trading tips

Fourth Time's A Charm – The Market Decides

Forex Kong 2 Comments

Obviously you can’t win if you don’t buy a ticket, and at times….these tickets can cost you a pretty penny may it be psychologically, financially or both.

So when things are trading sideways ( as with the example of EUR/USD for example ) how long does a trader choose to hang on before considering the trade a wash / scratch or even a loss?

It’s always up to the individual, as no two traders have the same “threshold for pain”, each with their own set of rules / factors influencing their decision-making but ideally…the decision is made “sooner than later” – as there will always be another opportunity.

One particular “dynamic of price action” I like to use ( in order to help with this decision-making process ) is what I call the “fourth time’s a charm”.

When any asset price has tested an area of support or resistance for a fourth consecutive time over a span of perhaps a few days – it’s time to take note – as the next move is likely going to be the one that counts.

Breakout or breakdown, one can usually “make it or break it” on the fourth time an area of support or resistance is tested, suggesting that the asset has “done all it can” to either push through the area of resistance overhead or succumb to the pressure, finally falling through support below.

And so we find ourselves in the case of the U.S Dollar vs a number of currencies, currently testing the “fourth time’s a charm”-  not to mention both our patience and our discipline.

Which way does she go from here?

The fourth time’s a charm so…….we’ll just have to let mother market decide.

 

The Countdown Begins – Greed Finds Its End

Forex Kong 11 Comments

Well this is it people – the countdown begins.

You can count yourself as lucky – no…..”very lucky” as to have some idea where / when the merry-go-round stops spinning – this being the “final turn” before the party ends.

We’re down to a matter of weeks now – if not days.

I don’t generally speculate on such short-term movements, but with respect to “this one” having such significance to the longer term / larger trend – I feel it’s reasonable to put something out there.

Let’s give it a full two weeks, 14 days ( give or take a day here and there )  before anyone “greedy enough” to still find themselves “hanging around” – finds themselves wishing they’d taken note.

This will mark the “final surge” in global appetite for risk, and the final push towards the highs, before the historical repetition of the typical “boom and bust cycle” takes effect once again.

The Fed meeting at Jackson Hole ( scheduled for Aug 21st ) will undoubtedly be the trigger, as Yellen suggests “for the very first time” that indeed it’s time for “risk takers” to exercise caution, or to be blunt – get the hell outta the way as fast as they possibly can.

In a matter of weeks “nay-sayers” will be left holding the bag, giving each and every one of you ample time to act accordingly – if you do so choose.

Currency markets have already made the transition ( with commodity related currencies smashed as of late ) as they will always lead, with safe havens catching the bid – suggesting the turn is already well underway.

You don’t want to be the last one out the door, and their will be ample trading opportunities on the “other side of the mountain” if you can just manage to discipline yourself to “get out of this while you can” and not get caught holding.

The countdown has begun.

Best of luck to all of you.

 

 

Curreny Wars Turn To Trade Wars – People Next

Forex Kong 2 Comments

From a purely geopolitical point of view things just keep getting hotter.

An expected “bounce in risk” ( considering the oversold conditions ) not as forth coming here as Putin pushes back with sanctions of his own BANNING EUROPEAN FOOD IMPORTS ( something which will further push Europe into a triple-dip recession ).

“Take that” then Obama / EU cronies.

Apparently the big boys in Washington and The EU are both completely shocked and outraged ( yet imposing sanction of their own is always Ok – right? )

Putin will not be bullied, now with the “supposed recovery” in The EU ( ya right ) hanging in the balance. Like it has anything to do “what so ever” with Putin or Russia.

This is now coming to a head as the West continues to do anything possible to provoke the “calm cool and collected” Putin.

The U.S must make war in order to retain “reserve currency status” and continue with the Ponzi at whatever cost.

Putin’s latest action keeps the game in check, and provides hope for those of us ( most of the planets population ) who look forward to a day when The U.S looks to concentrate on its own “completely f#&ked up situation”, starts taking care of its “own people” and keeps its big fat “overly indebted nose” out of other people business.

You’d think the people of The Ukraine were “made of gold” considering the amount of interest from Washington! No wait…….gas/oil – that’s it.

Currency wars turn to trade wars…….

Trade wars turn to “people wars”.

Hey – what’s up fellow traders? I know the flow of “daily trading info” has dwindled to a certain degree here at the public blog as it’s now “hopping” in The Members Area!

Things are really looking to pick up here in coming days / weeks with “The Fed news” late August as well current weakness in global equities assuring fireworks to follow!

Come check it out at www.forexkong.net

 

 

 

Navigating The Turn – 2 Years Without Returns?

Forex Kong 5 Comments

Considering that markets have more or less “skyrocketed higher” for such an extended period of time that the majority of investors / traders are likely convinced that this is just the “new normal” ( I can’t stand that expression by the way – as it reeks of complacency and “idleness”) and that dips should be bought, on and on, no worries, The Fed has your back etc etc…

It’s easy to understand, as even heightened geopolitical concerns continue to take the back seat, along side lowered global GDP forecasts, poor data out of Japan etc..It could easily appear to the casual observer that “nothing” can get in the way of markets just moving higher, and even higher.

But what happens when the turn is made? I mean…..we all have to appreciate that “nothing goes up forever” right? Historically speaking we can see the typical “boom and bust cycle” usually manifests in a “5 year up and 2 year down” type scenario – and we’re well past the 5 year up mark.

As investors / traders it would completely foolish to “simply ignore” these longer term patterns as I can imagine most of you…..have likely been caught doing that a time or two before right?

Tech / boom / crash 2000 maybe? Credit / housing / crash of 2007 perhaps?

I find it highly unlikely that many of you successfully navigated these “significant turns” to continue generating profits during the 2 year period following these incredible crashes in risk.

Take a look:

Market_Tops_Forex_Kong

Market_Tops_Forex_Kong

Market tops can be seen almost “to the letter” on a 7 year cycle with 5 years up….and 2 years down, with us sitting “right at the max” of this “extended 5 year move higher” based solely in the “money printing efforts” made by Central Banks.

The idea of going through this again ( as why would this time be any different? ) can’t possibly be appealing. Considering where you are in life, and the prospects of a “full 2 years” with your portfolio drawndown considerably – not to mention the mental and psychological end of things – who needs the grief?

You’ve come this far with your investing / trading decisions while the “good times have been good” so…..why not extend the same effort when ” the good times are bad”?

Suggestions to follow….

 

Yellen Gonna Prick Yer Bubble – Aug 21st

Forex Kong Got something to say?

I encourage investors and traders of all asset classes to just take a minute here  – and listen up.

As much as I understand you’ve likely got a BBQ to tend to or perhaps a Birthday party for your dog, this will only take a second.

The annual Jackson Hole economic symposium, a three-day conference in Wyoming begins on Aug. 21st where The Fed meets each year for the continued discussions of world domination,fashion tips for bankers,entertainment news, and of course – monetary policy.

This time it’s going to be different. You need to get this on your radar.

Risking complete and total repute ( if they’ve still got any left at all ) The Fed is finally going to “actually say something” with respect to letting some of the “hot air” out of this ridiculous stock bubble.

With the bond buying set to “end in October” Yes! END IN OCTOBER! This will only give investors a few short months ( more like 6 weeks ) to re-evaluate their current holdings / consider taking profits and head for the exits in an “orderly fashion” as interest rates are set to rise much sooner than most have been anticipating.

Now you ask me well……”How does this affect me Kong?” “I own Apple! One of the greatest companies on Earth…I can’t imagine anything The Fed says having much to do with them?

Listen.No stock survives on its own accord when “global risk for appetite” wanes. No stock.

When large institutional investors ( those that dwarf your portfolio by 10,000x plus ) start looking at investments where “higher interest rates” come at them like a dull knifes in the kidneys – trust me.

They sell.

You can’t boil this down to single days trading, or even a single week or month when you are staring dead into the eyes of such a “fundamental shift in monetary policy” and it’s far-reaching effects.

Housing, equities, credit / loans, dog food, birthday presents, beer, Apple and “everything else on this planet” that has been pushed along by way of “massive injections of liquidity by Central Banks” will very soon feel the effect of having that taken away.

The Fed hopes the exit will be in an “orderly fashion” but you know yourself best. You’ll hang on “just like the guy next door” thinking you’ve got this figured out and that “just one more day er two” and then I’ll cash out – that’s what I’ll do. Smart.

Doesn’t sound “too orderly” if you and the guy next door, and of course every investor on your block are thinking the same way now does it?

Everybody always runs for the exits all at once…..and everyone is always, always too late.

Watch for news surrounding the Jackson Hole Meeting around August 21st. You won’t want to miss it.

 

 

 

USD Topping Out – Nikkei Weekly Pin Bar

Forex Kong Got something to say?

The other day’s 100 pip ramp up in USD/JPY has stuck – so far.

Sitting up here at the top end of the range it’s obvious that The BOJ did everything it could “pre U.S GDP debacle” to keep the status quo and defend the line at 101.20.

Please appreciate the significance of this as…..the ultimate “breakdown” in USD/JPY is the signal / breakdown required for this entire “house of cards” to take a serious, serious blow.

The fact that currency markets have literally “stood still” for the past 48 hours as global equities take their first serious hit in months says a lot – affirming “just how desperate” the co-ordinated effort of Central Bankers ( to keep this ball in the air ) has become.

The subsequent breakdown in /ES ( SP 500 futures ) has now broken below major support that “under any normal conditions” would signal what we usually call an “intermediate decline” but again…..considering who we’re up against – I can’t get too excited looking for much further downside short of this thing “popping” higher first.

Nikkei ( as suggested the other day ) appears to have “popped and dropped” back into it’s near term range , also generating an interesting looking “pin bar” on the weekly time frame. The likely “top of wave 2” in our existing framework.

 

Nikkei_Weekly_Aug_01_Forex_Kong

Nikkei_Weekly_Aug_01_Forex_Kong

Considering the waves of poor data that continue to flood out of Japan it’s “all but certain” that the recent ramp job was / was purely Central Bank induced, “yet again” keeping this thing afloat as long as they possibly can.

What we begin to understand here now,  is just how desperate the situation is and that….more than likely the fallout will be much worse / severe than your average “garden variet” BTD ( buy the dip ) and “everything will be ok” type thing.

Trade wise – considering the massive overbought conditions of The U.S Dollar one has to consider looking long both EUR/USD as well GBP/USD here but again with caution as the “solid up trend in USD” would have this trade originally manifest as “counter trend”.

I’m having trouble imagining the U.S Fed letting USD get much further out of the basement here as every single uptick essentially drives the cost of U.S Debt higher ( being denominated in USD of course ) and “how soon we forget” – The Fed still wants to crush the currency.

For those brave enough to get out and challenge the BOJ here in coming days, I see that many of the long JPY pairs have retraced a touch and could provide for “re entry” here next week including short NZD/JPY, CAD/JPY and entry short USD/JPY up here at the top end “should we see reversal first”.

Otherwise the blatantly obvious trade here is looking at EUR, considering that if USD rolls over here and spends the next 6-8 days retracing ( or perhaps generating a much larger fall ) the biggest returns will be seen vs EU currencies.

AUD has clearly had the wind taken out of it on the “risk off” move over the past couple days but it really depends “against what” with AUD/JPY still firmly under the grasp of The BOJ.

I’ll be looking for entry long EUR/USD above 1.34 after the U.S data release here this morning, and will cover the specifics of several other currency pairs ( if it really even matters in this situation ) over the weekend.

The ponzi either goes another “final round” ( likely trading flat to upward for the rest of August / early September ) or it doesn’t.

That’s really all there is too it.

Forex Markets Frozen – Risk Comes Off

Forex Kong 4 Comments

If anyone’s had question as to “just what extent” the Central Banks have got their hands wrapped around these markets – you’ve gotta love this.

A -34 point loss on The SP 500 as U.S Equities erases 2 full months trading in a matter of hours, while the U.S Dollar ( and the entire currency market for what it’s worth ) remains unchanged.

Honestly, on a day like today ( perhaps a year ago ) I would have been dancing around the patio naked, with a sombrero and the Ipad, busting a gut at the ridiculous amount of profits made with my “short risk” positions – but today?

I can’t freakin well believe this. The entire Foreign Exchange Market is on lock down.

The U.S Dollar has moved all of 15 pips vs JPY and for the most part, not a single currency has made a move “any larger” than one might expect during a typical “hour” of normal trading. It’s like nothing has even happened!

Frankly, I’ve never ( in my entire career trading ) seen anything like it, and find this to be extremely concerning.

If a “day like today” can’t get this thing off it’s ass – WTF???

As these things don’t turn on a dime – I understand, but in this case we’ve got a real anomaly here.

This MUST be setting up for something far larger.

Forex, Stocks And Gold – Trading The Week Ahead

Forex Kong 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

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 Kong 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.

USD/JPY – A Pair You Can Learn From

Forex Kong 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