FOREX Even though we have significant data this week, it's better to stay on the sidelines until January. Any established trend, whatever strong it is will be distorted by the current lack of liquidity and interest in trading during this end of the Year. I initiated 2 trades I didn't post here because of the risk it implies. I am strating to sell the Euro again (see one or 2 posts above) and I am starting to buy the NZD (In my tweet I mentioned the loonie by mistake). Again it's better to stay flat to avoid the current randomness. I will talk about the Euro and the NZD in the coming days.
FOREX. A quick update: NZD trade: We are buying the Kiwi vs the USD and the EURO GBP Trade We are selling the GBP vs the USD Euro Trade We are selling the Euro vs the USD (careful on this one). Sorry not to give more informations on the NZD, will talk about it soon. Our Experience if we close everything now has brought our 10k account to 38k within 3 months and with no drawdown. The Experience is near its End, and a new one will start on the 2nd of 2016. Follow @neoflytox for quicker updates..
GBP Trade GbpUsd Closing All because it's the End of the current Experience. We made 1280 Pips and $5700 NZD Trade NzdUsd Closing All because it's the End of the current Experience. We made 1 pip (lol) EurNzd Closing All because it's the End of the current Experience. We made 321 pip , $1010. Euro Trade EurUsd Closing All because it's the End of the current Experience. We made 109 pips, $448 . Ok the Experience is Over with an account value of $37K started with 10k (within 3 months). A new Experience will start next week. We stay bearish on the GBP, the Euro and Bullish on the NZD. We will open new trades next week based on the same incentives but with a way smaller capital since we restart with a new 10k account.
Hi happy new year and welcome to our second Experience. We start with a fresh account on a retail platform with a 10k account. This Experience will last 3 months until March 31st. Euro Trade EurUsd: We sold 50K on Jan 4th We expect some strong pullback around 1.0740 , 1.0640 and 1.06. We will add on pullback after we make enough room to lock the upper positions. We are initiating a trade here and it's tricky because we are not far from the medium term consensus who valuate the pair around 1.0500. Techs are divided, some are waiting for a breakout below 1.08 and others try to play the swing from there. Real money is not going to buy the Euro but will need some confirmation on the CPI front to sell again. Conclusion: We initiate a trade here because the upside is limited but we must find out quickly how market is anticipating the next CPI releases.
Hi, sorry didn't find time to update this Journal. I posted this Yesterday on my blog. for real time updates you can follow @neoflytox on twitter JPY Trade: USDJPY: We were long 50K and added +25K this morning Jan13 This was posted Yesterday: Front running post China mess: Big turbulence under the radar. This night Gmt we have Chinese trade balance numbers and this time it can be a big deal. Broad stock market is under Chinese pressure and any thing lower than what's expected can renew the sell off. This means a flight to safety detrimental to our positioning. Participants will buy the Yen as a safe haven making our plan a bit pretentious. What can help us: Probably seeing the current mess the official number could be engineered to settle down the market, a lie that is. China is used to modify its econ numbers at will. Nobody believes them but market tend to move as if they were true. I don't see them printing below consensus but nevertheless, it's a risky situation. We are going to wait for the US closing to see how the Asian session is anticipating the event. I suspect that Chinese traders knowing how is the number before it's released will position themselves accordingly. In a thin session as Asia it can generate significant movements. Euro Trade: EurUsd: We were "short" 75K and added -25K on jan 13, now: -100K This was posted Yesterday: Econ numbers improving and parity moving away. So why are we so obsessed by selling the Euro while econ numbers are improving. Because the main focus is deflation and even though a growing economy generates inflation, seeing how Oil and commodities are plummeting it's not going to happen any time soon. It highly likely that the next CPI print will be still euro bearish and this is limiting the upside movements. Having said that the China numbers this night Gmt are going to impact the pair. It can hurt if the numbers are below consensus but we don't see the price moving above the range (1.0950). GBP Trade: GbpUsd: We were short -75K and added -25K (Jan 13) now -100K This was posted Yesterday: GBP Brexit fears not building up yet and BOE on hold One of our incentives explaining why we sell the GBP is at stake. The idea of a collateral damage in terms of growth coming from the EZ is seriously questioned because the EuroZone is doing better and better. Remains the Brexit threat to the economy not yet on the headlines and some deflationary pressures that are here to stay seeing the commodities slump. We stay here for now and will probably add around 1.4500.
Forex Jan 16: During the China / Oil mess. JPY TRADE UsdJpy: We were pending lower after taking some losses (61 pips) on the previous positions. We are now positioned long for 125K from lower levels. Security stop at 115.900. Keep in mind we are here trying to initiate a trade. We wouldn't be so heavy if we weren't covered. As usual we finance this with our positive floating P&L not with our capital. This is where the power of Forex Experience lies and building the mindset to handle it is what you need first. Forex is out of its mind. Currencies are becoming CL and Shanghai composite replica. This is not going to last. As we said, to calm down the game a probably manipulated number is going to print during the China's GDP release due on Tuesday the 19th. We believe that Chinese Gov is strong enough to calm down the domestic market and capitalized enough (huge foreign currencies reserve) to support its currency Oil is another story, and we are not going here to anticipate anything. EURO TRADE EurUsd: We don' have any stops here and we didn't deleverage. Why: Structurally the upside to the Euro is limited and, at the contray of the Yen, we don't see the current rise able to become self-powered. Nevertheless we will give this trade a chance and lock it as soon as possible because the downside is also limited. We expect a dovish Draghi's press conference. Problem is the Euro is more driven by Europeans bringing back home their cash than monetary policy. It's not going to last. GBP TRADE GbpUsd: We are entering our target area and we use the current fall to lock anything between 1.45 and 1.43. The pound is the only currency still moving as a currency. We have the next CPI as a catalyst due on Tuesday and we will probably add until then. Commodities Currencies We don't trade any commodities currencies since our last tentative with NZD. Because it's not a good Idea to trade commodities with Forex. If, let's say you want to profit from the CAD based on the Oil sell off, you're better off trading CL on futures market than UsdCad on Forex. You would first have a neater picture and second you wouldn't experience any inflow/outflow dynamics not to mention central banks interventions or other data impacts. Another problem with Oil, is its high sensitivity to Geopolitics. And lately this main driver is upside down. Normally seeing the tension between Saudis and Iran oil should be above $100/barrel not $30, whatever are the supply and reserve levels. This is a sign that something is structurally changing and its influence on commodities currencies and even the broad economy is changing too. Meaning that Oil importance as a leading indicator and commodities currency driver is going to wane, and what we are seeing now is a market driven by an outdated analysis. Actually we don't care, we just don't want to be there. Nevertheless like what we are trying to do on the Yen, there will be a moment when we will be interested in buying CAD or AUD to profit from the low prices. This will happen when market fully prices in the current situation, not before. I'am often asked to give more explanations about the way I trade, those interested can have a first read here : http://www.tradingsolo.com/forex-the...stem-strategy/
THIS WAS POSTED ON THURSDAY 21st CHARTS ARE UPDATED JPY Trade UsdJpy: We are long 175k below 118.000. Post China mess and Polarized Forex: Security stop at 115.900. We base this trade on improvements of the market sentiment focused on China and Oil. The other incentive being Japan likely refusing any further appreciation of the Yen. BOJ jawboning. Euro Trade EurUsd: We are holding -225k now. As expected Draghi's presser wasn't only dovish but also it hinted at possible monetary policy actions on March meeting. We are holding -225k now. We have a new focus for the Euro, ECB March meeting. We see the market starting to price in further easing until then. We don' have any stops here and we added after the press conference, looking at 1.0500. Cons: Cash returning back home supporting the Euro (European investors fleeing the global slump). GBP Trade GbpUsd: We took profit as planned at 1.4200 making 1088 pips. Still holding -50k from the highs. We want some consolidations to add again. A better place would be above 1.4250. Some talks about a slightly rising inflation, nothing serious so far. CAD Trade CadChf: +25K from the lows, added +25K at 0.7075 Here we are using a market distortion to initiate the trade CAD is too stretched on the downside and therefore is prone to short squeezes. Structurally the CAD is falling while econ numbers are improving, it can't last. Governor Poloz surprising hawkishness We use CHF before Draghi to profit from its correlation with Euro. We also use CHF because of the high differential with CAD in terms of risk sentiment Cons: Oil fall not entirely priced in nor over. Conclusion: We are more trying here to trade a market distortion than a real conviction. We start very light in terms of position size while looking at any sign able to amplify the squeeze. Something like Saudis more keen to cut production or a significant diminution in Oil reserves. We don't trade Oil we trade the squeeze, but if the Oil market calms down (we have no opinion on this), CAD should return to a more normal value. Sorry to post with such a significant delay. for real time trading take a look here http://www.tradingsolo.com/wp-login....ack-invitation
WEEKLY RECAP JAN 31st We will only post weekly recaps JPY TRADE UsdJpy: Our anticipated scenario on BOJ jawboning associated with a very stretched positioning worked very well. AS anticipated the short squeeze worked very well and allows to get quickly far away from our first entry levels. BOJ is introducing negative rates, given us the 125.000 area as a possible target. Some of our lower positions are locked in case some stress is renewed on Stocks. We are not out of the wood yet on the Oil front, OPEC Russia negotiations have always failed so far. EUR TRADE EurUsd: Re-positioning at the highs of the range after FOMC. We had a hard time handling our floating P&L when some bidders managed to take out the stops above 1.0955. We re-positioned higher after having closed all our positions in the middle of the range while opening them higher. This was costly but what we anticipated happened after the last catalyst of the week was release (US GDP). Our re-positioning was also motivated by some rumors of SNB buying the Euro across the board. Our first target is still the 1.0500 area and we locked some positions in case of a renewed stress on the broad market. GBP TRADE GbpUsd: The profits we previously took here, were used to pay for the EurUsd re-positioning. We have a better picture now on GBP in terms of next target and we will try to reach it heavily loaded. Nevertheless, Cable can become a crazy beast, it doesn't last but it can impact our risk exposure; We will proceed tactically using catalysts while monitoring closely Inflation numbers. GbpAud: This is a companion trade in our GBP trade, the core being GbpUsd. We are rather neutral on AUD but we start to think that its downside is limited. Though we must really be cautious since the BOJ bazooka (negative rate) can inspire/influence the RBA. Caution; small and locked positions needed here. CAD Trade CadChf: Here too we used the extended positioning prone to trigger short squeezes to front run the market. We proceed cautiously with small increments and locking systematically after we managed to have some room. The risk of renewed Oil sell off can't be dismissed even though we thing that CAD is less and less sensitive to Oil. We didn't use UsdCad to initiate this trade; we don't sell a currency on which we are not bearish (USD), unless if it is for a tactical short term trade. Sorry to post with such a significant delay. for real time trading take a look here http://www.tradingsolo.com/wp-login....ack-invitation
Forex Trading Pseudo Plaza accord hopes Our Core View: Eur: We are selling the EUR with the 10th March ECB meeting as a target. We think that until then the market will start pricing in a very dovish outcome probably bringing back the EUR inside the 1.10-1.07 former range vs USD. We also use the CHF which is highly correlated to the EUR, heavily unbalanced in terms of positioning and under the threat of an aggressive SNB wanting parity on EurChf. GBP: We wanted to fade the GBP temporary up move due to the anti-Brexit deal euphoria but it was short lived (probably due to London Mayor announcing his support to Brexit). We think that Brexit fears are going now to hit the headlines with uncertain polls and dramatic warnings. This is going to put heavy pressure on the GBP until June to which you can add a very dovish BOE and a weakening CPI. This pressure can generate significant, if not massive, outflows due to Investors hating uncertainty, London being the financial heart of Europe. We are only interested here in the market anticipations not in the outcome of these events. This week intentions: We have the G20 central bankers and Fin Ministers meeting starting the 27th of February. Market may start seeing this as the big accord, Plaza like, between world powers to boost global growth. We anticipate during this week market pricing in a positive outcome we can translate in the following anticipations. EUR: The inflows due to repatriations may weaken further supporting our Core view. This can help us adding shorts at different liquidity levels. CHF: The same can be said here, while we may also profit from the heavily unbalanced positioning on UsdChf prone to squeezing. GBP: We were expected to fade from at least 1.45, but the Eu summit was sold quickly. We rhink that its too soon to be heavy on GBP and will wait for the GDP data. USD: Good data starts piling up lately for the US and even on the CPI front. Even though we dont know how the schizoid stock market is going to make his mind between easy money (dovish Fed) and improving economy (hawkish Fed), in Forex the perspective of a more hawkish Fed is going to support the USD and our View in the same way. Risks: Oil pressure adding to market stress. View: We see the Stock market becoming less and less sensitive to Oil volatility. Furthemore Oil shorts will start thinking that Saudi/Russia may mention production cuts since they were able to agree on freezing it Banking sector instability impacting the CHF heavily: View: Theres a limit to CHF safe haven status. The first being the lack of liquidity preventing buyers to find sellers at decent price. The second being the SNB mixing up monetary policy and FX rates manipulation. G20 meeting seen as a non-event: Our view: Seeing the current global stress and the global deflationary fears, the financial leaders will tend to reassure the financial world and the economic agents. We will probably have some headlines showing their determination and commitments in restoring growth. Though we thing the outcome is going to be a non-event but again we are just interested in market anticipations. This week heavy data supporting the Euro (EZ PMIs and CPIs-German GDP and IFO): Our view: Nothing can support the Euro beside repatriation flows due to risk off. Good prints would mean less stress therefore less inflows but not less dovishness from the ECB. Bad prints would mean more stress but also more Dovishness from the ECB limiting the possible upside. The CPI is another story since its the main focus of the ECB (Price Stability) A good print is highly unlikely seeing how commodities are pressuring prices, but if it happens it can be a game changer on the short term. US Data weakening the USD: Our View: US needs several prints in the row before moving on this because of the good employment level and the surprising last CPI higher than expected.