trading tips

Central Banks Salivating – Is It War Time Yet?

Forex Kong 10 Comments

Well….It didn’t take long for one of those “black swans” to swim by, as not only has Russia “invaded” Ukraine ( yes, yes I know only Crimea where the population is primarily Russian anyway ) but Ukraine has also order “full military mobilization” in response.

With Forex Markets opening in just a few short hours it will be interesting to see if there’s any reaction to the news, as “the threat of war” would generally have investors looking for safety.

Obviously it’s far too soon to tell…but purely for interests sake, I myself am very curious to see if “even this” could possibly slow the advance of U.S Equities but again….far too soon to tell.

I’ll keep a close watch on the Japanese Yen (JPY) obviously as the first signs of “fear” will be seen with JPY rising.

Keep in mind that Central Banks absolutely “loooooove” wars, as they present governments with the need to borrow “even more money” than the copious already “being borrowed”.

Again….all that borrowing from the privately owned Fed…..”with interest”.

Is it war time yet?

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

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.

Fed Pulls USD Strings – Puppet Show Goes On

Forex Kong 4 Comments

How long have I been going on about “tapering impossible”, U.S recovery a sham, QE to continue, Fed to destroy the Dollar, blah, blah, blah, you’ve heard it all before, a thousand times again, over n’ over n’ over, yes Kong we get it , by all means why not tell us how you “really feel” – right?

Ok.

So we’ve seen Bernanke make his exit, and now we’ve got Yellen at the helm.

Keep in mind, the position of “Chairman of the U.S Federal Reserve” is likely one of the most, if not “the most” economically and financially influential positions on planet Earth, akin to “god” – or at least to you humans so……changes in U.S Monetary Policy effect each and every country on this planet – in some way or another.

With two straight months of “-10 billion dollars” in supposed “tapering” – why aren’t stocks falling? Why aren´t bond yields ripping higher? Why hasn’t the US Dollar shot to the moon on safe haven flows?

Because it’s never gonna happen that’s why! And to my absolute shock and surprise…the market already knows it!

Taking the bait, and again “trading what’s in front of me” sure…I’ve spent a good 3 or 4 days looking at “long dollar strategies” ( as much as it’s pained me ) then BAM!

We pretty much saw the USD fall out of bed over the past two days, crossing significant areas of support and signalling / suggesting “considerable downside” ahead. Can you believe it? Already?

It looks pretty plain to me that markets have absolutely “no faith or belief” that the Fed will stick to its guns and continue with tapering, and that if anything “yes indeed” more QE and money printing await – just around the bend.

That being said, it’s quite likely the U.S Dollar will take a bounce here sure, but – I will now “reframe” this as a “bounce” and NOT a fundamental change – reflecting “any change” in my long-term views being that the U.S Dollar is toast, and that the Federal Reserve will continue to print / devalue until the absolute end.

I’ll likely use any strength in USD next week to “gracefully exit” a couple of positions, so if it gets another “zig before the zag” I see the good ol 200 Day Moving Average up around 80.80 as good a place as any.

We’ll need to take another day or two to see what it means for stocks and “risk in general” but as it stands…and as hard as it is to believe well…..ya you know.

Whipsawed Fundamentally – It Happens

Forex Kong 33 Comments

Further decimation of the U.S Dollar overnight has now taken us below a critical level of technical support, coupled with a dramatic and powerful “surge” in fundamental / supporting data.

All CPI readings for a number of European countries came in “above expectations” overnight propelling the EURO and other Europeans countries currencies “even higher” with the inverse effect on USD.

Now falling into “oversold” territory USD is setting up for a bounce / move higher, but that’s not of much consequence really – when you’ve just been completely and totally “fundamentally whipsawed”.

The barrage of conflicting data (suggestion of China’s tightening / slowing, as well the continued notion that indeed the Fed sticks with the taper) has created a scenario,where one has little choice but to either “get out-of-the-way” – or risk great pains in sticking to the program.

I choose to get out of the way. I will not participate in any “waterfall activity” as USD’s “time in the sun” appears to have been / will be short-lived, so will likely look to sell ( at a loss ) remaining open positions on any further strength.

This sets up for a very difficult time ahead with USD now rolling over and suggesting a “continued trip lower”. Personally I’m stunned by the activity but in putting a couple more pieces together am of the thinking that “few of the big boys” really have much faith / belief that the Taper will continue much longer – and aren’t even bothering to catch “whatever move upward” in USD may have resulted. That and the fact that the Fed is still very busy “behind the curtain” doing everything it can to crush the U.S Dollar.

I “may” try again to catch a move upward in USD but in getting my hand caught in the cookie jar here this time – will remain wary.

Considering I’ve suggested late March as a time to consider Fed intervention again ( and further printing ) anyway – I’ll now likely look for any further USD strength as an opportunity to sell / get short as opposed to riding it off into the sunset on safe haven flows.

Go figure eh…me the biggest USD bear on the planet get’s caught long.

I’m thrilled.

Forex_Kong_Face_Book

Forex_Kong_Face_Book

Forex Markets – A Disturbance In The Force

Forex Kong 33 Comments

Something is going on, and I don’t like it.

With the Nikkei down “another” -360 points here as of this morning, the Yen has barely budged, while the U.S Dollar has gotten absolutely hammered overnight as well!

What happened to the safe haven flows seen yesterday? Is this your “garden variety routing” where nearly everything you “expect to happen” doesn’t happen ( a very normal part of trading ) or perhaps indication of something larger?

The ECB has been “talking down” the EURO overnight, yet here again – the EUR as well GBP and even The Swiss Franc (CHF) have all surged higher in the face of a beaten down U.S Dollar!

I wish I could simply just look at it as a “ripple” or a normal day-to-day type thing, but I’ve been at this far too long. Something doesn’t look right – and I don’t like it. I don’t like it one bit.

An extra “zig” or and extra “zag” in our charts ( as well the every changing fundamental back drop ) can be expected in these times of unprecedented Central Bank intervention but when I see something “blatantly” out-of-place, a move “so contrary” to what I believe “should” be happening – I immediately switch up my thinking.

If I don’t know what’s going on, there’s only one place I choose to be ( at what ever costs ) – and that’s in cash, happily sitting on the sidelines, looking for a time when I “do” know.

Today being Thursday we can generally look for “a move” in markets, as the U.S Data hits the street here around 8:30 a.m.

I will be watching like a hawk. Or a dove, no wait…..a hawk….no dove.

No no no…..all gorilla here.

Stay tuned for an intra day update.

 

Reversal Across The Board – USD And JPY Back In Demand

Forex Kong 40 Comments

It’s a funny thing really.

You can make light of a particular currency pair’s price level (such as AUD/JPY yesterday afternoon), as well point out its general connection / relationship / correlation with “risk appetite”, and BAM!

Perhaps it’s a touch too early to say, but I’m seeing reversal’s in just about every single pair I track with respect to a reversal in “risk appetite” – with both USD as well JPY showing strength here overnight.

Did I need to wake up and check SP futures? or perhaps tune into my local financial news this morning to get an idea of where U.S stocks may be headed here today? Nope.

Obviously I’m short AUD/JPY from yesterday, and will be adding a couple more long JPY ideas here today. The long USD’s I’ve got will be added to as well.

I can’t imagine another “triple digit gain” here in the U.S today, as this counter trend rally peters out.

Forex_Kong_Face_Book

Forex_Kong_Face_Book

AUD/JPY And The 200 SMA – Just Can't Get Along

Forex Kong 9 Comments

So you’ve been pushed to your limits “technically” and the majority of you’ve been pushed off the field.

Hungry bears trading “too big too fast” crushed in the recent upswing and “right around now” eager bulls feeling that it’s “safe to buy the dip”.

Has anything changed?

AUD_JPY_200_Forex_Kong_Trading

AUD_JPY_200_Forex_Kong_Trading

Last time I looked ( 15 minutes ago ) this Yellen chick (now heading the U.S Federal Reserve) is sticking to the plan and the “taper talk” continues so……check your “fundamental heads”.

U.S equities “still” pulling the wool over your eyes perhaps?

The Australian Dollar ( which generally trades” along side risk” ) just had a brief meeting with its old friend the 200 Day Moving Average and guess what?

Same old story. These two just can’t get along,and yet again part ways – unhappy.

Things setting up for a nice lil “reversal” here if you ask me.

Technical Limits – A Fundamental Challenge

Forex Kong 19 Comments

There’s a pile of traders out there that feel “the fundamentals” are a complete waste of time. Following the charts day by day, minute to minute, hour by hour, “riding the waves” and trading the technicals –  with little or no regard for any such thing as a “fundamental”.

This works great of course…….until it doesn’t.

A “technical limit” provides a “fundamental challenge” in that eventually ( as markets will always push further in either direction than the average trader can bear) “all technicals” will be broken/shattered  creating further “fuel for the fire” in an industry “built” on the sale of technical analysis, and the promise of eternal wealth – while the fundamentals continue to lurk in the under current.

Can you consider making a living trading with “no concern” for the fundamentals, trading only the technicals?

I’ts my belief, that the answer to this question is no.

Eventually…..”all technicals” will be broken as the simple mechanics of the system “require” this to be the case.

Markets tell you to buy the RSI at level “x” and sell MACD at “y” as it “commands” – all-knowing the indicators / levels are meant to be breached, pushing “past” any extreme, essentially “snatching your dreams” with little concern for “anything you’ve learned” about technical analysis, time and time again as the fundamentals continue to hide in the shadows.

Do not leave your indicators set at the “pre defined” levels suggested to you in your trading platform! They are designed to be broken!

Learn to “compliment” your short-term trading with a “sprinkling” of the fundamentals as you really can’t survive without both.

Do I like coming home to “yet another day” of a counter trend rally? Absolutely not.

Am I at all worried about it?

What do you think?

Back in the game……nothing has changed.