<b><span style="text-decoration: underline;">1. INTRODUCTION:</span></b>

I am back safe and sound from the gastronomic road trip of the “Maritimes”. It was a tiring journey lots of kilometers covered and I would like to thank the Fx markets for welcoming me back with a snooze fest…talk about boring, boring, boring. I have never yawned so much as I have done this past five or six days. I was ready to leap back in with gusto!

I have often tweeted and used this blog to state my position, that I believe that Ben Bernanke is the most powerful man in the world. Can there now be any doubt? The entire investment community, whether written, audio or visual has gone into “Tapering” overdrive. If ever there was a case for cancelling Monday and Tuesday next week as days in the calendar we are looking at it now. The whole financial world is on hold pending Ben’s “FED Statement and Press Conference” next Wednesday afternoon (Eastern USA).

I received a question the other day from “H” in Glasgow, Scotland about my trading accounts, which basically asked, given the summer trading thin conditions and slow markets “Am I making money at the moment, if so is it greater or less than last year?”

As I have stated many times of late it is a difficult market in which to trade, whether you are a novice or have a few years experience.

I looked from August 1<sup>st</sup> until the present. This year in that period I lost just over $250. In comparison to last year, where I added over 7% to my bottom line, which in cash terms was over $1,000 to give you a cash comparison. I always mange the balances of my accounts within a $2,000-$3,000 range. So, to answer your question my trading income is less this year than last year for me.

This year we have been range bound and the fact that “Tapering” has been hanging over the markets like the “Sword of Damocles”, this means that the markets have been in denial, plus, the JPY was controlling matters for a week or so in August so it was strange times to trade. That's how I saw it anyway.

I believe, that in the summer if you can keep your head above water in your trading you are doing a great job. Why trade in the summer if “not drowning” is the goal? Market familiarity is my only answer; you always need to keep in touch. But remember you can trade a “Dummy” account. It’s not the same for me trading with a demo/dummy account so I am more times than not just a “market voyeur”. But remaining in touch is essential to success.

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<b><span style="text-decoration: underline;">2. THE VIEW FROM MY TRADING DESK:</span></b>

<b><span style="text-decoration: underline;">I AM WATCHING MOVIES, DOING THE GARDENING, OR, MAYBE JUST FINISHING OFF A BOTTLE OF JACK…. WHILST I AM WAITING FOR BEN’S ANNOUNCEMENT ON WEDNESDAY.</span></b>

If ever there was a sign to lock away your trading computer for a couple of days this is it now. You do not want to get caught in trades that lead you down the garden path to the compost heap. Those types of trades, and, you know the ones I mean, false breakouts on thin trading positions…those trades are on the horizon now, yesterday was the last “normal day” (if there is such a thing anymore).

The long and very eagerly awaited FED September “Statement and Press Conference” is finally happening on Wednesday.

As I understood it, Ben’s deciding factors on reducing QE (tapering) were based around unemployment numbers/percentages and the FED inflation target.

When Ben stated six months ago after introducing asset purchases of $85 Billion per month, initially he used words rather than numbers to describe the exit strategy. He used phrases like, “Until we see a substantial improvement in the outlook for the labor market”; the reason for words at that time was allegedly on the basis that, and I quote “Because we ourselves don’t know precisely what would define substantial improvement”.
<p style="padding-left: 300px;">There were the numbers I first recall: -</p>
<p style="padding-left: 300px;">Unemployment Rate of 6.5%
Inflation Target was 2.0% …but then it became as long as it’s under 2.5%.</p>
Then in June this year unemployment substantial improvement meant 7% not 6.5%. Then the word “Tapering” entered my everyday vocabulary as much as the word “No” (We have two small puppies).
<p style="padding-left: 300px;">Right now the statistics are: -</p>
<p style="padding-left: 300px;">Unemployment Rate = 7.3%
Inflation = 2.0%</p>
One could argue, these current numbers themselves meet the criteria for “Tapering” to start, hence the twitchiness in the markets. Wall Street in on orange alert for massive quantities of “loo paper” and watch out for traders drinking copious volumes of peppermint tea as well as consuming cardamom, coriander, fennel seeds and eating ginger. (My branch out into mentioning herbs is just to highlight I have a broad knowledge base and I wanted to pose. The herbs listed are well known Hindu remedies for upset stomachs…they should know, those guys can dish out wild curries!!)

I have read that Ben is going to shave $10 Billion off the existing $85 Billion. Tapering starts or it doesn’t start, either way a big market move is on the cards.

My balls on the chopping block; Tapering is on. I believe that Ben, who is in a very difficult position, near the end of his tenure at the FED, will not want to go out with the job half done, leaving the next incumbent with a huge asset purchase facility to deal with.

Inflation is in line and more and more people are no longer registering for jobs, benefits were cut again very recently, so I believe the unemployment rate is on the cusp of a huge move lower. I think Ben will be as high as $20-$25 Billion in the QE (Tapering), which will cause a stir to say the least. He may have at the back of his mind to have 50%-66% of monthly QE off the table before he leaves his current position, maybe even more towards 75%-80%.

At the end of day, the U.S. economic statistics are at best hit and miss from where I am sitting. I still question what has QE actually achieved for the man on the street. Sure as eggs are eggs, the Wall Street “fat cats” have been on cream for quite some run courtesy of the FED. The Wall Street and CME trader’s morning chant of “Buy the dip”; “Buy the dip” will soon be a thing of the past.

The FED is at an important crossroad. It really has to act. The natives are getting restless, so to speak. Bernanke’s move has brought matters to a head.

From my perspective, it’s all about housing. A bullish housing market keeps the cogs turning. In addition, quite frankly with all the billions of dollars spent to achieve very little in my view, they could have given over $250 to every U.S. citizen, in the main this would have had a greater effect on consumer spending into the economy.

In any event, I am on hold until Wednesday. I have one trade (see later).

My advice, stay clear of your machine. This (QE) tapering has never been tried before, no one, and I mean no one knows what will happen it’s all pure speculation. I have my thoughts like thousands of other people. Your account balance is precious and capital preservation vital.

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<b><span style="text-decoration: underline;">3. LONG TERM TRADES:</span></b>

As per my tweet earlier this week I am short the EUR/USD. It is a small trade and well within my risk toleration and well within my trading plan guidelines.

I know, we have the biggest news event of 2013 on the horizon but my stop will not be moved.
<p align="center"><b>EUR/USD:
Entry (Cost Average): 1.3311
Position Size: 40%
Closing Price: 1.3293
Stop Loss: 1.3360
Limit (Profit Target): 1.2650
Profit/Loss:  +18 pips</b></p>
<p style="text-align: left;" align="center"><a href="http://www.thepipaccumulator.com/blog/wp-content/uploads/2013/09/EURUSD-MONTHLY-14092013.png"><img class="aligncenter size-large wp-image-1969" alt="EURUSD MONTHLY 14092013" src="http://www.thepipaccumulator.com/blog/wp-content/uploads/2013/09/EURUSD-MONTHLY-14092013-1024x516.png" width="1024" height="516" /></a></p>
<p style="text-align: left;" align="center">You can see from the Monthly chart below why 1.3320 has been major resistance for this pair over recent trading sessions. It is the 61.8% retracement on the last big monthly chart move. As I am looking for USD strength, EUR weakness to come into this pair. Setting my profit target is interesting.  Obviously 1.3000 is a key psychological number, and you can see candlestick support and resistance lies there.  That would be my first target, and beyond that 1.2650.</p>
<p style="text-align: left;"><strong><span style="text-decoration: underline;">4. POTENTIAL TRADES ON MY RADAR:</span></strong></p>
I missed it Friday…damn.

I am looking at the EUR/GBP to go much lower. I missed the break lower at 0.8400 (I will be looking for a pullback).

Eurozone issues are bubbling again and I see Italy and Spain dominating, plus we have German elections due shortly (Bavaria this weekend) nothing is certain. In addition, all the Eurozone agreements on banking etc. are well away from being sorted never mind an implementation date.
<p align="center"><b>My ideal trade set up is: -
</b><b>ENTER SHORT AROUND: 0.8400
</b><b>STOP LOSS AT: 0.8480
</b><b>LIMIT / TARGET: 0.8165 (61.8% retracement see chart below)</b></p>
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<a href="http://www.thepipaccumulator.com/blog/wp-content/uploads/2013/09/EURGBP-WEEKLY-14092013-2.png"><img class="aligncenter size-large wp-image-1972" alt="EURGBP WEEKLY 14092013 (2)" src="http://www.thepipaccumulator.com/blog/wp-content/uploads/2013/09/EURGBP-WEEKLY-14092013-2-1024x516.png" width="1024" height="516" /></a>

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<b><span style="text-decoration: underline;">5. LOOKING FORWARD…THE KEY SUPPORT &amp; RESISTANCE LEVELS WITH THE USD MAJORS:</span></b>

<b>EUR/USD: Closing Price 1.3293. </b>This pair has been in a tight range for quite sometime now. FOMC will break this. 1.3225 to 1.3325 is the range. I would wait if not already in a trade until Ben’s words of wisdom have been expelled. The FOMC holds the key to the breakout.

<b>GBP/USD: Closing Price 1.5872. </b>The EUR/GBP broke down today and the cross-rate effect for Cable going higher sprung into action. 1.5900 is written all over this pair and I think that had it not been for the EUR/USD continuing to struggle to break out this would have been achieved. I do not see the bears being back in control of this pair until we break below 1.5750. If we break 1.5900, once has to say that 1.6000 will be next. Once again the FOMC holds the key to the direction.

<b>AUD/USD: Closing Price 0.9242. </b>I really want to get short this pair, but I still fear a run to 0.9400-0.9600. A break below 0.9150 sets the bears firmly back in control. Once again a commodity push after the FOMC will dictate this pairs direction.

<b>NZD/USD: Closing Price 0.8124</b>. Now it looks like the RBNZ are going to hike rates in 2014. This will be interesting to see. I am, not sure how to play this pair longer term at the moment. I just cannot make sense of the fundamentals. The trading range for now is 0.8100 to 0.8180.

<b>USD/CAD: Closing Price 1.0349. </b>Like soooooo many people I want to get long this pair around 1.0260. We may not break below 1.0300!! Not too sure what to do with this one. The range as I see it is 1.0300 to 1.0380.

<b>USD/CHF: Closing Price 0.9295. </b>I really do find this pair to be of all the majors the one I hardly ever look at a nowadays. It was reacting like the JPY for a while back in August, now…well I am a little confused and being honest I find it hard to judge. There is SNB news this week maybe something will come out of that, but do not hold your breath. It’s a boring pair for me right now. The range on my charts is 0.9250 to 0.9380.

<b>USD/JPY: Closing Price 99.36. </b>I thought that as soon as we broke past 99.20, we were heading for a smash through 100.00 and then we would be on a march to 104.00. Well, I got that wrong. Rejected twice recently around the 100.00 level. The immediate range that seems to be containing this pair is 99.00 to 100.00. After Wednesday, this should be broken one way or another.

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<b><span style="text-decoration: underline;">6. MAJOR FOREX NEWS THIS WEEK THAT INTERESTS ME:</span></b>

SUNDAY: N/A

MONDAY: AUD – Monetary Policy Minutes

TUESDAY: GBP – CPi
TUESDAY: EUR – ZEW Sentiment
TUESDAY: CAD – Manufacturing Sales
TUESDAY: USD – Core CPi

WEDNESDAY: GBP – MPC Voting results
WEDNESDAY: USD – FOMC
WEDNESDAY: NZD - GDP

THURSDAY: N/A

FRIDAY: CAD – Core CPi

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<b><span style="text-decoration: underline;">7. FINAL THOUGHTS:</span></b>

This week is a big week. Obviously, the FOMC dominates all other news events and quite honestly I do think we will be pretty much range bound pending the FOMC.

Thin trading sessions will still continue, so, trading with caution is recommended. Do not over-stretch your account and keep inside your trading plan limits.

Good luck and take care.

Scott Pickering
The Pip Accumulator
Saturday September 14th 2013

FOLLOW ME AT:
Twitter: @pipaccumulator

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