf your portfolio by 10,000x plus ) start looking at investments where “higher interest rates” come at them like a dull knifes in the kidneys – trust me.

They sell.

You can’t boil this down to single days trading, or even a single week or month when you are staring dead into the eyes of such a “fundamental shift in monetary policy” and it’s far-reaching effects.

Housing, equities, credit / loans, dog food, birthday presents, beer, Apple and “everything else on this planet” that has been pushed along by way of “massive injections of liquidity by Central Banks” will very soon feel the effect of having that taken away.

The Fed hopes the exit will be in an “orderly fashion” but you know yourself best. You’ll hang on “just like the guy next door” thinking you’ve got this figured out and that “just one more day er two” and then I’ll cash out – that’s what I’ll do. Smart.

Doesn’t sound “too orderly” if you and the guy next door, and of course every investor on your block are thinking the same way now does it?

Everybody always runs for the exits all at once…..and everyone is always, always too late.

Watch for news surrounding the Jackson Hole Meeting around August 21st. You won’t want to miss it.

 

 

 

Goldman Now Warns – Japan To Implode

Forex Kong 4 Comments

A little late Goldman as I’ve been onto this for some time now – right?

As many of you know I’ve been “following the hot money” out of Japan over the past several months, as well been keeping a close eye on the Japanese Stock Market “The Nikkei”.

I can only imagine that for many of you, likely absorbed in the daily coverage of things far closer to home ( such as the SP 500 or DOW ) this may appear somewhat “uninteresting” or even “un-applicable” to your current/future trading and investment interests, but encourage you to stick with it long enough to see this through.

Perhaps the recent and “sudden” drop in U.S Equities ( erasing the past 2 months gains in a single 48 hour period ) may have done a better job in “captivating your attention”, as I’ve always suggested that “we’ll see the cracks in Japan first” and that U.S Equities are generally…..always the last to go.

We’ve now seen the very best that The Bank of Japan can do with respect to keeping their own stock market propped up as long as they can, employing the exact same techniques as The Federal Reserve – only on a much larger scale. As The Fed has continued with its tapering and is very close to “shutting off the tap altogether” ( down to only 25 billion per month ) Japan’s QE program has been blistering forward at an alarming pace and has contributed considerably to the recent rally in U.S Stocks – as money floods over seas in search of yield.

This just out from Goldman Sacks:

Goldman Warns Of 6.5% Japanese GDP Collapse – Worst Since Lehman

The greater-than-expected weakness in the consumption snapback signals significant downside risk to our forecast of 4.6% decline for Q2 real GDP (sequential annualized). While we expect lower imports, higher inventories, and other factors to support GDP to some extent, we see negative real GDP growth of around -6.5% as likely, based on the data currently available.

The data is set for release on August 13th.

Japan is headed for economic collapse, and for those of us interested in “taking this seriously” ( keeping in mind that Japan led the market crash of 2007/8 by 6 months ) a miriad of trade opportunities will soon be upon us.

For stock traders again…..a quick look at EWJ – The Japanese Index Fund ETF.

EWJ_July_3_Forex_Kong

EWJ_July_3_Forex_Kong

I can understand how hearing it from an “anonymous gorilla over the internet” may not be enough to get you outside your comfort zone fair….. but Goldman now too?

Japan led the charge lower in 2007 / 2008 and from everything I track / follow I see that this time – things will be no different.

Come check out how we are trading it ( and profiting from it ) in our Members Services Area.

more on the subject: http://confoundedinterest.wordpress.com/2014/08/03/japan-sinks-into-the-abenomics-abyss-debt-to-gdp-at-226-q2-gdp-likely-to-fall-5-house-prices-continue-to-fall/

USD Topping Out – Nikkei Weekly Pin Bar

Forex Kong Got something to say?

The other day’s 100 pip ramp up in USD/JPY has stuck – so far.

Sitting up here at the top end of the range it’s obvious that The BOJ did everything it could “pre U.S GDP debacle” to keep the status quo and defend the line at 101.20.

Please appreciate the significance of this as…..the ultimate “breakdown” in USD/JPY is the signal / breakdown required for this entire “house of cards” to take a serious, serious blow.

The fact that currency markets have literally “stood still” for the past 48 hours as global equities take their first serious hit in months says a lot – affirming “just how desperate” the co-ordinated effort of Central Bankers ( to keep this ball in the air ) has become.

The subsequent breakdown in /ES ( SP 500 futures ) has now broken below major support that “under any normal conditions” would signal what we usually call an “intermediate decline” but again…..considering who we’re up against – I can’t get too excited looking for much further downside short of this thing “popping” higher first.

Nikkei ( as suggested the other day ) appears to have “popped and dropped” back into it’s near term range , also generating an interesting looking “pin bar” on the weekly time frame. The likely “top of wave 2” in our existing framework.

 

Nikkei_Weekly_Aug_01_Forex_Kong

Nikkei_Weekly_Aug_01_Forex_Kong

Considering the waves of poor data that continue to flood out of Japan it’s “all but certain” that the recent ramp job was / was purely Central Bank induced, “yet again” keeping this thing afloat as long as they possibly can.

What we begin to understand here now,  is just how desperate the situation is and that….more than likely the fallout will be much worse / severe than your average “garden variet” BTD ( buy the dip ) and “everything will be ok” type thing.

Trade wise – considering the massive overbought conditions of The U.S Dollar one has to consider looking long both EUR/USD as well GBP/USD here but again with caution as the “solid up trend in USD” would have this trade originally manifest as “counter trend”.

I’m having trouble imagining the U.S Fed letting USD get much further out of the basement here as every single uptick essentially drives the cost of U.S Debt higher ( being denominated in USD of course ) and “how soon we forget” – The Fed still wants to crush the currency.

For those brave enough to get out and challenge the BOJ here in coming days, I see that many of the long JPY pairs have retraced a touch and could provide for “re entry” here next week including short NZD/JPY, CAD/JPY and entry short USD/JPY up here at the top end “should we see reversal first”.

Otherwise the blatantly obvious trade here is looking at EUR, considering that if USD rolls over here and spends the next 6-8 days retracing ( or perhaps generating a much larger fall ) the biggest returns will be seen vs EU currencies.

AUD has clearly had the wind taken out of it on the “risk off” move over the past couple days but it really depends “against what” with AUD/JPY still firmly under the grasp of The BOJ.

I’ll be looking for entry long EUR/USD above 1.34 after the U.S data release here this morning, and will cover the specifics of several other currency pairs ( if it really even matters in this situation ) over the weekend.

The ponzi either goes another “final round” ( likely trading flat to upward for the rest of August / early September ) or it doesn’t.

That’s really all there is too it.

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!

 

 

BRICS Nations – Bypass Washington With New Bank

Forex Kong 1 Comment

I’m sure you are familiar with the “BRICS” nations ( being Brazil, Russia, India, China and South Africa ) right?

Well…..disatisfied with The United States “overwhelming influence on global finance” these fellows ( accounting for almost half the world’s population and about a fifth of global economic output ) have recently put their heads together ( and lots of money ) and started “their own” development bank.

The New Development Bank (NDB), formerly referred to as the BRICS Development Bank,is a multilateral development bank operated by the BRICS states (Brazil, Russia, India, China and South Africa) as an alternative to the existing World Bank and International Monetary Fund.

The 100 billion dollar bank ( complete with another $100 billion currency reserves pool ) is aimed at funding infrastructure projects in developing nations, and will be based in Shanghai, providing these nations with access to funding “outside” the usual channels of World Bank or IMF funding.

The genie is clearly out of the bottle here, as a growing number of extremely powerful and influential nations continue to move further and further away from Washington’s insane monetary policy and stranglehold on global financial movements.

You wanna impose more sanctions on Russia? You want to keep printing U.S Dollars like toilet paper? Have at it Obama – knock yourself out.

A major game changer here as The NDB has finally arrived.

more here: http://thediplomat.com/2014/07/3-reasons-the-brics-new-development-bank-matters/

 

A Question? – For Fellow Forex Traders

Forex Kong 10 Comments

You are all hotshots – I know.

So…..tell me.

As many of you have suggested “trading the fundamentals” is akin to “reading the entrails of dead animals” ( essentially suggesting that “pure technical analysis” is sufficient ) – what are your thoughts on USD/JPY?

JPY ( Japanese Yen ) being the largest contributing factor in the current and seemingly “never ending rally in risk” ( as Japan’s “printing machine” currently dwarfs that of The United States ) – why isn’t USD/JPY making “massive upside moves” along side the ridiculously manipulated run up in U.S Equities?

If currency markets where “taking the bait” wouldn’t we see USD/JPY bursting higher, then higher, and even higher alongside the current ponzi playing out in U.S Equities?

USD_JPY_July_23_2014

USD_JPY_July_23_2014

From a purely technical perspective the chart pattern seen above ( a descending triangle ) is extremely bearish – suggesting that the pair will “eventually break through support” and likely waterfall lower.

The Central Banks of both Japan and The Unites States are hell bent on preventing this from happening but…..would you imagine the opposite?

Risk at all time highs…but the “ultimate suggestion” of risk ( borrowing JPY at 0% and investing it in U.S Equities” in seeking yield ) hasn’t done jack shit for the past 6 months.

I invite you all to weigh in – as fellow readers can only benefit from the potencial “pissing match ” to ensue.

Perhaps a cat’s got your toungue? Or maybe you’re out in the back yard now…looking to kill one and have a good look at it’s insides – with hopes of figuring this out.

Good luck with that.