I’m In! These for starters….and far more to come.
Short:
AUD/USD at 97.00
NZD/USD ( adding to existing postion ) 85.13
EUR/USD ( small position ) 1.3780
GBP/USD enter at 162.58
Long:
EUR/NZD at 161.85
GBP/NZD at 190.50
USD/CAD at 1.02 85
I’m trying to get some of this out in as real time as possible so….please forgive the “lack of meat on the bone” here from a fundamental stand point.
We’ve been into all that already….and obviously there’s plenty more to come.
So the jobs report out of the U.S this morning is literally “beyond horrible” – yet…..initial reactions across the board have people partying in the streets.
What could possibly be discerned from such an absolutely dismal report that would see equities/risk futures “burst higher” ?
The disconnect from any rational evaluation of fundamental economic principles and this “euphoric bliss” has now truly taken on a life of its own.
I will be fading this action no question, and will be initiating trades “after the dust settles” as suggested previously, in that we cannot be far from a major turn.
This “turn” will have a seriously “long USD / short risk” vibe.
Unreal.
Forex Trade Signal – October 22, 2013
You can visit a thousand different financial websites, each evaluating the markets using a different sets of tools, each with their own “take” on where things are headed next. More often than not I find the majority of these sites generally have a steadfast view either “bullish or bearish” – and tend to just stick with that. Each looking like “heroes” for a time then taking their turn getting wacked when the market turns against them.
Staying objective and working to “trade both sides” can be challenging no question.
I wanted to draw your attention to a chart and concept I had posted on some weeks ago “EEM” the Ishares ETF tracking emerging markets. Take note that we are now at “the exact same spot” as some weeks ago, as U.S equities have continued to reach new highs.
We had discussed how “lots of those freshly printed U.S Dollars” find their way into investments in emerging markets ( as the yield on anything U.S related is nil) and how when “risk aversion” comes into play – these dollars are repatriated back to the U.S and converted “back into USD.”
Why no breakout in “EEM” then? We’re at all time highs everywhere else?
EEM_Emerging_Markets_Forex_Kong
Perhaps I’ll eat my words here, but to see this turn downward “again” in light of the fact that “everything U.S” is apparently headed for the moon certainly warrants interest.
Tomorrow’s “highly anticipated employment report” may prove to be the catalyst either way.
I remain focused on AUD and NZD as well ( and obviously ) USD here as “yet again” we find ourselves in a precarious position. It’s tough to argue with the continued “ramp” in risk assets but my analysis suggests we’ll see pullback before heading higher.
With every single headline, and every single website singing high praise to the “economic recovery” in the U.S , with disasters averted left and right, and an equities market seemingly “constructed out of pure titanium” – it’s difficult entertaining ideas that “anything” could go wrong.
One always has to keep in mind that when “too many people” are leaning hard in one direction, markets have a tendency to “correct that” – often with incredible efficiency.
Even if you’re of the mindset that “nothing is going to stop this train” you’ve still got to consider the normal market dynamic known as “profit taking” – where traders / investors simply decide to “take a little bit off the table”.
The recent moves upward in both U.S equities as well the Australian Dollar are highly correlated here, as the two both represent “risk on” market sentiment. It’s difficult to comment on the “never-ending rise” of U.S equities in light of recent events, however what I can tell you is that the Australian Dollar (AUD) is as “overbought” as it’s been for months , “if not” over the last entire year – on continued decline in volume.
If for no other reason than purely “technical trading” ( let alone with combined fundamentals ) short AUD is setting up for an extremely low risk / high profit opportunity here.
An opportunity I intend to take considerable advantage of.
Trade ideas include: long GBP/AUD as well EUR/AUD, as well short AUD/USD, AUD/CHF and AUD/JPY just to name a few.
Stock traders can have a look at the ETF: FXA
I’ll plan to “tweet” entries / ideas in real-time moving through the week. Should the correlation stand, I’d also be looking for downside action in equities.
Short USD Trades – October 14 – 17th?
As per my posted “trade ideas” Friday, a couple of the “short USD” ideas have taken shape. In fact nearly everything is moving in said direction short of the pesky NZD. This damn currency has been bobbing around / consolidating for nearly a month and has proven to be a real stubborn pain in the ass.
https://forexkong.com/2013/10/11/my-trade-ideas-october-11-14-2013/
For the most part USD weakness “again” appears to be the move , although at this point nearly every single chart ( looking at nearly any time frame) could almost / just as easily go the other way.
The U.S Dollar is undoubtedly the “tough nut to crack” here, and “with it goes” the rest of it so…..
Here we sit. On the fence again.Kinda.
With risk events such as the U.S Gov Debacle only days away, it makes perfect sense that currency markets aren’t moving too much, as it also remains to be seen where equities, bonds and gold will find their direction.
I like where I’m positioned here but again, am trading with 1/2 to 2/3 smaller position size than when “out on the highway” so we keep things small while we come around the corners.
Switzerland’s currency, “the franc” plays an important role in the international capital markets.
Due to Switzerland’s history of political neutrality and reputation for stable and discrete banking, the Swiss franc is generally looked upon as a safe haven in international capital markets.
During times of international turmoil investors often flee to the safety of the Swiss franc. For that reason, when volatility rises in the financial markets ( have you checked volatility as of late? ) , investors often bid up the Swiss franc at the expense of other currencies.
I rarely trade CHF as the Swiss National Bank is notorious for “forex market intervention” and have “on numerous occasions” entered forex markets with massive sales / purchases in order to keep the currency under control.
We are living in desperate times and in turn, desperate actions “may be required” – in order to survive. I strongly encourage all of you to do a bit of research, in order to better understand the Swiss Franc and it’s role in global currency trade.
To make a long story short The SNB has scared the bejesus out of speculators so many times in the past ( as to keep the currency from rapidly rising ) that it’s become the “two-headed step child” of the currency market for years. Massive interventions ( as the SNB has close to as much money as god ) have allowed the Franc to stay at a manageable level but…….as we are living in desperate times…..get an eye on it.
Trades “short commods” and “long CHF” would also make sense moving forward ( however dangerous to the novice ).
Forex Trade Ideas – October 11 – 14, 2013
The US Dollar has now made a “swing high” here, at a very important and critical junction.
As usual ( these days ) the implications are considerable, depending on which camp you’re in.
Off the top of my head, further ( and continued ) downside here would see USD trading “lower” in tandem with “risk” (also trading lower) – which in itself is troubling, as we would “usually” consider “risk off” activity to be good for USD.
In a situation where both USD as well U.S Equities where to fall in tandem ( as we have seen on several occasions over the past year ) it is also very plausible that we see both NZD as well AUD fall “even more”.
There would be absolutely no question that JPY ( The Japanese Yen ) would rise.
Trade ideas “would include” some pretty bizarre set ups – in that I would consider things like:
It’s far to early to tell, and the outline above is highly speculative but…..should further evidence of this unfolding be seen – I WILL IMPLEMENT TRADES IN NO LESS THAN 12 PAIRS IN A HEARTBEAT.
You’ve got to “at least” have a trade idea / plan in mind, then allow it to either play out or fail, as opposed to just turning on your television. Getting this one right could generate some serious, serious profits but again……………you’ve got to have an idea, a plan – before heading out on the field.
I’ve taken profits “again” here this morning on anything and everything related to the U.S dollar as well “risk” in general. It’s been a touch frustrating spending this last week “toiling away” under the daily barrage of headlines coming out of Washington, and as the days wind down to the “ultimate stand-off” on raising the debt ceiling limit – the likelihood of resolution increases.
These buffoons can’t possibly be so stupid as to actually risk default, and yet another damaging ( if not killer ) blow to American credibility on the world stage. I’m not sure I’ve ever seen anything more embarrassing for a country’s government, as daily news “across the entire planet” has this “top of the list” of blunders – LET ALONE THAT IT’S 100% COMPLETELY SELF IMPOSED!
It won’t be war, and it won’t be terrorism oh no…no natural disaster or alien invasion will do it nope. The American government can just step right up and get the job done itself. Absolutely unreal.
Trade wise….there is no doubt the media / Wall Street will “rejoice” a resolution, and rejoice in the knowledge that the ponzi scheme is safe and sound for another couple of months.
Commodity related currencies have traded flat as pancakes, GBP has pulled back, and for the most part its been a complete “ghost town” out there leading up to this trainwreck completing.
I’m up 3% and back on the sidelines – waiting a day or two to see how things shake out, looking to take a shot at the “pop” on resolution. Then “back with the bears” into the new year.
Ironically ( and in light of yesterday’s post “seen here first” ) overnight, both China and Japan have now publicly warned that the U.S better get its act together pronto.
As well (and again, I’ve got no crystal ball down here….only Mayan Shamans) The IMF (The International Monetary Fund) has now released the following:
“World growth will be slower than expected this year and next, and will take another big hit if the U.S. fails to resolve its debt drama, the International Monetary Fund warned Tuesday”.
“The IMF cut its 2013 global growth forecast by 0.3% to 2.9%.”
In other news ( not like you’ll see it on your local T.V ) China’s growth forecasts “specifically” have also been reduced.
Getting the message anyone????
Are you getting the message?
Zoom out and take a look at the next couple years, pull out your tin foil hats and get your shopping carts tuned up. 5 years worth of incessant money printing / stimulus, stocks “inflated beyond belief” and NO RECOVERY!
The normal business cycle ( which has been the same for generations ) has been stretched ,pulled , manipulated , extended “past” what we’d normally call “normal” and it’s time my friends……it’s time to get real.
I’m open to discussion as to “what the hell” to do about it, but the bottom line is – silver clouds / hope / faith / positivity / good attitude doesn’t pay the bills.
Start thinking “seriously” as to where you can look to tighten.
For your reading pleasure: https://forexkong.com/2013/01/31/2013-you-will-never-trade-it/
My feelings are that…..we’ve reached a major low in the U.S Dollar.
With this in mind, some major “MAJOR” questions come to mind as to the near term direction in markets, but much more importantly – the longer term view.
U.S equities have been stretched “beyond stretched” on the seemingly never-ending “Fed pump” but as we’ve seen recently – are most certainly showing the “final signs” of exhaustion.
What happens in the next two weeks is 100% completely irrelevant as to the forward direction of markets.
My take is…….we’ll see “some kind” of relief rally in risk, when the U.S finally get’s its act together ( if you can even call it that ) – but that’s all it’s gonna be. A relief rally.
If “incredibly” equities stretch to make a “higher high” ( which I seriously doubt but don’t rule out ) it will be “blow off” in nature and extremely short lived. New retail investors will undoubtly believe that “all has been saved” and buy the top with reckless abandon – as Wall Street hands off the bag.
We know interest rates can “go no lower” so……anyone with half a brain in their head should recognize – we are entering a time of contraction – not expansion!
Quietly, behind the scenes several other countries are already “hinting” at possible rate hikes ( Great Britian as well as New Zealand) as the writing is cleary on the wall. The big boys are preparing……as it’s now painfully clear that the U.S.A money printing efforts have done nothing to bolster a “true recovery”, and that the U.S government itself….is in no position to “govern” much.
What we are seeing unfold is a considerable shift in “investor sentiment” – and sentiment drives markets. People are now losing faith that “even the never ending printing / easing” can pull the U.S out of it’s current downward spiral.
I feel very stongly that at “some point” the Fed will print more – but the kicker will be…the markets just won’t buy it.
Charts and more in part 2.