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

What an interesting week in the Forex market.

I was going to start my blog  along the lines of boring, boring, boring, given that the EUR/USD traded the entire week stuck in it’s tight range of about 100 pips between 1.3450 and 1.3570. Then of course, we had the BOE governor Carney speak last Thursday, basically saying no more QE for the UK and cable then rallied on the back of that news and the EUR/USD followed with a similar move upwards overnight Thursday into Friday, but the range held!!

During the week I was focused on my usual pairs, the AUD/USD, NZD/USD and USD/CAD. These commodity currencies fascinate me. Just when you think they are off to the races with strength, they diverge from equities and they slump. Then, when equities start to come under pressure they really start to break down. They tend also to be daily directional…that is most of the time. It just helps my trading style if I am day trading.

With the commodity currencies under pressure and the EUR/USD and especially the GBP/USD strengthening, I started to look at some of the “exotic pairs” for trading opportunities. I mentioned this point in the “Midweek Fix #1” last Tuesday and I want to expand these thoughts later in this blog.

So the U.S. congress is once again about to split on party lines and hold the country and Obama to ransom on raising the U.S. debt ceiling, and sequestration amongst other items, culminating in what is now called closing down the government. The voting American public must be so pist off with their elected representatives, the correct words to use actually fail me. But it is the voters who are at fault, they voted these numpties into office and as such they are therefore responsible.

If ever there was a case for a review of the U.S. political system its upon the U.S. right now. The existing two party system is a failure and the system that allows almost constant campaigning is painful. Nothing ever gets done, apart from inter-party squabbles.  The existing set of representatives in both houses should focus on country first for a time. The present routine for the politicians on both sides of the house is complete bulls**t and quite frankly utterly dysfunctional. The current batch of freak politicians are great examples to the future of America…not.

Anyway, enough of that, this is a forex blog, not a party political address. The bottom line is that in the future to trade the USD with some care, as we are entering a sound-byte season once again.

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<b><span style="text-decoration: underline;">2. THE VIEW FROM MY TRADING DESK:</span></b>
<p align="center"><b><span style="text-decoration: underline;">WHAT TRADES ARE ON MY RADAR</span></b></p>
<p align="center"><b><span style="text-decoration: underline;">EXOTIC CROSS RATES…MAYBE A GREAT OPPORTUNITY IS ON THE HORIZON.</span></b></p>
Having been a little bored with the EUR/USD trading opportunities last week, coupled with the strength of cable, I started to look at opportunities further afield that I would not usually look at. As you know, my favourite pairs to trade are the AUD, NZD and CAD. Looking at the cross-rates with the USD divergence there are some very interesting set-ups on the horizon.

I must at this point, mention a few words of caution regarding trading these exotic currency pairs. Do not get carried away with bold and sudden moves. Note and remember that these currency pairs trade with wider than normal rate spreads and are very, very volatile. The ATR (Average true ranges) are larger than normal. These pairs are also not as well financially supported as the USD majors. Therefore spikes can be sudden and false breakout moves are also a part of these pairs, beware.

The AUD is probably my favourite currency to follow and trade. I look many times a day at the EUR/AUD as this pair in particular, in addition to the USD/JPY follows equities. In fact, the EUR/AUD was one of the best trades in the Fx market as it closely followed U.S. equities; it was in fact a mirror image. In recent times, as I have often blogged, correlations were “off” and this pair although it was good for “risk on” or “risk off” scenarios was not as cast iron a trade as pre financial crisis and all the ensuing Eurozone issues.

Since the financial crisis, so much hope had been placed at the Chinese door on manufacturing and production. The EUR/AUD was sold in buckets as the AUD currency could be viewed as a stooge currency for China.

Angela Merkel has been re-elected in Germany and this will hopefully add stability to the Eurozone. Chinese GDP is falling; I do NOT believe a bloody word that comes out of China. It is in their best interests to lie. Look, how many times do you get orange sauce on your chicken, when it says tangerine on the menu?  Think about it. We may have China GDP below 7%, maybe even as low as 6.75% as we move forward into 2014. These two factors alone make the AUD a different currency to trade moving forward.

Add into the picture, the FED. Yes, I had to mention my mate Ben, the most powerful man on the planet!! QE is coming to an end, we just do not know when…therefore, all bets are off, the goal posts have moved. Equities are presently at all time highs, as soon as QE (tapering) starts and ends, is it not inconceivable that as the “free money” dries up, the upward momentum in trading equities ends and we see a downside move as U.S. monetary policy changes?

Should this happen, could not the EUR/AUD get stronger and unwind a massive down side move? If this were to happen it would be massive. It has only really been a short trade for 5 years.

I know my fundamental views are sometimes ahead of the technical, but evidence is starting to gather in my opinion.

The beauty of a move in the AUD currency is that it spins off into the NZD and also has an effect on the CAD as well. There are 6 charts below based on the “Cross Rate” currencies (Exotics) compared to the EUR and GBP. There are monumental moves in the offing if things play out the way that I am seeing and thinking. Nothing is guaranteed but should this shift happen there are thousands and thousands of pips available.

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<strong>EUR/AUD: Close on Friday: 1.4508</strong>

The chart below shows that the move higher could actually already be in motion. 1.4116 was a key level. The level has been pulled back to and tested on the current month.

The 38% retracement level is 1.5100 or so. That is 600 pips away. With huge moves lower like this it is possible to retrace even higher over months. The often referred to mother of retracements 61.8% is at 1.7400, that is about 3,000 pips away. The unwinding of this pair could lead us all the way to this level.

<a href="http://www.thepipaccumulator.com/blog/wp-content/uploads/2013/09/EURAUD-MONTHLY-28092013.png"><img class="aligncenter size-large wp-image-1988" alt="EURAUD MONTHLY 28092013" src="http://www.thepipaccumulator.com/blog/wp-content/uploads/2013/09/EURAUD-MONTHLY-28092013-1024x516.png" width="1024" height="516" /></a>

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<strong>GBP/AUD: Close on Friday: 1.7314</strong>

We are unwinding but I really want 1.7350 to be taken and confirmed as an upward move before entering a trade. Should this happen, 2.2200 is the 61.8% retracement. That is just shy of 5,000 pips for the overall move in the coming months/years. Just think about it though, a move to just the 38% retracement in the region of 1.9200 is 1,700 to 1,900 pips.

<a href="http://www.thepipaccumulator.com/blog/wp-content/uploads/2013/09/GBPAUD-MONTHLY-28092013.png"><img class="aligncenter size-large wp-image-1989" alt="GBPAUD MONTHLY 28092013" src="http://www.thepipaccumulator.com/blog/wp-content/uploads/2013/09/GBPAUD-MONTHLY-28092013-1024x516.png" width="1024" height="516" /></a>

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<strong>EUR/NZD: Close on Friday: 1.6307</strong>

This pair is extremely volatile. 1.6330 is the key level for me, a confirmed break here and a similar break upwards with the GBP/NZD, should also see the NZD/USD getting crushed. The NZD/USD could be down sub 0.8000 very quickly.

A move to just the 38% retracement yields a potential 2,700 pips.

<a href="http://www.thepipaccumulator.com/blog/wp-content/uploads/2013/09/EURNZD-MONTHLY-28092013.png"><img class="aligncenter size-large wp-image-1990" alt="EURNZD MONTHLY 28092013" src="http://www.thepipaccumulator.com/blog/wp-content/uploads/2013/09/EURNZD-MONTHLY-28092013-1024x516.png" width="1024" height="516" /></a>

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<strong>GBP/NZD: Close on Friday: 1.9450</strong>

You may recall a while back I was looking for a move above 2.000 targeting 2.2400 and beyond. That move is still on, but the break out point is now around 1.9500 in my opinion.

There are in the region of 1,000 pips available with this pair and even more if we get traction in the unwinding move.

<a href="https://weeklyfxdrivethru.com/wp-content/uploads/2013/09/GBPNZD-MONTHLY-28092013.png"><img class="aligncenter size-large wp-image-1991" alt="GBPNZD MONTHLY 28092013" src="http://www.thepipaccumulator.com/blog/wp-content/uploads/2013/09/GBPNZD-MONTHLY-28092013-1024x516.png" width="1024" height="516" /></a>

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<strong>EUR/CAD: Close on Friday: 1.3934</strong>

This move is already underway in my opinion; I have missed the first 1,000 pips!! Above the 38% retracement of 1.4138, will hopefully get us a move towards 1.4785 the 50% retracement. It’s only 600 pips.

<a href="https://weeklyfxdrivethru.com/wp-content/uploads/2013/09/EURCAD-MONTHLY-28092013.png"><img class="aligncenter size-large wp-image-1992" alt="EURCAD MONTHLY 28092013" src="http://www.thepipaccumulator.com/blog/wp-content/uploads/2013/09/EURCAD-MONTHLY-28092013-1024x516.png" width="1024" height="516" /></a>

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<strong>GBP/CAD: Close on Friday: 1.6629</strong>

Similar to the EUR/CAD, this move has already started. The break above 1.6343 was the level. 1.6860 is the next level and then a break to the 38% retracement sets up 1.8120. That would yield a move of about 1,300 pips from current levels.

<i> <a href="https://weeklyfxdrivethru.com/wp-content/uploads/2013/09/GBPCAD-MONTHLY-28092013.png"><img class="aligncenter size-large wp-image-1993" alt="GBPCAD MONTHLY 28092013" src="http://www.thepipaccumulator.com/blog/wp-content/uploads/2013/09/GBPCAD-MONTHLY-28092013-1024x516.png" width="1024" height="516" /></a></i>

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Please do not get carried away with these trades and enter them all blindly right now.

Assess your risk/reward and add when profitable, if they play out. There is the potential to make a huge amount of money.

I may be a few weeks or a month ahead here, but bear these potential moves in mind. I am currently looking for pullback entry levels and I will tweet these as they happen and mention this batch of trades in the next Midweek fix.

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

At this stage I am still in cash.<b></b>

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<b><span style="text-decoration: underline;">4. POTENTIAL TRADES ON MY RADAR:</span></b>
<p align="center"><b>EUR/USD
</b><b>Short: 1.3570 (or thereabout)
</b><b>Stop Loss: 1.3820
Initial Target/Limit: 1.3480</b></p>
<p align="center"><b><span style="text-decoration: underline;"> </span></b><b>NZD/USD
</b><b>Short 0.8340 (or thereabout)
</b><b>Stop Loss: 0.8370
</b><b>Initial target 0.8220</b></p>
<p align="center"><b>EUR/AUD (Assessing over the next few days)
</b><b>Long
</b><b>Stop Loss
</b><b>Initial Target: 1.5150</b></p>
<p align="center"><b>GBP/AUD (Assessing over the next few days)
</b><b>Long
</b><b>Stop Loss
</b><b>Initial Target: 1.9170</b></p>
<p align="center"><b>EUR/NZD (Assessing over the next few days)
</b><b>Long
</b><b>Stop Loss
</b><b>Initial Target: 1.9060</b><b> </b></p>
<p align="center"><b>GBP/NZD (Assessing over the next few days)
</b><b>Long
</b><b>Stop Loss
</b><b>Initial Target: 2.2420</b><b> </b></p>
<p align="center"><b>EUR/CAD (Assessing over the next few days)
</b><b>Long
</b><b>Stop Loss
</b><b>Initial Target: 1.5400</b><b> </b></p>
<p align="center"><b>GBP/CAD (Assessing over the next few days)
</b><b>Long
</b><b>Stop Loss
</b><b>Initial Target: 1.9180</b><b> </b></p>
<p align="center"><b>USD/CAD
</b><b>Long: 1.0260
</b><b>Stop Loss: 1.0190
</b><b>Initial Target 1.0675</b></p>
<p align="center"><b><span style="text-decoration: underline;"> </span></b></p>
<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 1.3521. </b>After all the shenanigans on Friday, we closed the week one pip lower than the previous week’s close<b>. </b>There is not much to say other than what I have posted on twitter a couple of times lately. We are stuck in a range of 1.3450 to 1.3570. You need to wait for a confirmed break to get the direction. Trading within the range is also fine at the moment. I am expecting a break from this range this week with an ECB Press Conference and Non Farm Payrolls on the event calendar.

<b>GBP/USD: Closing Price 1.6138. </b>This pair is really strong at the moment. Comments from BOE Governor Carney have put a rocket under the strength of cable. We closed just shy of 1.6160, which I have noted as the next resistance level. In my opinion, cable does not come under pressure, with the bears resuming control, until we once again break below 1.5970.

<b>AUD/USD: Closing Price 0.9313. </b>I think we are heading lower once again with this pair, but 0.9270 needs to be taken out to have my thoughts confirmed. 0.9410 offers up great resistance if the bears come out to play.

<b>NZD/USD: Closing Price 0.8258</b>. This pair is acting very strong on the back of RBNZ comments a few weeks ago. It is very stubborn, even though it is being dragged lower by the AUD. A break below 0.8200 should however set us up for a break lower. Resistance is very strong at 0.8340 and again at 0.8470.

<b>USD/CAD: Closing Price 1.0303. </b>This week’s close exactly the same as last weeks. We are caught in a range here that needs to be broken. ‘This is still the resistance and support is still strong at 1.0240.

<b>USD/CHF: Closing Price 0.9055. </b>I am still not following this pair. In the back of my mind I think it will soon test 0.8800 or close to that level before possibly spiking higher. But this really depends on how the EUR/USD behaves.  During last week we broke key support at 0.9090 support, and we are now heading to test 0.9000. We need to break above 0.9150 to see a real lift with this pair<b>.</b>

<b>USD/JPY: Closing Price 98.22. </b>I am just ignoring this pair at the moment. It is another pair that is stuck in a range, 98.00 to 99.20. If 98.00 gives way, and it may, 96.00 could be in our vision very quickly.

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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: CAD – GD
MONDAY: CNY – Manufacturing PMi

TUESDAY: AUD – RBA Interest Rate Statement
TUESDAY: GBP – Manufacturing PMi
TUESDAY: USD – ISM Manufacturing PMi

WEDNESDAY: GBP – Construction PMi
WEDNESDAY: EUR – Interest Rate and Draghi Press Conference
WEDNESDAY: USD – ADP Non Farm Employment Change
WEDNESDAY: AUD – Retail Sales and Building Approvals

THURSDAY: GBP – Services PMi
THURSDAY: USD – ISM Non-Manufacturing PMI
THURSDAY: AUD – Trade Balance

FRIDAY: USD – Non-Farm Employment Change and Unemployment Rate.

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

This next week is a big news week for all forex traders to concentrate on.

Australian news events are huge market movers and will give us a huge indication on which way to trade this pair. PMi results in the UK and U.S. will be followed closely but the biggies are, without doubt, U.S non-farm on Friday and Draghi’s press conference the day prior on Thursday.

As usual, trading with caution is recommended. Do not over-stretch your account and keep inside your trading plan limits.

Watch out for the Midweek Fx Drive-Thru this week.

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Good luck and take care.

Scott Pickering
The Pip Accumulator
Saturday September 28th 2013

FOLLOW ME AT:
Twitter: @pipaccumulator

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