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Current positions update.
It’s now Wednesday and positions have continued with our directional bias, Up. To over view our positions, we are holding the following positions all longs (buys). Aud/jpy, Eur/chf, Gbp/chf, Gbp/jpy, Usd/chf, and Usd/jpy. The Aud/jpy and Usd/jpy positions have retracted some since there ultimate high, but the Swiss Franc associated trades that we sold it against have more than made up for the strength of Japanese Yen (jpy). I could get into some macro fundamental breakdown of why the pairs are moving in the way that is playing out, but trading it on a shorter time frame of positions being held for only days, I think the technical aspect is more relevant and I don’t really have it in me to come up with some fundamental bs today. Instead we’ll just go over some facts about the trades.
The Eur/chf pair had originally sold off about -18%, our trade in that has moved up about +3.3%. Our Gbp/chf trade is up about +3.6%, that had sold off some -15% since the Swiss National Bank (SNB) removal of the Eur/chf $1.20 support barrier. Usd/chf is at +2.6% rebound from it's -14% sell off. Where are these going to end up you may ask? Beats me, my guess is we will probably hold close to the current levels with a possible testing of the high water marks from earlier this week. Both the Eur/chf and Gbp/chf reached up over a +4% rebound before settling back down to where they are currently. The Japanese yen trades have completely evaporated their gains and the Aud/jpy, Usd/jpy pairs are now posting a loss.
In one hour and 40 minutes Japanese retail sales are being released for year on year (y/y), so hopefully this will help out positions. Later at midnight my time, Great Britain national house prices month on month (m/m) are being released. Two hours after that German unemployment change and rate will be released, this could help out our Eur/chf trade, so of course we'll be praying for the best outcome.
Woke up this morning to the pleasant surprise of our positions having increased in gains. The usd/jpy trade that was down the past couple of days has turned a 180 degrees from the other day, up about as much as it had been down, currently almost +0.50%. Looking at a chart, it seems that the retail sales data that was released yesterday was the catalyst and the start of the upwards move, at least in usd/jpy. Aud/jpy seems to be another story, as mentioned earlier German unemployment rate and change were released which strengthened the Euro against the Australian dollar. Also earlier this week on tuesday German confidence came out a bit stronger, both of these data sets moved the Aud significantly against a leading global currency, which in turn affected the Aud dollar against the Yen. On a correlation heat map, these pairs Eur/aud & Aud/jpy have a strong negative correlation in the time frame of my swing trades, meaning when the Aud gets weak against the Euro, the same is likely to happen against the Yen.
Our current Swiss Franc trades are doing excellent, Eur/chf has moved +5.75%, Gbp/chf +5.25% and Usd/chf +4.75%
For economic data, in a couple of hours we have Australian Producer Price Index (ppi) which measures the selling price of domestic manufacturers. I imagine this could have an impact on our positions. Later German retail sales are being released, this will be relevant to our Eur/chf trade.
…So once again let’s hope for the best, bust out the rosary beads and the prayer rugs.
Hello and good day traders!
Previous trades were closed a couple of days ago for an overall gain. The Aud/Jpy and Usd/jpy were the two positions that refused to return a profit, which is more than ok considering our long Eur/Chf, Gbp/Chf and Usd/chf trades turned out so well.
This week Usd/jpy once again met all my parameters to go long and once again we seem to be bouncing around in a range testing and bouncing off resistance at 117,25. This trade has been bouncing around from negative -0.30% to +0.30%, negative, than back again. At this point I’ll be happy if it just breaks even or better yet I can get out a few ticks up. Yeah I know this is how currency moves, but it’s one thing to bounce around in a profit or loss and another to bounce around from loss to gain than back and forth.
In about 35 minutes, some economic data is being released for japan and with 2 of our 3 trade parameters still being met, hopefully this will give Usd/Jpy the push up we need until we get out in a couple days, when our exit parameters are met.
The data coming out is as follows.
:JPY Japan Buying Foreign Bonds (Yen) (JAN 30) previous ¥45.6B -medium importance
:JPY Japan Buying Foreign Stocks (Yen) (JAN 30) previous ¥382.1B -medium importance
:JPY Foreign Buying Japan Bonds (Yen) (JAN 30) previous ¥237.5B -low importance
:JPY Foreign Buying Japan Stocks (Yen) (JAN 30) previous ¥466.9B -low importance
About 1 hour and 40 minutes later the following is happening.
:JPY BOJ Iwata Gives Speech and Hold a Press Conference -low importance
As awaited the Japanese news was released and helped our trades. Usd/Jpy didn’t move immediately in our direction, but sometimes moves play out over the course of a few hours as traders figure out what they want to do and the manipulators have chance to run those positions.
Japanese purchasing of foreign bonds had increased from 44.2bln yen to 675.2bln yen, foreign stocks had increased from 382.1bln yen to 457.9bln yen. As for their purchasing of Japanese bonds, that dropped from 236.3bln yen to 70.2bln yen. Purchasing of Japanese stocks dropped from 464.8bln yen to 104.bln yen. Wow! the purchasing of foreign bonds increased +1428%. That blows me away, and the purchasing of domestic bonds and stocks fell an average of -74%. In a simplistic view of this, a layman's view, I would say this shows their doubt in the stability of their economy. I haven't delved too deep into the structure of their finances, so they could be balancing it all out in some way, but as for trading it on a time frame of a couple days, I think most traders are looking at the currency the way I stated. From the time of this economic news, the Usd/Jpy has moved up about +0.17% as I type this. The pair also seems to be unable to find a direction and wants to oscillate back and forth across the 117.45, ranging between 117.10 to 117.70
For tomorrow we have non-farm payrolls and unemployment, so we'll go ahead and hold to see what happens then.
Cause and effect is the basis of all currency trading. Currency exchange is supply and demand; fundamental analysis that examines economic factors can help determine supply and demand. You could spend years even decades learning all there is to know about Forex trading. You can apprentice “all knowing traders” dump money into technical systems, apps, and lessons. The best education is experience, if by chance (you will), you do come across the “all knowing trader” run the other way. A good trader is a humble one; they have made bad calls and lost a lot and also made great moves and gained. A humble trader will have more respect for the Forex market, including the individuals that follow their own way and want to learn all they can. The Forex market is a combination of corporate and private traders using different strategies, looking at different pieces of data that sway their moves. With more than eight major currencies and at least seventeen derivatives available for trading at any given time, finding the right information that will work for your strategy is key. More than seven pieces of vital information is released daily, regarding the eight major currencies. This information can be about the country’s inflation, deflation, trade balance, payroll, production, sales, or banks. Specific information can be much more important and move the market causing high, medium, or low volatility. We can download many different types of economic calendars that highlight all of these aspects even what the rate the volatility will be upon the reports release. Timing is also another thing to consider. The time when the information is released in another country can create a trend quickly causing momentum unable to sustain even the right moves. Even if you do your research, the risk of reversal is high due to the volatility.
U.S. economic releases are looked at the most since the USD is involved with 90% of all trades. Unfortunately, the United States focuses on corruption everywhere but America. The correction in the reports will come regardless of what they report now. If you are not one of the sheep believing that the economic data reports are accurate, you can predict what the outcome of those reports will be.The real indicator is price.You can listen to the rumors or buy and sell fact. Focusing on too much on news, propaganda, and fundamentals can damage your performance.The major players are not concerned with the facts or reports based on what they want to happen.
It is important to watch how the market is moving and just what information is making an impact. What factors move the market? I mentioned before Fundamental analysis, the study of economic factors that influence the Forex market. Technical analysis on the other hand predicts patterns, studying price levels, volume, and then forecasting the pair and what direction they will move. Information is the key, and your own knowledge is truly power you have. Unfortunately, the United States focuses on corruption everywhere but America.If you are not one of the sheep believing that the economic data reports are accurate, you can predict what the outcome of those reports will be. If you are one or know one of the major players on Wall Street you may be able to gain your own what they call a “Whisper Number” this number is the earnings per share (EPS) unpublished and unreleased forecast. These numbers are much more regulated and confidential now days. However, major corporations and the extremely wealthy still get tips here and there. You can also generate your very own Whisper Number, just by your own research, information, company financials, and market trends. You can even use instinct or gut feelings when it differs from the consensus forecast you can set your trades appropriately to gain an edge. Forex trading is not based on logic, it is primary a price action strategy, gauging the directional future of the market. You should definitely incorporate all the information given to position yourself correctly.
A study on just how long information from the news affects the market was done by Martin D. D. Evans and Richard K. Lyons in 2004. It showed that it takes hours if not days to absorb the effect on returns and order flow, it generally occurs in the first or second day and really pronounced by the third day lingering till the forth day. This study was also done in 2004. Technological advancements and instant data are much more accessible. You can see the effect happen quickly looking at the volatility. Volatility is crucial to understanding the way the market moves. How much a pair moves by the minute, hourly, daily, and long volatility vary drastically? Monitoring the volatility is constant, and can tell you how you should be trading. Volatility is much more useful when measured by the fundamental and technical analysis. Conditional bias will happen, politics, and other elements will throw off any predictions they have. Developing your own strategy is the key to achieve or sustain profitable trades.
The ever-looming Grexit decision has created weakness and uncertainty in
the Euro and the Central Banker’s have been planning just what to do
next and what limited options they have. The other currencies can
benefit from the decision one way or another, one alone would benefit
the most the Swiss Franc (CHF). If Greece exits the Euro (EUR)
Switzerland would have billions of fresh capital that would need a safe
place, that it wont be denominated into Greece’s new or old Lira, Peseta
or Drachma. One thing is for sure, the Swiss will do whatever it takes
to benefit them in the long run. The CEO of Zuercher Cantonal Bank,
Martin Scholl has said “anything is possible” when asked the question if
they were going to implement capital controls or lower the already
negative interest rates. Capital controls limit the flow of foreign
capital in a domestic economy. This flow in and out of capital affects
Forex, bond, equities and overall market based forces. Control over the
flow in and out of an economy can be seen as positive or negative and
has been a subject of much debate. The foreign capital includes tariffs,
taxes, outright legislation and volume. Many have strong opinions on
just how this can affect the economy overall. Economy’s open to foreign
capital give large companies easier access and the overall demand for
domestic stocks can rise a great deal. Some think it can limit the
efficiency and economic process, tight capital controls in developing
counties are common. The integration of financial markets along with
other global factors have contributed to the easing of controls, yet the
Swiss are saying this is a option. Central banks all over the world are
blowing up with liquidity, what choice does a independent Central Bank
have other than limiting their own currency’s convertibility? They have
an obligation to protect their country’s currency from the coming
currency crap-storms, and they will do whatever it takes.
The Swiss don’t really have any commodities so they import them in U.S.
dollars (USD) or in Euros (EUR) so they are striving to lower their
currency even though they are in a healthy position with good demand for
their currency. Capital controls are control of money and that just
leads to control of people, the banks are feeling as though they are
losing control over the money and the people. This is a big problem and
the SNB will have to make some major decisions before the grexit.
The Swiss have been open with their plans and generally give a great
deal when it comes to their next moves and strive in maintaining their
independence. They were not so forthcoming when they ended the cap, in
fact they made statements that would make people think they never would
end it. Because of this many think they have lost their well established
credibility. The Central Bank had stated that “The minimum exchange
rate must remain” just two days before ending the CHF cap, that caused a
black swan event within the market. Huge currency swings like that make
trading highly problematic, and fear moves the market the most. People
are veering from unstable currencies, however the CHF is a historically
“safe” currency. Normally capital controls are implemented to prevent a
massive outflow of capital not a inflow, in turn this would seem that
the National Bank (SNB) could be worried about a collapse in the CHF or
the other way around they thought that a strong currency would hurt
exports.
The currency war is accelerating. Central banks, like all decision
makers have a range of options. The SNB (one Friday afternoon on a bank
holiday weekend) may just impose negative interest rates to a level that
forces bank runs then order capital controls to lock everyone out of
getting their money, highly doubtful. The discussion of imposing
negative rates is a clear sign that the borrowing entity is bankrupt.
The SNB has not stated that they will impose the negative interest rates
or capital control. However, when you say you’re not considering
something at the moment, that seems to imply that you might consider it
in the future. Most people in the U.S. pay with plastic not cash , in
Europe more cash is used. We may soon have to bank at home , it will be
the only safe place for your money. The banker cartel’s worst fear is
that we will take the money printing press away from them and no longer
support digital and fiat.
Currently we are holding short/ sold the following positions. Gbp/jpy-0.26% Nzd/usd+0.37% Usd/cad+0.33% Usd/jpy+0.13%
Looking over the economic data that came out, USA consumer confidence saw a drop from 103.8 down to 96.4, weakening the Usd against the majority of the major currencies. In regards to exposure, our second largest position is short Usd against Cad and Jpy. Our primary exposure is long/ bought Jpy against Gbp and Usd. Since Usd/jpy is such a highly traded pair with alot of volume and it having dropped because of Usd weakness, I think this transpired into helping out our short Gbp/jpy trade. The Gbp/jpy pair had slowly been climbing against our directional call, but when USA consumer confidence was released, this pair dropped massively even though Usd is not part of the currency pair. I correlate this with the Usd/jpy pair moving down.
Tomorrow Nzd trade balance data is released, so I imagine this will have an influence on our Nzd/usd short position. Hopefully this will push Nzd/usd back down to it’s low of today and push through that support !
Well, New Zealand trade balance was released and came out stronger than expected at 56 million. Previously it had been -159 million and was forecast to come out at -158 million, so it was a massive surprise to the market, particularly with our Nzd/usd short position. Our Nzd/usd position is currently at -0.55%, but is still meeting trade parameters to be holding short. The rest of our positions are as follows Gbp/jpy-0.73% Usd/cad+0.76% Usd/jpy+0.16%
Position totals as a whole is oscillating around -0.46%, so far the last few days we have been anywhere from +1.00% to -1.00%
Tomorrow there is a lot of economic data being released for the USD, Consumer Price Index, Initial Claims (jobless) and Durable Goods Orders.
Once again we are waiting for some magic to happen and wake up to a profit !!
