forex market analysis

EUR/USD – USD And Gold – Alien Knowledge

Forex Kong 3 Comments

A simple correlation – the price of commodities and the U.S Dollar.

Gold being priced in USD obviously.

As the “value” of The U.S dollar rises – Gold price goes down. When the value of USD falls….one would expect the inverse in gold. Gold moves higher as USD falls. All good?

So you should find it interesting then, that over the past few days ( since giving the green light to buy gold ) The U.S Dollar has remained strong. Suggesting to myself at least…..that “even with a relatively strong dollar” the price of gold and silver related stocks have not only remained buoyant, but have made some pretty sold gains over the past few days.

I bought IMG at 4.68 a couple days ago –  Now sitting at 5.29 – All the while USD has continued to move higher.

So what gives Kong? How can the value of the U.S Dollar keep rising AS WELL as Gold and related names?

Answer: An intermediate bottom in Gold.

I’m not talking about a nice little dip to buy, or a quick little stock tip to make you a couple extra bucks for beer….I’m talking about a large scale “fundamental shift in money flow” where the big boys are already well in position. Fully prepared for the U.S Dollar to fall – just that couple of steps ahead of you as…….you still see relative strength in USD even while the big money keeps scooping up Gold.

These large-scale “intermediate turns” don’t play out in a single day.

This will be short-lived, and here is why:

The Euro only further confirms the move currently in play as……it’s now very VERY close to bottoming as well.

Currencies don’t lie. You can’t have EUR and USD going up at the same time!

eur_bottoming_at_1-09

eur_bottoming_at_1-09

So the trade at hand is as follows. Long Gold / Silver and the miners NOW…….and short USD ( long EUR ) here in coming days…once this turn shows itself to the masses.

These “big turns” take weeks and even months for the big boys to build positions, so you don’t always see typical correlations playing out “minute to minute”. It’s my firm belief that the entire year of 2016 has essentially had the big money distributing stock to retail investors….while they quietly and patiently unload USD and scoop up Gold.

Make no mistake. It’s “Dollar Short Time” again here soon, with large gains planned in EUR longs, and a solid investment in Gold.

You think it’s backwards. You don’t think it makes sense but…….haven’t you been reading / lurking here long enough to know better by now? Once you throw currencies into your watch lists, and basket of tools to draw from…you can see things much clearer.

Big moves coming post election.

 

Why Are Markets Trading Sideways?

Forex Kong Got something to say?

In a general sense……you can’t do shit when markets continue to trade sideways.

It’s very difficult for new traders as……you still feel that you “must keep trading” in order to keep money coming in. Trades go nowhere, you get frustrated…..then you make mistakes. Costly mistakes.

Taking a quick look at the Dow ( going back a few months ) we can see at least the past 8 weeks as virtually “unchanged”. Marketing stuck in the mud a full 8 weeks now.

 

dow_trading_sideways_for_months

dow_trading_sideways_for_months

You can’t “really” trade this, as this small amount of movement leaves little room for profit – and timing entries becomes paramount. You need to recognize it for what it is….and accept it. Then your trades / trading will improve.

I don’t really expect this to change until AFTER the U.S Election / Gong Show finally winds up in November, and will be planning trades accordingly. Smaller orders…lower expectation. More planning for the larger moves expected post elections.

It is what it is…..you’ve just got to learn to recognize it sooner.

 

 

 

 

Understanding USD/JPY – You Know You Need To

Forex Kong 12 Comments

With Japan now out of the way….we can clearly see that markets don’t dig it. The Yen is powering higher which is the absolute last thing Japan would like to see.

A strong Yen is terrible for Japan ( as a strong currency is for any nation these days ) and suggests that money is actually flowing “out” of markets – back to the place where it was originally borrowed at 0%.

asimo-is-selling-his-u-s-stocks

asimo-is-selling-his-u-s-stocks

Think about it.

Let’s say you went nuts and borrowed thousands of dollars when the interest rate was 0%, then invested it in U.S Equities hoping you could make a buck. Months later your U.S Equities trades are flat at best, but even more likely sitting at a loss. Then you figure out……hey wait a minute – if we get an interest rate hike here in The States…this market is gonna tank! You sit there thinking…..man I better get the hell out of here, or I am gonna get killed.

Imagine if they actually DO raise rates in the U.S today? You are hooooooped!

How will I pay back all that Yen I borrowed??

So you unwind your trade. You sell your U.S Equities likely at a loss…..then you have to convert the U.S Dollars “back” to Yen ( at a new rate that also hurts ) and finally pay back your loan. This is the fundamental driver behind movement in the currency pair USD/JPY. This is why it’s been tanking since markets “actually topped” back in late 2015. Everything else has been pure distribution as the big boys and heavy hitters unwind their Yen Carry trade, and it’s taken more than a year to quietly do so.

You can see it on the charts  so clearly, and now that USD/JPY is at parity……things could get pretty ugly.

Clear signs that markets have more or less topped out – and have been distributing to retail “hopefuls” for the past full year.

Little mining stocks on fire….just getting started in the larger macro trend people so……go grab a couple!

 

 

Tomorrow’s Trade – BOJ And Fed On Deck

Forex Kong 13 Comments

Blah, blah blah……as once again The U.S Fed and Bank Of Japan keep markets on their toes.

Tomorrow we “should” hear from both, which sets up a pretty tricky scenario if you are thinking about placing any trades prior to the announcements. That’s not how I roll, although…….I am still holding every single trade entered like – 10 days ago.

Conviction is great, as I am 100% certain that The U.S Fed will not be raising interest rates this close to the election but we can never EVER count on The Bank Of Japan to do what we expect. In fact…there have been several times in the past where The BOJ has surprised markets –  big time.

You are aware that the BOJ and The U.S Fed have been working together on this “propped up market” for years now right? Taking turns cranking up the printing presses as to keep these fake dollars / yen rolling into markets? 

BOJ takes the next kick at the can

BOJ takes the next kick at the can

This coordinated effort is widely known….yet poorly understood.

It would not shock me in the slightest to hear Japan “beefing up” its easing and money printing efforts in order to keep the balls in the air a while longer as…..Japan is deep DEEP in The Fed’s pocket.

If Japan pulls the trigger ( allowing The U.S off the hook ) expect markets to rally…..otherwise…we continue flat across the top. Flat across the top until the elections are out of the way…then down.

Further currency trading prior to tomorrow’s announcements is plain stupid.

Sit tight….wait and see what shakes out.

 

Holding All Trades – Bored As Hell

Forex Kong 1 Comment

So the number of people who filed for unemployment assistance in the U.S. last week rose less than expected, remaining in territory associated with a healthy labor market, official data showed on Thursday.

In a report, the U.S. Department of Labor said the number of individuals filing for initial jobless benefits in the week ending September 10 increased by 1,000 to a seasonally adjusted 260,000 from the previous week’s total of 259,000. Analysts expected jobless claims to rise by 6,000 to 265,000 last week.

unemployment-in-america

unemployment-in-america

I love the media spin, framing this as good news….that the number of people without work is rising “less than expected”. Why is it rising at all? Only another quarter million U.S citizens filing for unemployment benefits last week…………..last week!

Talk about waiting for the other show to drop. That´s what I call a recovery.

I´m so deep in profit on long EUR/AUD ( 400 pips ) I will consider taking profits before the weekend. Unfortunately a number of other trades still remain flat…but stops have been moved to break even so….risk has been eliminated.

I´m holding all trades…just bored as hell.

 

 

EUR And USD – How To Trade Them

Forex Kong 2 Comments

It´s simple. Very simple.

The EUR and The U.S Dollar are simply the two most widely held currencies on the planet. This being said….you can usually generalize that weakness in one suggests strength in the other ¨regardless¨ of the news. Seriously…….all news aside you can generally just look at EUR and USD as ïnterchangeable¨ – trading nearly 100% correlated. Tit for tat.

So……..with further consideration that USD has now reached a major inflection point ( and is headed decidedly lower ) we can also assume that EUR is set to bottom. Fair assumption?

Now you start looking at EUR pairs specifically and ask yourself……which currencies will I see the largest moves in against EUR?? Well…….we can also assume that commodity related currencies take a hit when risk appetite subsides right? Currencies like AUD and NZD ( Australian and New Zealand ) generally  fall when risk appetite wains so……long EUR and short AUD?

EUR_and_AUD_When_Risk_Comes_Off

EUR_and_AUD_When_Risk_Comes_Off

I’m watching exotic pairs such as EUR/AUD ( which also falls into my ¨faceripper¨ category, being that this thing is extremely volatile, and ready to blow up in your face at any moment ). You can’t trade this thing…..but you can sit on the sidelines and observe.

I´m watching this pair as of today…..not trading it – YET!

Facerippers are nuts. These currency pairs will clean out your account without a moments notice so please – do not try this at home! Watch this pair……watch for the coorelation to ¨risk on vs risk off¨.

USD Tanks – The Decisive Break Lower Arrives

Forex Kong 4 Comments

There’s little more to be said here this morning – as The U.S Dollar plummets nearly a full 1%, down a full 100 points from 96.00.

Absolute Dollar devastation as both GBP as well EUR make 100 point gains, USD/JPY hit’s resistance and dumps….and our little gaggle of gold and silver miners now up 7-9% since entry.

I’m obviously short as “sh&%t”…and very well positioned ahead of the move. So what could you have done better perhaps?

  • You “could” have plotted areas of support and resistance on your charts “long before this move was made”, and have been fully prepared with your orders
  •  You “could” have created 3 small orders and “legged in” over the previous 3-5 days, ensuring and average price and not betting the farm on a single entry.
  •  You “could” have shut of your T.V, eliminated the noise, and gotten back to your charting…where you would have clearly seen the set up coming.
  • You “could” have opened your mind to the “other side of the trade” ( vs the general main stream media ) and taken advantage of some pretty early indications ( here at the blog ) that things where about to turn.
Forex_Kong_Ashamed

Forex_Kong_Ashamed

There it is…..likely the best possible entry / trade tip / suggestion that you’ve seen laid out for you over the last several days…no stress….no pressure. No chasing markets in panic…no text marathon’s with your broker…just proper planning and execution. A very well placed trade, looking to become a very VERY profitable trade.

So what are you gonna do now? Seriously………..what are you gonna do now?

Currency Markets Move – Just Slower Than U Think

Forex Kong 8 Comments

As I’m sure you’ve been following the “bold call” earlier this week..our dear friend U.S Dollar “has indeed reached the 96.00 level”, and as suggested – has clearly been rejected.

On has to appreciate not only the timing and levels, but the “patience required” in planning your trades, then executing properly.

This trade “short USD” was outlined back on Monday.

The_Next_U.S_Dollar_short

The_Next_U.S_Dollar_short

This is the key difference in “planning a trade” as opposed to waking up early one morning, and “impulsively taking a trade” cuz of something you’ve heard / seen on the T.V. This generally has you “chasing markets” and usually ends in a loss.

Broadstroke……this has USD headed lower as expected. and will also likely mark a “daily cycle low” for both Gold and Silver ( have you bought your few small mining companies yet? ) providing these with several days upside to follow.

Perhaps consider a shot at EXK and / or GPL for some silver plays ( fun ones…….very  cheap ).

Have at it people. If this hasn’t put you in a decent spot to make a buck er two shit……..what else do you need?

 

 

USD – Major Inflection Point At 96.00

Forex Kong 1 Comment

Whatever…….

Call it 96.50 or 97.00 – I mean seriously. We are talking about 1/100th of a cent difference in the value of the currency so…..take your decimal points and go blow it. Its far bigger than that.

Forex is highly leveraged, and great deals of money can be made on even the smallest of moves but…..thats not the reason I trade forex.

I trade forex because it’s the ¨window to our world¨. Economically. Geo politically. Nothing goes on in any other market, any other asset class that isn’t first reflected in the currency market.

The trick is only to understand it.

Forex trades 24 hours a day…no pre market bullshit….no after market earnings announcements ( ever wonder why they do that? ). You don´t wake up in the morning to find out your stock has traded down 23 bucks during the hours that you´ve been sleeping….laying there – powerless.

You can stay in the game – out on the field 24 hours a day!

I like that as…….I like to play…and I´m very good at it.

USD in the 96.00 area suggests a serious inflection point. I won´t get into the fine details….just sticking to the plan.

You lining up any trades?

Thought not.

 

Forex_Kong_Finger

              Forex_Kong_Finger

 

Oooh! The Anticipation – Kong Buys IMG

Forex Kong 1 Comment

You can play “short USD” in any number of ways….and when considering “diversification” ( as any knowledgeable trader / investor should! ) why not throw a couple of bux towards those good ol gold and silver mining stocks.

As a “token” of my current plans moving forward “as planned”….I am placing the first of many orders “long gold and silver” ( inverse to short U.S Dollar ) here today.

Long IMG at 5.00 Even.

Gold_and_Silver_Long_Entry

Gold_and_Silver_Long_Entry

The currency side of things plays out pretty simply.

USD goes down and the largest gains are seen in pairs such as short USD/JPY and long GBP/USD, EUR/USD.

When risk comes off “in general” ( which will also happen for a time here ) even bigger gains are found in getting long JPY against AUD, NZD and CAD.

I expect U.S Equity markets to fall “along side” USD as well so – there’s a head scratcher for ya! Kong ! I thought that if U.S Equities get “sold” then money should just pour back into the U.S Dollar no???

No.

The big boys are already out of their “long dollar trades” and it will be JPY that rises as U.S Equity markets sell off.

JPY is the funding currency for this gong show, and you will see it hit the stratosphere when equities are sold.