trade strategy Archives - Page 15 of 43

Equities Exhausted – USD Double Top

Forex KongJuly 25, 2014 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 KongJuly 24, 2014 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/

Forex, Stocks And Gold – Trading The Week Ahead

Forex KongJuly 21, 2014 Got something to say?

The updates trade table offers little in the way of “new trades” here as of this morning, as last Thursday’s “drop” and in turn Friday’s “pop” has left the higher time frames unchanged, and more or less “yellowed the waters” shorter term.

Weekly_Forex_Overview_Sunday_July_20_2014

What may be of particular interest to you this week will be USD, and “yes once again” the debate as to which way she’ll go ( with conviction and follow through ) should we see this distribution environment “flip” to something with a little more trend / conviction either way.

We’ve got JPY and its related pairs under the thumb, with eyes on Nikkei if considering to “beef up / add ” to any positions under our current framework. Ideally we’ll want to see JPY “breakout” from it’s ascending triangle moving higher…as “appetite for risk” moves inversely lower.

NZD in particular remains weak here this morning, but Thursday brings with it “another possible rate hike” out of New Zealand. It’s my thinking perhaps they “hold off” on an additional hike here and perhaps markets have already suspected as much but….that’s just speculation.

Still no aggressive trades in EUR, GBP vs USD as I want to give it another day or so to see if USD turns lower here as I expect it to.

A weak open here as Japan was weak overnight as well EU stocks so…..it remains to be seen of “the machine’s that be” will again step in at the U.S open and work their “usual magic” to keep this thing flying a little longer.

Comments from both The BIS ( Bank of International Settlements) as well the IMF “AND” even The Fed suggesting that it’s getting a little out of hand here – with public perception and the underlying fundamentals now clearly out of touch with reality.

Gold miners entries as of a few days ago remain strong, and the final “short SP 500” added at 1956.00 ( via Sept 191 puts ) appears to be holding its own.

Want to see what other irons we’ve got in the fire? Come join us in the members area for weekly reports, daily strategies, real-time chat and trading of “anything and everything under the sun” at: www.forexkong.net

U.S Debt – A Ton Of Debt, A Pound Of Growth

Forex KongJuly 15, 2014 4 Comments

The following article and series of charts / graphs should scare the living day lights out of you, if you don’t already have a general idea how artifically low interest rates and the “U.S debt situation” fit together.

http://www.zerohedge.com/news/2014-07-15/why-status-quo-unsustainable-interest-and-debt-what-yellen-wont-tell-you

Shocking when you consider that net interest costs will double in five years, and triple in eight.

So…….The Fed is gonna hold rates at zero forever then?

Impossible.

The Federal Reserve’s Impossible Equation: When Math Meets Reality

Let’s strip away the Fed’s fancy rhetoric and look at the cold, hard numbers. When interest costs are set to double within five years and triple within eight, we’re not talking about some distant economic theory – we’re staring down the barrel of fiscal Armageddon. The Federal Reserve has painted itself into a corner so tight that every move forward accelerates the collapse they’re desperately trying to avoid.

The Zero-Rate Trap That’s Swallowing America

Here’s what Yellen and Powell don’t want you to understand: artificially suppressed interest rates aren’t just an economic policy tool – they’re life support for a terminally ill financial system. Every day rates stay near zero, the debt monster grows larger and hungrier. The government has become addicted to cheap money like a junkie needs his next fix.

But here’s the kicker – they can’t keep rates at zero forever without destroying the dollar’s credibility entirely. Foreign central banks are already questioning whether holding U.S. Treasuries makes sense when the purchasing power gets inflated away year after year. We’re witnessing the early stages of what will become a full-scale dollar collapse if this trajectory continues.

The Mathematics of Financial Suicide

Do the math yourself. If net interest costs double in five years while the Fed maintains their “accommodative” stance, where exactly does that money come from? The only options are: print more money (hello hyperinflation), raise taxes to economically crushing levels, or default. There’s no fourth option hiding behind some academic theory.

The debt-to-GDP ratio has already crossed into territory that historically signals the end game for empires. When servicing debt becomes the primary function of government rather than governing, you’re looking at systemic breakdown. The Fed knows this. Wall Street knows this. The question is whether retail investors and everyday Americans will figure it out before their savings get vaporized.

Currency Wars and the Coming Reset

While the Fed plays pretend with interest rates, other nations are preparing for the post-dollar world. China’s accumulating gold at record pace. Russia’s building alternative payment systems. Even traditional U.S. allies are quietly diversifying away from dollar reserves.

This isn’t conspiracy theory – it’s economic survival. When the world’s reserve currency is being deliberately debased through monetary policy, smart money doesn’t sit around waiting for permission to protect itself. The signs are everywhere if you know where to look, from precious metals accumulation to bilateral trade agreements that bypass the dollar entirely.

What Happens When the Music Stops

The Fed’s impossible equation has a simple solution – it doesn’t. Something has to give, and it won’t be pretty. Either interest rates eventually rise and crush the government’s ability to service debt, or they keep rates low and watch the dollar lose reserve currency status through inflation and loss of confidence.

Both scenarios end the same way: massive wealth transfer from savers to debtors, from the middle class to the financial elite, from dollar holders to real asset owners. The Fed isn’t trying to solve this problem – they’re trying to manage the controlled demolition of the existing monetary system while protecting their buddies on Wall Street.

The smart money isn’t asking if this system will collapse – they’re positioning for what comes after. Currency crises don’t announce themselves with press releases. They arrive suddenly, violently, and completely reshape the economic landscape overnight. The math is already written on the wall. The only question left is whether you’ll be ready when it becomes undeniable to everyone else.

USD/JPY – A Pair You Can Learn From

Forex KongJuly 15, 2014 5 Comments

We’ve discussed how important this pair is with respect to it’s “drive in equity markets” ( with JPY being sold/borrowed then converted to USD in order to purchase equities ) and it’s interesting to note that:

Regardless of whatever fluctuations we’ve now seen around Yellen’s “slightly more hawkish” comments….USD/JPY refuses to break higher thru the downward sloping trend line that has contained it for so long.

What would appear as “USD strength across the board” really only manifests as a couple pips rise in USD/JPY.

This is because strength in JPY is even GREATER. With both currencies taking inflows only JPY taking MORE creating a net result of USD/JPY falling “lower”.

This may appear counter intuitive as one might imagine “well USD is going higher….this pair should also be going higher right?” WRONG.

Understanding the fundamentals behind this pairs movement can tell you a lot about market’s appetite for risk as “USD will be converted BACK to YEN as U.S equities are sold.

A stronger Yen correlates to “weaker U.S Equities” near 95%.

Something to add to your toolbox if it’s not already in there.

I’m adding short USD/JPY here at 101.63

The USD/JPY Risk Barometer: Reading Market Fear Like A Pro

This resistance at the trend line isn’t just technical noise — it’s the market screaming that something fundamental has shifted. While amateur traders chase headlines about Fed policy, the real money understands that USD/JPY has become the most reliable gauge of institutional panic you’ll find anywhere.

Why Smart Money Watches This Pair Like Hawks

Here’s what separates the pros from the tourists: USD/JPY doesn’t just move with risk sentiment, it LEADS it. When Japanese institutions start pulling capital back home, when carry trades get unwound in massive blocks, this pair telegraphs the move before SPY even blinks. The 95% correlation with equity weakness isn’t coincidence — it’s causation.

Think about the mechanics: every time markets get spooked, those borrowed yen need to be bought back to close positions. Massive JPY buying pressure hits the market like a freight train, and USD/JPY craters regardless of what’s happening with dollar strength elsewhere. This is why you see USD gaining against EUR, GBP, and everything else, while simultaneously getting crushed against JPY.

The Carry Trade Unwind: When Leverage Works In Reverse

The beauty of this trade lies in understanding leverage flows. For years, cheap Japanese money has been the fuel for global risk-taking. Borrow yen at near-zero rates, convert to dollars, buy everything from tech stocks to real estate. Easy money, until it isn’t.

Now we’re seeing the reverse. USD weakness across multiple fronts, combined with rising volatility, is forcing massive position closures. Each unwind creates more JPY demand, more USD selling, and more downward pressure on this critical pair. The trend line resistance confirms what the fundamentals are screaming: this carry trade party is over.

Reading The Equity Market’s Next Move

This is where most traders miss the bigger picture. They see USD/JPY falling and think “currency story.” Wrong. This is an equity story, a risk story, a “how much pain is coming” story. When this pair breaks convincingly lower, U.S. equities follow with mathematical precision.

Watch for the break below 101.00. That’s when the real fireworks begin. Margin calls accelerate, more carry positions get liquidated, and the feedback loop intensifies. Rally expectations get crushed as reality hits: when yen strengthens this aggressively, risk assets have nowhere to hide.

The Technical Setup: Confluence of Doom

Beyond the fundamental picture, the technicals are screaming short. That downward sloping trend line has held through multiple tests, each rejection getting weaker. The inability to break higher despite supposed USD strength tells you everything about underlying demand.

Volume patterns confirm the story. Every bounce gets sold, every rally attempt dies at resistance. This isn’t random price action — this is institutional positioning for a larger move lower. The smart money isn’t trying to break resistance; they’re adding to shorts on every bounce.

Risk management here is straightforward: tight stop above the trend line, target the 100 handle for starters. But understand this isn’t just a currency trade — you’re betting against risk appetite, against carry trades, against the entire “everything goes up forever” mentality that has dominated markets.

The yen is speaking. The question is whether you’re listening. This pair has told us more about market direction than any Fed official ever will. When borrowed money needs to go home, it goes home fast. And when that happens, USD/JPY becomes your best friend for understanding exactly how much fear is driving the bus.

Position accordingly. The trend line has held for good reason, and that reason is about to become very expensive for anyone betting against it.

Yellen Must Get Hawkish – Doves Will Cry

Forex KongJuly 14, 2014 Got something to say?

To garner even the tiniest amount of respect over the next few days….Janey Yellen “must” do something to forewarn markets / prepare investors for the inevitable “unwinding” – coming soon to a theatre near you.

It would be completely irresponsible for Yellen ( at this point ) to continue looking into the camera with those “beady little eyes”, suggesting that interest rates aren’t going up ( much sooner than markets are currently pricing in ) with the continued stance that “no bubbles are seen” and that all is going according to plan.

I believe it’s come to the point now…..where even the “just shut up and buy the dip / The Fed’s got your back crowd” would just as well get the signal here soon…….as they’ve pushed this about as far as “even they” think is possible.

Interest rates are on the rise much faster The Fed cares to make mention of, and this “playing dumb” act has about run it’s course.

I encourage everyone to take “extra special notice” over the next few days as to “what Yellen says” and more importantly “how markets interpret / react” as…..

If The U.S Fed had even the smallest shred of human decency ( which we already know it doesn’t ) now would be the time to “give the market a little heads up”.

The massive positions / time it takes to unwind has this so ridiculously”one-sided” that without an appropraite amount of time…..you may just see everyone run for the exits all at once.

It’s 100% up to Yellen.

She can make this “somewhat orderly” or she can roll the dice another turn, and have this thing tank later.

That’s what I call a free market baby. That what I call – America!

The Bond Market Tells the Real Story

While Yellen plays theater with her prepared statements, the bond market is screaming the truth. Ten-year yields are climbing faster than The Fed can manufacture excuses, and this divergence between policy rhetoric and market reality is creating the perfect storm. Every basis point rise in yields is another nail in the coffin of this artificial bull run.

The foreign exchange markets are already positioning for what’s coming. Smart money isn’t waiting for Yellen’s permission slip – they’re moving now. The dollar’s recent strength isn’t sustainable when you’re printing money faster than a counterfeiting operation, but the initial flight to “safety” will create some brutal whipsaws before the real USD weakness begins.

Currency Wars Begin When Central Banks Panic

Here’s what nobody wants to discuss: when The Fed finally admits they’ve lost control, every other central bank will scramble to protect their own currencies. The ECB, Bank of Japan, and even the Bank of England will be forced into defensive positions they never wanted to take. This isn’t cooperation – this is survival.

The yen has been getting obliterated, but that’s about to reverse violently when carry trades unwind. The euro looks dead until it doesn’t. These aren’t gradual moves we’re talking about – these are gap openings that will vaporize accounts built on The Fed’s false promises.

The Unwinding Will Be Swift and Merciless

Institutional money managers are sitting on positions so leveraged and so one-sided that any hint of actual Fed hawkishness will trigger a cascade of forced liquidation. They’ve been playing musical chairs with billions in assets, and Yellen is about to shut off the music.

The real question isn’t whether the unwinding happens – it’s whether it happens in an orderly fashion over months, or in a violent deleveraging event over days. Every additional week Yellen delays gives these institutions more time to quietly reduce risk, but it also allows more weak hands to pile in at exactly the wrong moment.

Gold and Real Assets Will Have Their Day

When confidence in central bank omnipotence finally cracks, the flight to real assets will be immediate and decisive. Gold has been consolidating while everyone chases tech stocks and crypto promises, but precious metals always get the last laugh when fiat currency games reach their inevitable conclusion.

This isn’t about predictions or technical analysis – this is about mathematical certainty. You cannot print prosperity indefinitely without consequences. The laws of economics aren’t suggestions, and they don’t care about political timelines or market sentiment.

Position Yourself Before the Crowd Wakes Up

The beauty of markets is that they eventually force truth through all the manipulation and propaganda. Yellen can control the narrative for now, but she cannot control mathematics. Interest rates will normalize whether she wants them to or not, and when they do, the repricing will be spectacular.

Professional traders know this game is ending soon. The rally continues until it doesn’t, and when it stops, it stops hard. The smart money is already hedging their bets and reducing their exposure to Fed-dependent assets.

Watch Yellen’s next few appearances not for what she says, but for what she doesn’t say. Watch the bond market’s reaction more than the stock market’s initial response. Watch currency flows more than headline grabbing equity moves. The real story is being written in the markets that matter most when confidence disappears.

Either she prepares markets now with honest communication, or she lets this blow up later with spectacular consequences. Based on her track record, we all know which path she’ll choose. Position accordingly.

Second Quarter GDP – Reality Check Anyone?

Forex KongJuly 13, 2014 4 Comments

The “advanced estimates” for U.S GDP ( gross domestic product ) are to be released on July 30th, and promise to bring with them a “flurry of market activity”, with traders, economists, analysts and speculators alike clambering to find an edge, and get positioned for the news.

I pose a simple question.

With first quarter GDP coming in with a devastating contraction of – 2.9% growth ( consider for a moment that is the worst quarterly GDP report in 5 years….those last 5 years with the Fed printing billions per month ) what on Earth could possibly have occurred in the past 3 months ( the second quarter of 2014 ) to not only make up for the massive loss, but to suggest anything close to “positive growth”?

You’d need to see a headline like ” Second Quarter Growth Sky Rockets! ” a whopping 4% to even consider the United States is “not” heading straight back into recession ( never left actually ).

Impossible.

What “magical changes” could possibly have taken place in the past 90 days to produce a second quarter GDP number that “doesn’t signify recession”?

Answer: None.

With “consumer spending” accounting for more than two-thirds of economic output, how can people making $7.25 per hour ( minimum wage ) or just under 1200.00 per month pre tax be expected to buy anything other than beans / rice and “hopefully” keep a roof over their heads?

The false sense of wealth created by The Fed and its ponzi / racket in U.S Equities has done absolutely nothing to bolster further growth of the American economy, and soon…..yes soon……..chickens will be coming home to roost.

2nd Quarter GDP disappoints, and “maybe” it’s reality check time.

The Real Numbers Behind America’s Economic Illusion

Let’s cut through the noise and examine what’s actually happening beneath the surface of these GDP theatrics. While the financial media spins fairy tales about economic recovery, the underlying fundamentals tell a completely different story—one that smart forex traders should be positioning for right now.

Consumer Spending: The Foundation Built on Quicksand

When you strip away the Fed’s monetary circus, the math becomes brutally simple. Real median household income has been stagnant for over a decade, yet somehow we’re supposed to believe consumers are driving robust economic growth? The disconnect is staggering. Credit card debt has exploded to record levels, savings rates have plummeted, and the average American is one missed paycheck away from financial disaster.

This isn’t sustainable growth—it’s a consumption binge funded by borrowed time and printed money. Every dollar of artificial stimulus creates temporary demand while destroying long-term purchasing power. The Fed’s balance sheet expansion doesn’t create wealth; it redistributes it upward while leaving the foundation of the economy—actual productive capacity—to rot.

The Currency Implications Are Massive

Here’s where forex traders need to pay attention: when GDP numbers consistently disappoint relative to the fantasy projections, currency markets react violently. The dollar’s strength has been built entirely on the myth of American economic exceptionalism, but that narrative is cracking.

Smart money is already positioning for what comes next. The Fed’s impossible choice between letting the economy collapse into recession or debasing the currency further through more quantitative easing creates a perfect storm for USD weakness. Either path destroys dollar purchasing power—recession kills demand for dollars, while more printing kills their value directly.

Employment: The Numbers Behind the Headlines

The employment situation reveals the same pattern of artificial manipulation. Part-time jobs replacing full-time positions, gig economy workers with zero benefits, and millions dropping out of the labor force entirely—yet somehow this translates to “job growth” in government statistics. The quality of employment has deteriorated dramatically while the quantity gets manipulated through statistical sleight of hand.

When people earning minimum wage represent a significant portion of your consumer base, expecting robust spending growth becomes pure delusion. The mathematics don’t work, period. You cannot build a consumption-driven economy on a foundation of poverty-level wages and exploding living costs.

What Smart Traders Do Next

The writing is on the wall for anyone willing to read it. This GDP report, whether it meets expectations or not, changes nothing about the underlying structural problems plaguing the U.S. economy. Artificial stimulus cannot create sustainable growth—it only delays and amplifies the eventual correction.

Position accordingly. The dollar’s reign as the unquestioned global reserve currency is ending, not in decades, but in years. Countries are already moving away from dollar-denominated trade, central banks are diversifying reserves, and the golden reckoning approaches faster than most realize.

When the GDP numbers hit, remember this: short-term market reactions are just noise. The long-term trend is clear for those bold enough to see it. The American economic miracle was built on cheap energy, global dollar dominance, and a productive middle class—all three pillars are crumbling simultaneously.

Trade the trend, not the headlines. Reality always wins eventually, and reality says this economic model is finished.

Central Banks To Pop Bubble – IBS Says Do It

Forex KongJuly 9, 2014 4 Comments

With The Fed minutes being released this afternoon, it’s pretty fair to say we’ll be going “nowhere fast” here this morning. That’s fine – we’re used to that.

But I will be particularly interested in today’s “Fed minutes release” as something “very, very interesting” has developed here just recently.

The Bank of International Settlements ( also considered the “Central Bank of Central Banks” ) has “sounded the alarm” and has now more or less stated to its members to “pop this bubble now” to save yourselves even worse fallout later.

A few quotes from the recent report / statement:

“Few are ready to curb financial booms that make everyone feel illusively richer. Or to hold back on quick fixes for output slowdowns, even if such measures threaten to add fuel to unsustainable financial booms,” …

“The road ahead may be a long one. All the more reason, then, to start the journey sooner rather than later.”

Apparently a few “intelligent people” at the IBS who see the clear disconnect in current market valuations and “reality” are now flat our suggesting that the World’s Central Banking Community “just get’s on with it” – and bring forward the downward leg of the cycle.

So…..that being said, I think it warrants “lending an ear” here this afternoon as to even the “smallest hints coming out of Washington” that perhaps The Fed may drop, in order to keep itself on the right side of public opinion, whilst planning the next phase of the inevitable “boom and bust cycle”.

As I’ve suggested to you “countless number’s of times” this cycle being stretched to 5.6 years of upward movement now, with no real evidence of economic recovery – 2 years moving lower is really just standard fair.

Here’s more: http://notquant.com/did-the-bis-just-call-for-a-collapse/

The Central Banking Chess Game: What The Fed Minutes Really Mean

When central banks start contradicting each other publicly, that’s when smart money pays attention. The BIS warning isn’t some academic exercise—it’s a direct challenge to the Fed’s credibility. They’re essentially calling out Yellen and company for keeping the party going too long, and today’s minutes will tell us whether Washington is listening or planning to dig in deeper.

Here’s what most traders are missing: The Fed is trapped between two impossible choices. Acknowledge the bubble and take responsibility for popping it, or ignore the BIS warning and risk being blamed when everything implodes naturally. Either way, USD weakness becomes the inevitable outcome as confidence in American monetary policy crumbles.

The Currency War Nobody’s Talking About

While everyone’s focused on interest rate speculation, the real action is happening in the currency markets. The dollar’s strength has been built on the illusion of American economic exceptionalism, but that narrative is cracking. When the BIS—the institution that coordinates global monetary policy—tells its members to start deflating bubbles, they’re not just talking about stock markets.

They’re talking about the dollar bubble itself. For five and a half years, we’ve watched USD strength built on nothing more than relative monetary policy and faith in American growth that never materialized. Now the very institution that helps central banks coordinate their policies is saying the music needs to stop.

Reading Between The Lines of Fed Speak

Today’s minutes won’t contain any earth-shattering revelations—they never do. But watch for subtle shifts in language around international coordination and financial stability concerns. If you see phrases like “monitoring global developments” or “assessing international spillover effects,” that’s Fed code for “we’re getting pressure from overseas.”

The Fed has always prided itself on independence, but when the BIS starts making public statements about bubble-popping, that independence becomes a liability. No central banker wants to be the last one standing when the music stops, and the Fed knows it.

More importantly, watch for any discussion of currency impacts or dollar strength concerns. The Fed has been quietly worried about dollar strength crushing exports and emerging market stability for months. Now they have cover from the BIS to start talking about it openly.

The Two-Year Reset Cycle Begins

This isn’t just about monetary policy—it’s about resetting global financial imbalances that have been building for over half a decade. The BIS understands what most market participants refuse to acknowledge: longer bubbles create bigger crashes, and we’re already deep into dangerous territory.

The mathematics are simple. Five-plus years of artificial asset inflation requires at least two years of deflation to restore balance. That’s not doom-and-gloom talk—that’s basic economic physics. The only question is whether central banks orchestrate a controlled deflation or let market forces do it messily.

Currency traders should position accordingly. When central banking coordination shifts from “extend and pretend” to “controlled demolition,” safe haven flows and metal moves become the dominant theme. The dollar’s role as the primary beneficiary of crisis flows gets complicated when American monetary policy is part of the problem being solved.

The Smart Money Is Already Moving

Don’t wait for official confirmation from today’s Fed minutes. By the time central banks spell out their intentions clearly, the best trading opportunities are gone. The BIS statement is your early warning system—use it.

The global monetary system is about to shift from crisis prevention to crisis management. That’s a fundamentally different environment for currency trading, and the old playbook of buying dollars during uncertainty won’t work when dollar policy is the source of the uncertainty.

Position for a world where central bank coordination trumps individual country monetary policy. The BIS didn’t issue their warning for academic purposes—they issued it because the alternative is systemic breakdown. Smart money understands the difference.

Correction Time – We've Finally Made The Turn

Forex KongJuly 8, 2014 Got something to say?

Do I dare suggest that we’ve finally come to the turn?

As per The Nikkei chart posted ( well…..again here today! ) I do hope the odd “nay sayer” out there has opened their eyes just a “touch further” to put together a clearer picture of what’s been going on these past few months.

Nikkei_Weekly_Forex_KongNikkei_Weekly_Forex_Kong

With The Fed’s “supposed taper” ( which hasn’t been a taper at all…only that the money has found its way into markets via “other means” – ie….Belgium ) highly liquid “floating mounds of Japanese Yen” have continued to come ashore in the U.S seeking yield.

The U.S Dollar hasn’t done “jack squat” for The U.S, short of keeping the Wall St bankers coffers “fat” and allowing for even further risk / exposure in investing in emerging markets and NOT AMERICA.

As the Japanese stock market falls and “risk off” takes hold…..Yen is repatriated…( flowing back to Japan ) as U.S Equities are sold ( in U.S Dollar terms ) then “converted back to JPY” in order to come home to bank accounts in Japan.

All you need to watch / worry about these days is the “coming breakout in Yen” and the waterfall effect it will have on U.S Equities and global appetite for risk in general.

If you are interested in actionable trades and solid plans as to how to take advantage of this, via currency trading, options and ETF’s please come join us at the members site for real-time trading, weekly reporting and day time discussion.

www.forexkong.net

What are you gonna do then ? Just sit there and pout?

The Yen Repatriation Trade: Your Blueprint for Profit

The mechanics are crystal clear once you strip away the noise. Japanese institutional money has been chasing yield in U.S. markets for months, propping up equities while the fundamentals rotted underneath. Now that the Nikkei is rolling over, this hot money is heading home faster than tourists fleeing a hurricane. The question isn’t whether this will accelerate — it’s how explosive the move will be when it really gets going.

Smart money has been positioning for this reversal since early autumn. The signs were everywhere: massive Japanese fund outflows slowing, Treasury yields losing their appeal, and most importantly, the technical breakdown in Japanese equities that we’ve been tracking religiously. This isn’t some theoretical economic exercise — this is real capital movement that will reshape currency markets for months.

USD/JPY: The Mother of All Reversals

Forget everything you’ve heard about dollar strength. The USD has been riding on fumes and Japanese carry trade money, not genuine economic vigor. As this USD weakness accelerates, we’re looking at a potential 800-pip move in USD/JPY over the next quarter. The technical setup is textbook perfect — a massive head and shoulders formation with a neckline that’s already been violated.

The institutional flows tell the real story. Japanese pension funds and insurance companies are unwinding their U.S. positions at an accelerating pace. When these behemoths move, they don’t trade in millions — they move billions. Each repatriation sale puts downward pressure on USD/JPY while simultaneously pulling liquidity from U.S. equity markets.

Cross-Currency Opportunities

The yen strength story isn’t just about the dollar. EUR/JPY and GBP/JPY are setting up for even more dramatic moves. European economic data continues to disappoint while Japanese export competitiveness improves with every tick lower in these crosses. The European Central Bank’s dovish stance combined with Japan’s newfound currency strength creates a perfect storm for sustained yen appreciation across all major pairs.

AUD/JPY presents the most compelling risk-reward setup in the entire forex market right now. Australian economic growth is slowing, commodity prices are under pressure, and the Reserve Bank of Australia is showing increasing concern about domestic weakness. Against a strengthening yen backed by massive repatriation flows, this cross could fall 1,200 pips without breaking a sweat.

The Equity Market Domino Effect

Here’s where it gets interesting for multi-asset traders. As Japanese money flows home, U.S. equity markets lose a crucial source of buying power. The correlation between yen weakness and S&P 500 strength has been nearly perfect for eighteen months. Now that relationship is about to reverse with devastating efficiency.

Technology stocks will bear the brunt of this reversal. Japanese institutional investors have been overweight U.S. tech for years, chasing growth and yield in a zero-interest-rate environment back home. As these positions unwind, expect dramatic volatility in mega-cap technology names. The market bottom many have been calling could prove premature if this currency dynamic accelerates as expected.

Execution Strategy and Risk Management

The beauty of currency trends driven by institutional flows is their persistence. Unlike sentiment-driven moves that can reverse on a headline, capital repatriation follows economic gravity — it continues until the underlying imbalance corrects itself. This gives tactical traders multiple opportunities to layer into positions as the trend develops.

Start with core positions in USD/JPY shorts, using any bounce above 148 as an entry opportunity. The target zone sits between 140-142, with intermediate resistance likely around 144.50. For more aggressive traders, the cross-currency plays offer higher volatility and potentially larger percentage moves, but require tighter position sizing due to increased overnight gap risk.

Risk management becomes crucial as volatility increases. The Bank of Japan won’t intervene to prevent yen strength — they’ve been complaining about yen weakness for months. This removes a key technical obstacle that has capped yen rallies in previous cycles. Position accordingly, because when institutional money moves in one direction, it tends to overshoot in spectacular fashion.

Future Moves In USD – The Case For Higher

Forex KongJune 28, 2014 10 Comments

I can’t stand The U.S Dollar.

You know that…..everyone knows that. The actions of The U.S Federal Reserve with it’s complete and total disrespect for the currency and continued abuse of it’s position as the “world’s reserve currency” is enough to make anyone sick.

So when would we start looking for USD to move higher? Why would we even “consider there a chance” for this beaten down piece of junk to go anywhere but down the toilet?

Hmmmm………

What many fail to understand is that “the value of a given” currency can only be deemed in “comparison” to another currency…or another asset. The pieces of paper themselves carry no intrinsic value what so ever.

Consideration of “dollar strength or weakness” as compared to a single thing ( like The Euro for example ) is ridiculous as….it is exactly that – a “comparison” of only two given currencies.

So……..

How’s the U.S Dollar stacking up against The Canadian Dollar?

Looks like a fantastic buy opportuntiy as USD has merely “pulled back” vs Cad.

USD vs CHF looks like a pretty classic reversal over the past few months, making a higher high, breaking the series of lower lows and lower highs. A swing low “somewhere in here” would mark a fantastic entry point long.

What about Crude Oil?

Pretty straight forward. When the price of something “goes down” in can equally be argued that the “value of the money” you are using to purchase such products has “gone up”.

What many just can’t wrap their heads around ( one dumb fellow in particular ) is that “there is no blanket statement” in considering being “long or short” USD as it only depends “against what”?

Another chart “sniffing out” coming USD strength:

CNBC_Josh_Brown_Market_Call

A good indication of a stonger dollar can be seen when Emerging Markets start to fall.

Imagine all that “free paper money” printed by The Fed and in turn “invested abroad” as to actually get some return ( you don’t actually think the banks invest the money they get from The Fed in “America” do you? – Please.) piling back into U.S bank accounts / converted back to U.S with concern for a possible rise in interest rates.

An absolute “sunami” of USD floods out of Emerging Markets and back into the United States, on even the smallest “hint” that interest rates may rise.

But……Interest rates ARE rising! In fact….( how soon you forget ) that interest rates on the 10 year U.S Treasury have DOUBLED in the past year and a half!

Rising interest rates cramp corporate borrowing and in turn kill bottom lines. A rise in rates pushes USD up, as well equities down.

Rates have already reversed, adding more fuel to the fire if considering a stronger dollar.

The short term squiggles are more or less meaningless at this point as…..The Fed and Central Banks abroad are just doing what they can to grind this thing a little longer before shit hit’s the fan.

How much longer can they keep this propped up? Not much longer if you ask me.

The Technical Setup: Why USD Bulls Are Getting Ready

The charts don’t lie, and right now they’re screaming one thing: the dollar is coiling for a massive move higher. While everyone’s busy crying about inflation and Fed policy, smart money is positioning for what’s coming next. This isn’t about loving the greenback – it’s about reading the damn market.

Interest Rate Reality Check

Here’s what the doomsayers refuse to acknowledge: rates are already doing the heavy lifting. That doubling in 10-year Treasury yields isn’t some abstract number – it’s rocket fuel for USD strength. Every basis point higher makes dollar-denominated assets more attractive, and we’re just getting started.

The Fed might talk tough about fighting inflation, but the bond market is setting the real agenda. Corporate America is already feeling the squeeze as borrowing costs climb, and that pressure creates a feedback loop that pushes the dollar even higher. Smart traders see this setup from miles away.

Capital Flight From Emerging Markets

Watch the emerging markets – they’re the canary in the coal mine for dollar strength. All that cheap money that flooded into developing economies over the past decade? It’s heading for the exits faster than tourists leaving a war zone. Brazil, Indonesia, South Africa – they’re all watching their currencies get demolished as capital flees back to Uncle Sam.

This isn’t gradual profit-taking. This is panic liquidation disguised as portfolio rebalancing. When pension funds and sovereign wealth funds start dumping EM assets, that mountain of dollars comes roaring back home. The USD weakness crowd completely misses this dynamic.

Technical Confirmation Across Multiple Pairs

USD/CAD is painting a textbook reversal pattern. That pullback everyone’s worried about? It’s a gift-wrapped entry point for the next leg higher. Oil’s weakness is just confirming what the charts already know – commodity currencies are about to get steamrolled.

USD/CHF broke its downtrend like it was tissue paper. The Swiss franc, that supposed safe haven, is getting crushed by simple interest rate arithmetic. When even the traditionalists start buying dollars over francs, you know the tide has turned.

EUR/USD? Don’t make me laugh. Europe’s energy crisis and recession fears make the eurozone look like economic roadkill compared to the US. That parity target everyone dismissed as impossible? Start taking it seriously.

The Bigger Picture: Dollar Dominance Reasserts Itself

This is where the conspiracy theorists and gold bugs get it completely wrong. They think the dollar’s reserve currency status is some kind of accident that’s about to unwind. Reality check: it’s backed by the most liquid markets, the strongest military, and now rising yields that make holding dollars profitable again.

China can talk about yuan internationalization all they want. Russia can pitch BRICS currencies until they’re blue in the face. But when crisis hits – and it always does – money flows to dollars faster than water running downhill. The recent market volatility proved this once again.

The dollar isn’t rising because it’s fundamentally sound – it’s rising because everything else looks worse. That’s not a bug in the system, it’s a feature. As long as the US remains the cleanest dirty shirt in the laundry basket, capital will keep flowing here regardless of how much we hate Fed policy.

Position accordingly. The dollar rally isn’t coming – it’s already here. The only question is how long it takes the market to catch up with what the charts are screaming.