Quite a few subjects to choose from to fill my opening comments to the blog; –
- CHINA / U.S. trade deal.
- TRUMP – continuing to mislead voters with “FAKE NEWS”.
- Continuing BREXIT woes for UK Prime Minister, Theresa May.
- How and why Democracy has failed in the UK?
- The EUROZONE about to implode as poor economic data continues.
- IRAN and middle east oil supplies – Potential military conflict ahead?
I have to go with TRUMP and CHINA trade deal although by the time this blog is posted my commentary could be old news as things may have moved on…. that is just a RISK that I will take!
Before that however….
I have to talk about the FX market. Last week was bizarre for me, and maybe you as well.
It started with the TRUMP tweets last weekend about the CHINA trade talks and raising tariffs, more about that later.
The implication of that tweet storm was that it brought me to a complete halt with trading. My initial thoughts were there would be volatility until the Chinese Vice Premier, Liu He arrived, if he came at all, and did I want to be a part of the nonsense that was about to unveil? So, I sat back and informed subscribers of my decision and plan.
There was an RBNZ Monetary Policy statement late Wednesday night (for me) I decided and announced that I would be there at my screens. I was tired it was a “Grab ‘n Go” affair, although I did hang around for the Adrian Orr, RBNZ Governor, Press Conference for what it was worth. I made a lot of pips with my plan. I had 9 screens in play with trades between 5 machines. It was a good night.
Apart from the RBNZ, I have been patiently waiting for hard news away from TRUMP spin etc… I was in real terms basically on “Gardening Leave”.
Yet, this month so far, the FX PREMIUM subscriber area has generated +1,244 pips, which is no mean feat. But this return really emanated from two key events that have taken place this month so far in FX for me anyway.
Firstly, following the UK local elections a week last Thursday, when both the main parties (Conservative and Labour) took a severe beating, losing seats and local control. The following day, there was a belief based on what, I am not sure, that they were coming together to get a BREXIT withdrawal agreement signed off. Both of the two leaders involved, Theresa May and Jeremy Corbyn, allegedly wanted to show the electorate that they were effective by getting a deal done.
The FX market rallied I took lots of pips out of BREXIT related trades via my TRADE PLAN for these trades.
Second was the RBNZ Interest rate and Monetary policy statement and press conference mentioned before.
So, for the past week, I have been an FX voyeur to all intents and purposes. I announced my plan to my subscribers; this was scheduled to start on the completion of a trade deal. Following the TRUMP tweet storm, he took me out of the market. I was basically flat going into last week and I saw no reason the change that given the market uncertainty. Apart from trading around the RBNZ.
Was that the right decision to exclude myself from the moves that happened last week especially with the JPY strength that came through the FX market with all the JPY pairs on a flight to safety move?
I can argue both ways, and here are my thoughts: –
- My start to the month with pips added is good.
- Did I let pips go by, by not participating? …YES.
- Did I suffer FOMO? …YES.
- Was the CHINA TRADE deal a high risk, and high volatile event? …YES.
- With hindsight do I regret not participating…YES.
- However, I traded my PLAN. That is paramount for RISK MANAGEMENT.
My point with the above is that I stuck to my guns and did not jump in chasing the market which is a novice and stupid thing to do. It can work sometimes but over time as a trader it is a bad habit and it fails more times that it succeeds.
Moving on, and, back to TRUMP…
What really happened…?
What caused the TRUMP tweet storm?
BRAVADO, BOLL***S, BULLS**T or BIDEN?
Below are the tweets that started it all from last weekend (4th / 5th May 2019).
So, do we want to attribute blame for the breakdown in talks?
TRUMP lays the blame at the door of the Chinese negotiating team, no surprises there, TRUMP has never admitted any wrong doings in his life. That reminds me I must write to Pope Francis at the Vatican to request that TRUMP be made a Saint.
Here, in no particular order are some questions I have: –
- Were the talks failing as TRUMP’S bully boy antics were just not working with CHINA?
- CHINA is in the middle of an Economic Plan to re-brand and re-energize the country. Are these trade talks an annoying sideshow that they feel that they have to participate in?
- Are CHINA being “cute whores” by delaying action and essentially playing the long game by running down the clock into the 2020 elections?
- Did TRUMP tweet knowing that holding a gun to the head of the China negotiators they would just dig their heels in allowing TRUMP to look strong to his base and Washington?
- Its easy to blame CHINA for failure. Culturally they will not run to twitter like TRUMP to justify themselves.
- TRUMP wants lower interest rates from the FED. If talks weren’t moving forward fast enough, jeopardizing the talks allows him to place the US economy at enough downside risk that a FED interest rate cut to counter-balance would probably happen which, is what he wanted all along?
- It is TRUMP’S base and the rest of his potential voting public that are being taxed by his actions. Who advises TRUMP that CHINA is paying for his tariff increases?
TRUMP’S actions and the U.S. / CHINA trade deal as a key news event provoked so much twitter activity it was incredible. On Friday morning last week here are three tweets at random in my feed that caught my attention, following the $200Billion tariff increase from 10% to 25% which was added to China imports.
They are all factual and is it any wonder the markets feel trapped.
Here is my conspiracy thought….
We are heading into the run up of the 2020 U.S. Presidential elections.
Would TRUMP jeopardize the U.S. / CHINA trade deal in favour of increasing his chances for re-election?
I believe he would.
TRUMP has lied and allegedly cheated and misinformed his way through his Presidency so far, why wouldn’t he be thinking ahead for his own good?
I think he is literally crapping himself with the thoughts of going up against Democratic front runner ex. Vice President Joe Biden.
By pulling out of TRADE DEAL talks blaming CHINA: –
- TRUMP appears strong and presents a don’t f**k with me approach to his base.
- His tweets regarding CHINA on trade were belligerent and direct, which his base would just love… the big “I am” approach.
- His actions also align him with the policy makers in D.C. who do not trust CHINA e.g. you can just see this vis-à-vis the Huawei debate.
- His GOP support numbers would increase taking a tough stand with CHINA. A strong and tough President is seen as a politically strong vehicle to get behind going into a general election.
- TRUMP uses old data about Biden during the Obama presidency where they were NOT direct with CHINA and let things drift. They were weak. This would be used over and over again during election time.
All of the above, give him a selling edge of political strength to be used in the future in his potential leadership fight with Joe Biden.
The Chinese are probably willing to go along with delays. They would in my opinion be happy to plod along, counting down the clock hoping that TRUMP does NOT get a second term. The problem would then go away, and, they would hope that tariffs would reduce as the U.S. consumers are paying for it.
CHINA could retaliate at some stage it’s all part of the game.
What could they do?
- Delay U.S. imports through increased Custom checks.
- Add more bureaucracy by more licensing paperwork.
- Add more tariffs to U.S. imports.
- Weaponize the Yuan to nullify tariff increases
It all depends whether they want to be nasty or nice, keep it gentlemanlike or escalate the TRADE WAR!
Chinese Vice President, Liu He, left on Friday last week stating that the talks went “fairly well”
The U.S. negotiators apparently gave Beijing three to four weeks to reach a deal before TRUMP places more tariffs on another $325Billion of Chinese imports…
I have given you the “BIDEN” conspiracy thoughts…
Now for the BOLLOCKS and the BULLSHIT.
If the negotiations were close, surely, they would stay working over the weekend.
Basically, CHINA said we are off, this is “BOLLOCKS”.
The U.S. put out a “BULLSHIIT” communique stating Liu He and his team have gone back to Beijing to consider. In real terms CHINA has been told in a few weeks we will load up tariffs on everything else.
I am not sure that there is a deal.
FOREX REVIEW:
1. FX – FORWARDS, BACKWARDS & SIDEWAYS:
1.1. THIS WEEK’S ECONOMIC DATA:
NOTE: Only the items that interest me are listed here.
1.2. BIAS CHART – USD MAJORS SUPPORT and RESISTANCE:
1.3. USD INDEX (DXY) OVERVIEW – MY THOUGHTS:
The Daily DXY chart is below and my thoughts, ideas and comments regarding the DXY are contained on the chart.
1.4. USD MAJORS – TRADING CHARTS and MY THOUGHTS:
1.4.1. EUR/USD:
The DAILY chart below shows a number of key points to note.
- Pricing is contained inside a down sloping channel pattern.
- (PURPLE DOTTED LINES) Indicate a series of lower highs and lower lows.
- The range we are in is 1.1110 to 1.1265.
My BIAS is still short. There are so many traders out there on twitter everyday claiming a bottom. … yet inside the range we trade.
Yes, a break above 1.1265 changes my thoughts but until that happens, I do not understand these bottom pickers.
1.4.2. GBP/USD:
No change here.
Longer-term I am still bullish this pair and believe my target on the attached chart of 1.4180 will be taken out as long as we have a BREXIT withdrawal agreement and progress is made.
The inverted head and shoulders pattern is still in play, even with a trend line support test around 1.2830.
Above 1.3300 is a bullish move in my opinion and above here I think the cable would squeeze like no one’s business.
1.4.3. AUD/USD:
I am in a love / hate relationship with this currency.
The DAILY chart below shows a bear flag pattern. It is still valid; I am looking for a spike to re-enter short.
1.4.4. NZD/USD:
Sellers are selling RIPS higher with this pair.
Yes, the RBNZ Governor Adrian Orr, basically made an error by walking back the rate cut. A classic… this Central Bank always does it regardless of Governor. As I wrote to my WEEKLY FX PREMIUM subscribers a government spokesman would be brought out after Orr’s screw up to talk back concern over existing price levels of the NZD.
This happened and this is why spikes are being sold into.
I remain bearish the NZD.
1.4.5. USD/CAD:
Blow out employment Data last week, 10 times above objective. …incredible numbers.
I remain “Not sure” with the CAD.
I have no doubt the analysts will be out calling for rate hikes again this week. The BOC through governor Stephen Poloz will respond by saying it’s all data dependent!
I want to be short the USD/CAD, but I am neutral for now. Not sure if recent economic data are just blips. I want to see a consistent month of data before revising my thoughts.
1.4.6. USD/CHF:
I want to be long this currency pair.
For that to happen I would expect the EUR/USD to dive lower. This would keep the inverse relationship in place. My problem is I want to enter long a little way back from the current prices. This would mean a EUR/USD spike higher in the short-term, which, I don’t want to see!
I am caught between a rock and a hard place.
1.4.7. USD/JPY:
I missed all of the recent dive lower on the back of the U.S. / CHINA trade deal shenanigans.
I am now expecting a bit of a pullback that I can look to sell into.
2. THE WEEKLY FX PREMIUM TRADING SUMMARY:
May 2019 so far: +1,249 net profitable pips.
2019 year to date: +7,461 net profitable pips.
The WEEKLY FX PREMIUM is my subscribed based FX support option, which offers, subscribers’ full access to my suggested trade set-ups and my market commentaries.
If you go to my website you will see more information about the WEEKLY FX PREMIUM, including the “SUBSCRIBE” tab at the top of my welcome page.
My website www.weeklyfxdrivethru.com has full details of my trade projection for 2019 along with reasons why you should consider joining my other subscribers at the WEEKLY FX PREMIUM. You will this information under the “History and Performance “tab
Plus, my website also contains full details of the subscription options available. You will find this under the “Subscriptions” tab.
3. WEEKLY FX PREMIUM SUBSCRIBERS ONLY:
This section has content only visible for WEEKLY FX PREMIUM subscribers.
4. THE FINAL SHOT:
Nothing more to add here, I have said enough except,
As usual…
Always remember longevity in Forex trading can only be achieved through trading with good RISK and MONEY MANAGEMENT, and above all set your position sizes in accordance with the size of your account and allow for some flexibility.
Scott Pickering
The Pip Accumulator
Twitter: @pipaccumulator
https://weeklyfxdrivethru.com/disclaimer/
BLOG VERSION: #321 FREE NEWSLETTER
DATE: 12th May 2019