trade strategy

Forex Trade Strategies – October 29, 2013

Forex Kong 16 Comments

Forex Trade Strategies – October 29,2013

It would appear that the U.S Dollar is making its “swing low” here this morning, suggesting that a bottom is close at hand. This one isn’t likely going to be your “usual” bottom in the dollar as it’s now reached extreme oversold levels as well as an area of sizeable support.

As we’ve discussed here many times – when the elastic band gets stretched “too far” the corresponding “snap back” is usually quite fierce, as many inexperienced traders are caught leaning to heavily in the wrong direction.

Wednesday’s Fed meeting/ announcement “should” likely provide the catalyst, and it will be very interesting to see which way a number of asset classes move with respect to whatever is said.

When looking “long USD” here its fair to say that the currency pairs EUR/USD as well GBP/USD should turn downward, as well USD/CHF to the upside – these are pretty much a given, but the commodity currencies will remain “on hold” until we get more clarity.

Both AUD as well NZD have taken “reasonable” turns to the downside as of late “along with” a continually falling US Dollar so……it remains to be see if these will also “continue lower” as the USD carves out this turn.

I plan to trade this quite aggressively as I expect the USD move to be a whopper. Off the top it usually doesn’t bode well for the gold and the metals when we see the Dollar rise….but if this time we see a “rise on flight to safety” it’s not at all hard to imagine both gold and the USD moving higher together.

I will be watching / posting via twitter for real-time moves , as well looking to celebrate my 1st Year Anniversary here at Forex Kong tomorrow!

 

 

 

 

The Fed – Do As I Say Not As I Do

Forex Kong 13 Comments

What “is” wrong with me?

Have I become so crotchy and skeptical as to actually consider next weeks FOMC meeting as yet another “wonderful opportunity” for the Fed to “yet again” pull a fast one the unsuspecting and “all too trusting” American investor?

They said they where going to taper “last time” ( as the Fed “should” be trusted to give guidance on its plans moving forward ) with every analyst and talking muppet on T.V talking it up as if it was an absolute “given”. Then “blasted” anyone and everyone who may have been “preparing” by “not tapering”. The Fed lost what little credibility it still had, and many lost “mucho”.

Am I insane? Have I lost my mind?

Would I be completely out to lunch considering that there is just as likely a chance “this time” that the Fed ( in the current scenario with the massive blow over the debt ceiling, government shut down and still terrible employment data) has everyone assuming “it’s impossible to taper” ( which in theory it is) and “once again” finds opportunity to screw the lot of you?

“Fed announces small 10 billion tapering of bond purchasing program” and the markets go crazy….(Only to then INCREASE QE a month later and catch everyone again)

Or even better……”Fed announces INCREASED QE” Straight Up! Boom! Bet you didn’t see that one coming!

You can see where I’m going with this. It’s long past ridiculous, and “non of the above” would surprise me “any more” than the other.

The Fed’s involvement ( or lack of ) in today’s markets is unpresedented, and weilds such influence that getting it wrong could prove disasterous.

I KNOW what the Fed is going to do , but week to week, minute to minute –  NO ONE KNOWS what these weasels are going to “say” they are going to “do”.

My gut has me thinking that “no matter what the outcome” to the FOMC meeting here wrapping up Tuesday, the market is gonna “pop” on news….and sell like hotcakes. I’d have every confidence that we are “lower” looking a week out. I’ll get these trades lined up as they come.

Caterpillar Earnings – What It Means To Me

Forex Kong 32 Comments

I don’t care what anyone else says ( obviously no? ) as we’ve all got our own opinions.

You can listen to the constant stream of bull%&it coming across CNBC justifying company after company’s earnings misses – then the ridiculous “short-term reasons” they suggest.

Fact of the matter is, the majority of companies that indeed “have met earnings expectations” have  largely done so via cost-cutting and margin expansion. Don’t be fooled – this is not revenue growth. Your company might “appear” to be doing better as well –  with 60 fewer employees etc…

As “the “global supplier to construction and mining industries, Caterpillar (NYSE: CAT ) sees the very foundation of economic expansion,  and is often considered an economic bellwether, particularly in emerging economies like China. More machines sold means more holes dug, more roads built etc.

If in the absolutely “simplest sense” one can’t see / comprehend CAT’s massive earnings miss as indication of global growth “slowing” and forward guidance as “further slowing” – I’d be extremely concerned that you may need to have your head examined.

CAT is no “one hit wonder” or some “.com fly by night”.

As CAT goes………global growth goes.

Trading The NY Session – Or Not

Forex Kong 11 Comments

I’ve booked ( and I do mean booked….ie sold positions and placed the money on the “plus” side of the account ) an additional 4% here this a.m  – as per the trades outlined just yesterday.

If there is one thing I really can’t stand – it’s watching these “real profits” disappear during the NY session as the usual “POMO ( permanent open market operations ) pump job” continues to mask the true fundamentals….lurking underneath.

More often than not, an entire “weeks” worth of planning/strategy and profits  can be completely “wiped clean” during the NY session as “counter trend rallies in reality” ( as I like to call them ) play out daily.

You’ll note that Asia and the commodity currencies got absolutely hammered last night with the Japanese Nikkei down a whopping 445 points, yet today “during the con job” I don’t imagine you’ll hear a thing about it.

Do think it just might be possible that our dear friends in Asia woke up to see the NFP / employment numbers out of the U.S and said: “Holy shit – that’s crazy!! What the hell is going on over there? Are these guys seriously talking about “recovery”? Bleeep! – sell.

Left to their “own devices” U.S markets should be crumbling like a moldy ol tortilla – left to sit out on the counter too long.

I’ll tuck my pennies in my pocket and continue on “after” the gong show rolls through.

Kong…….

Gone.

 

Kong Enters Market – Trade Positions And Levels

Forex Kong 21 Comments

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.

Fade This Move – The Turn Is Near

Forex Kong 13 Comments

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.

Emerging Markets – Signal A Trade

Forex Kong 22 Comments

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

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.

Trading Against The Grain – AUD And Risk

Forex Kong Got something to say?

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.

U.S Debt Downgraded By Chinese

Forex Kong 19 Comments

Finally we get a solid move on the fundamentals, as last nights downgrade of U.S debt from Chinese ratings agency “Dagong” sent the U.S Dollar spiralling down.

Now Dagong is no “Moody’s or Fitch” ( currently rating on “negative watch” ) but this in itself brings about a very interesting point.

A Chinese ratings agency having such a significant impact on the dollar? Wow.

You might expect this kind of move given that a “reputable” agency in the U.S gave the “thumbs down” on the debt ceiling debacle sure…but a Chinese ratings agency?

As the largest holder of U.S Debt / Treasury Securities on the planet it is now painfully clear how much influence China truly has. The agency suggested that, while a default has been averted by a last-minute agreement in Congress, the fundamental situation of debt growth outpacing fiscal income and GDP remains unchanged. “Hence the government is still approaching the verge of default crisis, a situation that cannot be substantially alleviated in the foreseeable future”.

Kicking the can a couple of months further down the road makes little difference when the U.S will just be back in the news then…..still unable to pay its bills.

The short USD trades obviously made big moves here overnight, but not exactly as expected. Great gains in EUR, GBP as well CHF but oddly the “commodity currencies” have shot higher. An interesting dynamic and certainly one to keep an eye on as NZD as well AUD approach overbought levels.

Gold up a wopping 34 bucks here this morning, so perhaps we’ve got the “risk off” flows on the move.

Forex Positions Update – USD Weak

Forex Kong 2 Comments

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.