ON THE AIR with F.A.C.E.

Early this week, I was back on the air with Dale Pinkert. In front of hundreds of live traders in the audience, I walked through my rationale for guppy, a bullish cable, a bearish euro and a continued dumping of the Canadian dollar:

 

There are ebbs and flows to every market. Trade what you see. Invest with a pro. [sponsored]

ON THE AIR with F.A.C.E.

Happy new year to the Forex Analytix team! This team of traders are experts and veterans in forex trading. Many of them I have been following for many years on Twitter (@nictrades, @spz_trader, @forexstophunter) and even before there was a Twitter (@pipczar). But the F.A.C.E. community is also full of many expert traders as well as new traders. So when I am asked to come on the show and discuss my views of the market, I consider it quite an honor. The respect, questions and great feedback I get from this team and audience makes it such pleasure to return.

Dale has such great timing as I made my first 2018 appearance on F.A.C.E. right before the Great British pound went on this monster breakout today. I revealed a few secrets that even Dale admitted he hadn’t heard from me before on his shows. The specific levels have been left far behind after Wednesday’s price action but the trading principles I discuss can be applied even now. Enjoy the show!

Intermarket Action Showing 1st Signs of Concern

The $GBPJPY has a huge wedge on the weekly chart but it has been difficult to catch a move on this currency pair. Shorts at the top of the wedge just above 147.00 level had to contend with choppy price action. After a few weeks price finally broke down lower to the 144.00 support, and former resistance, level. The reason why I don’t think we’ve seen a huge correction is because we have been moving in such a way that allows momentum measured by the RSI to reset. With the measured move lower to the 144.00 support level. When the yen caught any kind of weakness, the $GBPJPY moved as high as 146.76, close to the former highs above 147.00 which are the former lows turned now resistance level. However, I think this one will just continue to grind lower. The price action has stair-stepped all the way down allowing momentum to progress naturally lower in the midst of this very measured move to the downside. Until this week.

GBPJPY WEEKLY CHART

If you look at U.S. equities, the major American stock indices have been making new all-time highs all summer. Equities just keep grinding higher despite the divergence in momentum between price and RSI. The divergence has been recently invalidated with momentum make a new high higher than the previous high. However, the other equity markets in Europe, Great Britain and Japan have all failed to make new highs in tandem with the U.S. markets. In fact, the $DAX has already broken below recent lows and the $NIK has failed to move higher. The weak dollar has clearly supported U.S. equities higher. In converse, the strong euro has been killing European equities as of late. The forex market has certainly been a factor behind the divergence in western stock markets.

DAX WEEKLY CHART

SPX DAILY CHART

And in steps North Korea. The geopolitical tension between North Korea and the United States has been building for months. But this week, the warring ideologies escalated to fighting words. The market closed today below the summer highs for the first time since trump took office this year. This looks to be a first, early signal that the market is starting to crack. Will it be 2007 all over again a decade later? Get ready.

ON AIR with F.A.C.E

I spend every Sunday with students looking at markets for the upcoming trading week. So I was happy to share this week’s insights with Dale Pinkert this morning of the Forex Analytix Community Experience (F.A.CE.). While F.A.C.E. may be a new community, Dale certainly is not. He is an expert trader who has great experience interviewing the best personalities and experts in the business. So it is always an honor to be asked to discuss my views on markets. The nugget I dropped today that Dale really liked:

Correlations are shot. There are no correlations right now in the market.

What do I mean? Watch my interview and market review to find out.

I Survived the Flash Crash

The GBP just crashed in epic proportions. The official number is -5% in 2 minutes and 3 seconds.

GBPUSD 15 MINUTE CHART

It is already being called a flash crash because of the sheer scale of it. And the craziest thing about it is that we were on the right side of it. The following quote is from this week’s Quid Report (Volume 79):

The follow-through lower already this week proves correct the assertion in Volume 76 – that the resumption of the long-term downtrend that is the Great British pound has indeed taken place…It is very likely that this bear trend is the direction sterling trades for the remainder of the calendar year.

The rest of the report this week goes on to outline the setups that took place at the beginning of this week. Most of the targets had been hit before the flash crash except for two trades. These positions are up HUGE.  I haven’t seen this much money on a single trade in a long time.

I SURVIVED THE FLASH CRASH….

So I immediately issued a tweet to all Quid Report readers. This is not verbatim but it was definitely to this effect:

keep calm and carry on

If you were short the GBP ahead of this flash crash – GOOD FOR YOU! KUDOS! How you manage this trade is up to you. But no one will blame you if you close out these positions for all this big money. Taking big profits is the name of the game!

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ON AIR with Benzinga’s #PreMarket Prep Show

As a sterling trader, I feel inundated by talks of the UK’s upcoming EU referendum vote. Well all forex traders have been feeling the fatigue of Brexit news that has besieged the markets especially when the calendar turned to June. Today is exactly one week from the imminent vote. My homegirl, @piptrain, put this request out into the universe.

So when I got on air with the guys at Benzinga the next day, they toyed with hosting such a panel. In case it doesn’t materialize, hear my thoughts on Brexit and the effects I believe are in store for sterling and how we should trade it.

 

ON AIR with FXStreet’s Live Analysis Room #FXRoom

GBP has gapped down across the board and the follow through right now is tremendous. I talked with Dale Pinkert, host of LAR #FXRoom, about the Brexit and the levels to watch that $GBPUSD and $GBPNZD. These levels are being challenged right now as the new trading week gets underway.

It’s already Monday and the Friday close is already so important. Neither bears nor bulls should get too excited with these opening flows. Anything can happen this week. Trade it well!

Premium trade setups with targets and stops are published in the Quid Report.

Strong Yen Implications

The $GBPJPY continues to slide. The Japanese yen rally has become sustainable as the Bank of Japan (BoJ) continues to give indications that it is considering a shift away from its quantitative and qualitative easing (QQE) program. This is a very subtle shift in BoJ sentiment that is not getting much media attention. Less QQE means that the BoJ erodes at the divergence gap in monetary policy that it has had with other major central banks for several years. Manufacturing PMI released last week was higher than expected, helping to confirm the BoJ’s optimistic economic outlooks for Japan. This hawkish tone is helping to strengthen the Japanese yen now at a time when risk aversion flows may be re-entering capital markets. The geopolitical wars and diplomacy tensions around the globe are starting to wear on investor sentiment. As U.S. equities weaken, the Japanese yen continues to be the largest beneficiary of increases in risk aversion flows. The new trading week opens with the $GBPJPY trading at extremely oversold levels. Despite its bearish sentiment in the medium term, the $GBPJPY may consolidate the new lows below the major 170.00 psychological level.

GBPJPY WEEKLY CHART

The $GBPJPY has not staged a correction since breaking below the 184.00 support level back in early December. The break below the 175.00 support level with the extremely shallow rallies is a major signal of bear strength as the $GBPJPY continues to grind lower. The $GBPJPY breaks nominally below the 170.00 psychological level as the new trading week begins, subtly indicating that the staunch support level is being met with more bearish psychology than last year. Perhaps with the RSI at extremely oversold levels, the $GBPJPY will bounce higher as sellers exhaust. A “healthy” correction off the new 169.30 lows moves the $GBPJPY back toward the 175.00 level to the sell zone starting at the 173.45, 38.2% Fibonacci level. Sellers are lined up to the 176.00 resistance level. Given the importance of the 170.00 support level on a bearish move that has seen very little retracement, a strong bounce is highly likely. More aggressive traders will look to take advantage of any move higher to establish a short position in the $GBPJPY. Continued strength in the Japanese yen is likely especially as crude oil prices remain so low, which is an aide to the Japanese economy.

Premium trade setups with targets and stops are published in the $GBPJPY Outlook for the Week in Volume 45, this week’s Quid Report.

QUID REPORT LIVE

Due to the holiday shortened week and it being the very last week of 2015, no Quid Report was published this week. Instead, I am doing a video update to last week’s written report. While I have been on many forex shows, this is my first time hosting a live broadcast. This should be a quick update and review for the week in progress. Enjoy! And please leave your feedback in the comments. Perhaps this will be a new thing for me in 2016.

Yen Strength Can’t Persist

The Bank of Japan (BoJ) has not objected to the recent strength in the Japanese yen. The Japanese yen continues to benefit from the risk aversion flows that are clamoring back into the markets when equity markets crashed around the globe. The recent move lower in U.S. equities has been highly correlated with a stronger Japanese yen due to risk aversion flows in the market. This week, however, risk appetite looks to fuel safe haven selling. Additionally, the BoJ may look to increase its already substantial QE program as early as next month. With deflationary pressures still prevalent in the Japanese economy and signs of softening economic data, the GBP/JPY may not be able to continue its descent lower (Volume 31). The weakening Japanese fundamentals is likely to support a rally in the GBP/JPY on the back of sustained JPY weakness. With the recent lows holding in the buy zone above the 61.8% Fibonacci level, a Fibonacci move could spark a rally back to the 195.50 highs.

GBPJPY 4 HOUR CHART

After falling to 180.34, the GBP/JPY staged a corrective rally in the two weeks ago to the 50% Fibonacci level. Making a new high at 188.26 on Federal Reserve volatility in the sell zone, the GBP/JPY made new lows last week to 180.66. Into the end of last week, selling momentum exhausted and price moved higher. The now failed lows signal a move higher for the GBP/JPY. Future direction will be largely dictated by the capital flows in U.S. equity markets. The failed lows in the GBP/JPY also coincide with the aforementioned failed low in the S&P 500. Increasing strength in the S&P 500 will have to overcome the key 2040 resistance level to see a new high higher than the previous 188.26 high in the GBP/JPY. Though a new high can still respect this sell zone, a sustained rally in U.S. equities supports a complete reversal in the GBP/JPY back to the highs. If, however, the S&P 500 retests the 1867 lows, the GBP/JPY can move lower from current levels to its zone of support between 176.20 and 174.86. A confirmed close below the 181.00 support level becomes an early signal of a continuation lower. A confirmed close above the 184.00 resistance level signals a move back to the previous highs above the 188.00 level.

Outlook for the week…


This is an excerpt from this week’s issue of QUID REPORT. Subscribers receive my research on all major GBP pairs at the beginning of the week, including access to @faithmightfx on Twitter for daily, real-time updates to the weekly report. AVAILABLE NOW.