forex trading

EUR Soars – Volatility Suggests Something Big

Forex Kong 37 Comments

Ya I saw it happen. Right here, in front of my own two eyes – just a few short hours ago.

Shortly after we got the Italian Unemployment Rate ( coming in at a whopping 12.9%! ) we then received the EU Zone “CPI Flash Estimate” ( the change in the price of goods and services purchased by consumers year over year )…coming it at 0.8% as opposed to the expected 0.7%

Big freakin deal right? Who cares right? Wrong.

The EUR as well GBP and CHF soared on the news, sending the U.S Dollar Index directly into the toilet, smashing through forex charts and “forex hearts” across the board.

Apparently  0.1% of “nothing” is “really something” as the EUR advanced a full 100 pips against the U.S Dollar on the news.

Give me a freakin break. The data has absolutely nothing to do with it all.

These markets are boiling over with volatility these days, and are doing everything they can to transfer as much money from “you to them” as quickly as humanly ( or should I say “robotically”) possible.

It suggests to me that we are inching closer and closer to something “huge” as these “macro turns” are always the toughest to navigate.

I’ve got several irons in the fire now, with some huge data expected out in minutes, including both Canadian and U.S GDP data. These as well should provide for some serious fireworks.

Let’s see what “mother market” has in store for us this morning.

Hunting Black Swans – The Season Begins

Forex Kong 10 Comments

You’ve likely heard the term “black swan” before….and I’m not talking about the bird.

The black swan theory or theory of black swan events is a metaphor that describes an event that comes as a surprise, has a major effect, and is often inappropriately rationalized after the fact with the benefit of hindsight.

With all the “bad news” flying about these days, in such dark contrast to the background of eternally higher stock prices, and the never-ending “sunshine” of Central Bank intervention, it may just be time to consider getting out that cammo, shining up those shotguns, and heading out to the fields to do some hunting.

After all…..you can’t honestly expect some kind of “orderly exit” when things finally do start coming down to Earth do you? Do you?

Black swan hunting anyone?

Here’s a couple of things to keep in your sights:

1. The developing story in The Ukraine.

Once again The United States is sticking its nose where it most certainly does not belong, and is again butting up against Russia and our ol friend Putin with respect to this “tug of war” over The Ukraine. The U.S is hell-bent on having the Ukraine “come over” and join the E.U with aims to set up military / larger positions along the Russian border.

You don’t honestly think its humanitarian interests again driving the U.S do you? Do you?

Please. This scenario may not be on your radar “yet” but trust me……it’s should be.

2. China Carry Trade

China is now making some waves in the currency world and appears to be purposely pushing the yuan down in value to give its exports a bit of a lift amid the nation’s decelerating growth.

Sound familiar? So in other words….the Chinese are now doing exactly what the U.S has been doing for a full 5 years, and the media continues to label the Chinese as currency manipulators?? Hilarious.

The effect of a “falling yuan” has the potential to do “sizeable damage” to the CNY carry trade now approaching levels comparable to that of JPY so….a reversal of this trade would have monster global effects, with “unwind” being nothing short of disastrous.

China is “stirring the pot” now in the currency world and in my view is edging closer and closer to having the Yuan recognized as an “international currency”.

Watch for more signs of a “falling yuan” and the impact on global markets.

3. The E.U Zone

As you can get bored out of your mind listening to the day-to-day data out of any number of European countries, there is really only one thing you need to keep in mind.

The E.U Zone is so screwed, so banged up  and so “far beyond” any realistic expectation of recovery that it could seriously be “any day of the week” where news has it that well……lets put it this way – Spain’s unemployment rate is around 25% so…..you let me know when you hear that puzzle has been solved. Gimme a break.

So with all these potential “black swans” flopping about don’t get caught snoozing there in your blind.  You could wind up having a very, very..VERY bad day.

Oh ya…and the U.S unemployment print added another 348,000 to the line up last week so…….sounds like some real improvement there. Not.

Nikkei Rejection – Safe Havens Higher

Forex Kong 15 Comments

As suggested a day ago – The Japanese Nikkei has had trouble clearing 15,100 as we now see both the Japanese Yen as well ( yes finally! ) the U.S Dollar both moving higher on safe haven moves.

Yet to be reflected in U.S Equities, this would suggest a “lower high” in Nikkei and presents a significant “technical” twist / turn…..in line with “another leg down” in risk.

Long USD trades now more or less break even, with small long JPY’s added – this being “only the first suggestion” of a solid turn.

Miners pulling back ( again as suggested ) providing traders with an excellent opportunity to enter the sector in coming days.

Current trades:

long USD/CHF

long USD/CAD

short EUR/USD

short AUD/USD

short NZD/USD

 

4 More Days – USD Toast Or Treasure?

Forex Kong 10 Comments

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.

Forex_Kong_Face_Book

Forex_Kong_Face_Book

 

All Eyes On Nikkei – A Lower High?

Forex Kong 4 Comments

The new high attained by The SP 500 this morning correlates well with a “lower high” area on the Japanese Nikkei right here around the 15,100 level, as well with the U.S Dollar “again” testing the 80.20 level in $DXY.

As we all watch our own specific indicators / indices to get a better read on “where things are at” in a general sense, it’s my thinking that these things line up quite nicely, suggesting we’ve come into a solid area of resistance/support.

Should the U.S Dollar “finally” make a decent move upward, as well the Nikkei put in a “swing high” here (and create a “lower high”) we’d likely see this move retraced, as well perhaps – find some clarity in the medium term direction.

A move lower in Nikkei would suggest “risk off” as well a higher Yen/JPY and likely ( although these days…you never know for sure ) even a higher U.S Dollar so I’m far more interested in activity “over seas” this evening then I am in today’s “usual wash / rinse / repeat”.

Keep your eyes on Nikkei.

…hey that rhymes.

Forex_Kong_Face_Book

Forex_Kong_Face_Book

 

Forex Markets, Risk In General – Amber Light

Forex Kong 4 Comments

With no “specific driving forces” in markets here this past week ( and “seemingly not” this week as well ) it’s been a relatively tough environment to trade, as well get your head wrapped around in any fundamental capacity.

We get the usual flow of news and data from around the globe, siting an “improvement here”, and then a “disappointment there”, an “uptick in this” and a “downturn in that”, but nothing we can consider “earth shattering” and certainly not “market moving”.

It almost appears that markets are stuck in slow motion, or possibly “waiting for something” in order to make a move. This makes sense considering that “risk” is generally back at the old highs ( via the SP 500 – the riskiest of all ) stalling at these lofty levels while the U.S Dollar “barely” struggles to shows any signs of life.

So what are we waiting for then?

I could bore you to death with a million different “data points” affecting any number of countries specific currencies – but I’ll spare you the details. Looking at U.S equities as well the Japanese Nikkei Index (as well the currency pair USD/JPY) is really about all one needs to do at a time like this as USD/JPY has been stuck in a tiny “half penny” range the entire month of February.

That just about says it all.

You don’t make any bold calls when things continue to grind sideways….you just “get all Zen”, let the market make its own mind up, and be ready to jump on board when she does.

I’m “still” waiting for a larger move up in USD as this grind has been a touch frustrating to say the least. These are times when a trader is best to just “get outside” and not let it get on your nerves. The market is obviously setting up for “some kind of move” but as it stands…..still hasn’t tipped us off.

If I could pick a color to describe it…..I’m staring at an amber light.

Forex_Kong_Face_Book

Forex_Kong_Face_Book

G20 Says Yes – Just Print More

Forex Kong 8 Comments

Sydney-Australia (Feb 23)   The world’s biggest economies vowed Sunday to boost global growth by more than $2 trillion over five years, shifting their focus away from austerity as a fragile recovery takes hold.

Finance ministers and central bank governors from the Group of 20, which accounts for 85 per cent of the world economy, also agreed to pursue greater transparency about monetary policy after rifts about the US taper.

They expressed “deep regret” that reforms to the International Monetary Fund have stalled, because the United States Congress has yet to ratify them.

After their meeting in Sydney, the G20 ministers issued what host Australia called “an unprecedented” and unusually brief two-page statement to drive “a return to strong, sustainable and balanced growth in the global economy”.

“We will develop ambitious but realistic policies with the aim to lift our collective GDP by more than two per cent above the trajectory implied by current policies over the coming five years.”

In other words……the “powers that be” have more or less thrown the towel in on any kind of “real growth” and have pretty much opened the “global door” wide enough to accommodate any number (or size) of printing presses.

We’ll see how markets react but perhaps the can will just get kicked “around the globe” a little while longer……an obviously “bullish signal”.

I’m looking for whatever additional USD strength we see this week to bank profits , and then prepare for further desecration. On the back of this news it looks “relatively obvious” that those with printing presses have been given the global green light so…..if you can’t beat em you might as well just keep making money.

 

Walmart Lower – Sells Lipstick For Pigs

Forex Kong 16 Comments

If you had to pick just one name, one brand…….a single company that just “screams America” like no tomorrow –  which company would it be?

WalMart anyone?

Walmart Stores reported disappointing earnings for its fourth quarter and fiscal year, citing domestic problems like severe storms, cuts to federal benefits, an economically struggling customer base and international uncertainties like currency fluctuations.

The company announced on Thursday that profit in the fourth quarter, which included the pivotal holiday shopping season, was down 21 percent from the same period last year!

Down 21% from the same period last year!

Storms? are you kidding me?

Cuts to “federal benefits”? you can’t be serious…

An economically struggling customer base? No shit.

And my personal favorite “uncertainties like currency fluctuations”…..Walmart concerned about “currency fluctuations”? ( Now that’s just hilarious as…again “no shit” – your own local currency being taken to the woodshed by the Fed!)

By the time you’ve got Walmart in your sites ( as pretty much the lowest common denominator ) and even “that’s a miss”! You’ve really got to ask yourself….seriously…..

What’s with all this talk about recovery?

Get the lipstick out man ( perhaps purchased at a .99 cent store? )……this pig needs a touch up.

Forex Entries – What Are You Looking At Kong?

Forex Kong 17 Comments

Keep in mind everyone – this is a blog that requires “eyeballs” in order to be of any use to anyone so…..please forgive the occasional shameless plug. It’s a dog eat dog world out here in the “financial blogosphere” where “catchy headlines and the promise of riches” go head to head with good ol straight up “honest advice” on a daily basis.

Snake oil salesmen run rampid through these jungles, though few of them wearing the proper footwear.

So…..what are you looking at Kong? What makes the difference from one day to the next, that has you enter a trade or not? How do you know “when” to push the button? And how is it that ( more often than not ) you appear to enter markets at almost the “exact” right time?

Truth is……aside from my custom technology “The Kongdicator” which essentially tracks pure price action ( providing signals when a very specific set of criteria has been met ) the largest contributing factor is really just straight up old fashion patience, coupled with a solid grasp on “each currencies role” in the grand scheme of things.

The one thing the Kongdicator “can’t do” is rule out the amount of time that a particular asset will trade sideways / flat. This is where conviction and knowledge come into play as….you’ve got the level ( or around about the right level/price ) but can’t really know “how long” price may remain there.

Take this week for example where many forex pairs have literally – “barely budged”. Does this mean your trade entry was wrong? Not at all! Only that the amount of “sideways / churn” was near impossible to account for.

This also lends credence to the idea of ” trading in smaller orders around the horn” as…..you tie up less capital on your initial entry, you’ve resigned yourself to the fact that it “may not be perfect”, you’ve kept plenty of gasoline in the tank and you’re able to sleep through days and days of the dreaded “sideways” – without really getting to worked up about it.

You then plan to “add” to your position as things move in your favor, and have far less concern if things “don’t” – as your original position is relatively small.

Fine tuned entries as best you can – sure…….but “small entries over time” is equally a fantastic addition to your trade arsenal, keeping you in the game longer, allowing the market to “do its thing” and hopefully allowing you to sleep at night.

Hope it helps.

All entires looking good here as of this early morning so…unless something “incredible” changes here this afternoon – these trades will again be “added to” as they move further into my favor.

Forex Trade Ideas – Wednesday, February 19

Forex Kong 13 Comments

Sitting through an additional 4 or 5 full days holding a couple of small “long USD” trades, I’ve made the move here in the early morning to not only add to these – but pick up a few more.

Currently I’m holding:

long USD/CAD, as well short NZD/USD and AUD/USD

I’ve also added a small “face ripper position” in long EUR/NZD ( however bizarre you may think that is) at 164.83

I’m holding tight for the EU type currencies ( EUR; GBP and CHF ) as I’d like to see a more “convincing” move but both GBP and EUR are starting to show signs of exhaustion.

As well nearly ALL the JPY pairs are currently sitting at levels where a decent short position “could” be initiated but I’m still going to “tread lightly here” as these trades would suggest a further “risk off move”……and we know how that goes here as of late. The U.S Dollar looks painfully close to making a turn, but again we’ve got “Thursday” ahead – so in all honesty, not looking for too much action here today.

I’ve had little to say as of late, as I’ve not been actively trading but (as it’s my mandate) I must continue to push for profits as I go through alot of bamboo chutes, and of course don’t mind a good cold beer on the beach once in a while.