<strong> </strong>

<strong>1. INTRODUCTION:</strong>

That was some week.

“The Draghi Show” aka “The ECB Press Conference” last Thursday, being the highlight, maybe not from my own personal trading perspective, but it was an event to witness.

I had previously written articles for Linkedin, The DAILY FX POST (for PREMIUM SERVICE subscribers) and Twitter posts stating that “Talk is Cheap” and that should Draghi come to the market with anything less than “full-on” Quantitative Easing after the initial knee-jerk reaction taking the EUR/USD short it would bounce once the market realized it was just more talk. Once again it was the usual ECB high on rhetoric approach, kicking the can down the road scenario that we have all become so accustomed to. The is basically what happened. The only aspect of it all was the speed of the bounce (the squeeze), and, how far the EUR/USD bounced. From the lows of the day 1.3503, 1.3577 was the 38% Fibonacci retracement, 1.3585 was mega strong support on the way lower, which I thought would definitely hold on the way back…it did not. We squeezed to 1.3670, when it was all said and done.

It was a fascinating hour or so, however, why did the turnaround happen?

I have read so many articles and listened to so many comments following the
Press Conference. I am no clearer…was it: -
<ul>
	<li>Hedge funds involvement?</li>
	<li>Option Barriers?</li>
	<li>Only a Pea Shooter with the promise of a Bazooka?</li>
	<li>Was it Draghi stating that the ECB was basing EUR/USD exchange rate average estimate for 2014 at 1.3800?</li>
	<li>Was it the fact that Draghi announced TLTROs (Targeted long-term refinance operations) were expected to start in September and December this year?</li>
</ul>
Basically, I think nothing that was announced by Draghi was a surprise to the markets. The phrase “priced in” came up a few times in my reading. I think that as soon as 1.3800 was mentioned, and, in addition, when Draghi stated that he could not see steeper rate cuts in the future, and, that the ECB had reached “zero bound”, was a f**k up on his part. I believe this was a bit of a tactical error, which halted the EUR drop and it consolidated and then squeezed.

It was a difficult session for me as I experienced connectivity issues as well just to add to a stress factor, thankfully, I exited a couple of trades early on but I took two big losses on the EUR/USD short and a USD/CHF long during the squeeze and my power outages.

I think that I was being paid back for my comments about Eurozone and ECB officials whom, I thought were going to break ranks and leak ahead of Draghi’s announcement. Were they all on vacation? It was a deafening silence from the Eurozone. I should check the share price of duct tape…it must have bounced on a massive sales spike in Frankfurt and Brussels!

I also predicted that the SNB would front-run the ECB if there was QE. There was no QE, and, so no SNB announcement. My CHF trades were a waste of time.

I would not however completely rule out the SNB acting. If there is a huge switch out of the single currency into Swiss francs because of negative interest rates, do not rule oou the SNB imposing the same.

Then we had U.S. Non-Farm Payrolls. It was an in line number. Not as much volatility as usual. It was interesting for me (as I was on the sideline) to see that the Fibonacci levels basically held across all the USD majors.

Staying on the positive side, the PREMIUM SERVICE is still making money, and so am I, therefore I am happy. The Forex market is still challenging, so to make $$$ in these difficult conditions makes me happy.

I welcomed many new subscribers to the PREMIUM SERVICE in the past week, so I am hoping that this coming week, things will have settled a little to enable some quality entries on trades. There are many trades and charts later in this blog (PREMIUM SERVICE version only).

&nbsp;

<strong>2. THE VIEW FROM MY TRADING DESK</strong><strong> </strong>
<p style="text-align: center;"><strong>WHAT TO DO NOW, TRADING FX NOW THAT THE DUST HAS SETTLED</strong></p>
I was asked by a subscriber of the WEEKLY FX DRIVE THRU, what do I do, and, how do I approach the markets after big moves in a big news week.

The following is basically what I do, it is just my own way of dealing with how to trade following a big move in front line data. When we have a big week of news, then from my perspective it’s time to re-evaluate matters, look at my favourite pairs to trade and take stock, and above all take my time to review. It may not be everyone’s cup of tea but this is what I do.

Last week was a week packed full with PMi Data, Employment Statistics, Trade Balances and four central banks reviewed interest rates and three issued policy statements. It was a huge data dump, so much to take on board there were some wild volatility moves included for good measure.

Now it is time to sit back and review, plan and strategize ahead.

The fundamentals have NOT changed in my opinion. Some of the moves in currencies have an extreme look about them, however in bigger market moves this is normal. I think the biggest aspect of the moves this week that have influenced me the most are the moves in the cross-rates. I have written several times this year about never underestimating the cross-rate effect.

Without doubt, when any analyst from any investment area talks about currencies the EUR/USD is the focus, quite understandably. After the ECB Press Conference the moves in the single currency crosses were violent, fast, volatile and to me somewhat extreme. I know that the ECB news event last Thursday, was eagerly awaited and because it involved a policy change from the central bank, every dot and cross on the press release statement was dissected more so than normal.

The Non-Farm Payroll numbers were also market moving and affected all currency pairs but moves were in the main muted.

So where do we go from here?

Basically a little consolidation time in the Forex markets, the new levels need to be confirmed.

Usually, when we see such volatile movement, I take a step back, find my levels in the charts and note them and place the limit orders with my brokers. Then I sit back and let the trades come to me. It is very easy to get caught up in the moment, at present we are trading in times where false breakouts and breakdowns are almost an every day occurrence. There is a market literally every day, once FEAR and GREED take over, your psychology of trading effectively within your guidelines set out in your TRADING PLAN are gone. You can always make money in the Forex market, but by not being aware you can just as easily lose money.

Below, for everyone, I show you what I do and give examples on three pairs; EUR/USD, GBP/USD and AUD/USD.

I simply go back to the basics that I was taught. Just as the markets need to consolidate moves and work off over-bought or over-sold conditions as a trader I need to re-evaluate.

<em>(For PREMIUM SERVICE subscribers, I will provide all the entry levels etc. and in addition, I will carry on the same process later in your fuller version of the blog in the section titled TRADES ON MY RADAR. This will include reviews for several other pairs not just the majors but also some of the cross-rates).</em>

<span style="text-decoration: underline;"><strong>EUR/USD:</strong></span>

From the monthly chart below, resistance is now on the down sloping trend line at 1.3775.

I see this an area to short from. As you can see, the last three attempts to break out above trend line resistance, was resisted and the pair was smacked back down. Given that the ECB is embarking on a change of monetary policy to hold down the EUR exchange rate, I see no reason why this trend line should not be a bad area to short from. I would imagine lots of traders would be looking to short the EUR/USD ahead of 1.3800.

<a href="https://weeklyfxdrivethru.com/wp-content/uploads/2014/06/EURUSD-MONTHLY-06062014.png"><img class="aligncenter size-large wp-image-3824" src="https://weeklyfxdrivethru.com/wp-content/uploads/2014/06/EURUSD-MONTHLY-06062014-1024x470.png" alt="EURUSD MONTHLY 06062014" width="1024" height="470" /></a>

&nbsp;

<span style="text-decoration: underline;"><strong>GBP/USD:</strong></span>

From the daily chart below, although maybe a little difficult to see or follow, we have Fibonacci interests at 1.6870, coinciding with a recent high and trend line resistances. In fact, from 1.6840 to 1.6870 represents an area to look at to short from. The 2014 high at 1.6996 is not far above so you have a great risk level to work from. A few weeks ago, I stated that in my opinion, I thought that 1.6996 would probably be remembered as the 2014 high for this pair. Will this remain?

<strong> <a href="https://weeklyfxdrivethru.com/wp-content/uploads/2014/06/GBPUSD-DAILY-06062014.png"><img class="aligncenter size-large wp-image-3825" src="https://weeklyfxdrivethru.com/wp-content/uploads/2014/06/GBPUSD-DAILY-06062014-1024x470.png" alt="GBPUSD DAILY 06062014" width="1024" height="470" /></a></strong>

<strong> </strong>

<span style="text-decoration: underline;"><strong>AUD/USD:</strong></span>

From the chart below you can see that we have resistance at 0.9360, which is a Fibonacci 76% level. We have failed two / three times at this level and this where I would be looking to as resistance from which to use as my risk level for any short trade that I would enter. 0.9330 has been a major resistance level for what seems likes weeks that is basically a 61.8% Fibonacci level. Both of these levels give me confidence as resistance levels.
A major aspect of trading is realizing what your risk is before entering a trade. I will use these levels to determine my trade set-ups.

&nbsp;

<a href="https://weeklyfxdrivethru.com/wp-content/uploads/2014/06/AUDUSD-240M-06062014.png"><img class="aligncenter size-large wp-image-3826" src="https://weeklyfxdrivethru.com/wp-content/uploads/2014/06/AUDUSD-240M-06062014-1024x470.png" alt="AUDUSD 240M 06062014" width="1024" height="470" /></a>

&nbsp;

From the examples above it really is very basic analysis. This is really what I do several times a week across the board and several times a day on some occasions. It is basic and repetitive, but it can be extremely rewarding.

Fundamentally I am still a USD bull and as such, my views for the three currencies above are that they are to head lower. I also look at recent economic data and central bank talk to establish my macro views. All matters added together, I am looking for short trades on all three of the examples above.

With regards to my profit targets, that would very much depend on how long I intend to try and stay in each trade. Therefore, each trade would be treated differently with regards to my limit/ target objective.

Suffice to say, I use recent key Fibonacci levels, and other key resistance /support levels seen recently.

I do not know whether this helps, or, has given the answer hoped for, but this is what I do, in fact, to be more accurate this is what I am doing right now!

<strong> </strong>

<strong> </strong>

<strong>3. LOOKING FORWARD…THE KEY SUPPORT &amp; RESISTANCE LEVELS WITH THE USD MAJORS:</strong>

<strong>EUR/USD: Closing Price 1.3642.</strong> This pair literally has ended the week virtually unchanged, after having been through a major policy change announcement from the ECB and U.S. Non-Farm Data, which is quite incredible. I think until we hit 1.3775, this pair is a buy on dips and sell at the trend line resistance. My initial range is 1.3600 to 1.3670.

<strong>GBP/USD: Closing Price 1.6790</strong>. My limit order at 1.6790 timed out during the past week, so I never had my trade trigger. I am now looking to enter a little higher than present levels with the view to a move much lower. My range for the cable is support at 1.6740 and resistance at 1.6840.<strong> </strong>

<strong>AUD/USD: Closing Price 0.9331</strong>. Not much of change in the closing price for the Aussie this week. With quite a large amount of Aussie news over the past week generally, my thoughts are that the RBA has now gone a bit neutral on the exchange rate level. It is a little bit of a policy shift considering that RBA governor Stevens was leaping up and down a few months ago about wanting the AUD/USD at about 0.8500. That level is a little bit away, I would say looking at matters right now. My bias is to the downside. Support is really good at 0.9210. Resistance is good at 0.9330 and 0.9360.

<strong>NZD/USD: Closing Price 0.8497</strong>. This is another pair that closed the week almost identical to the previous weeks’ close. I am still very negative the NZD, but I am also conscious of the RBNZ statement on the horizon that could affect my bias. Key support lies at 0.8420, with resistance at 0.8555. If the support gives way I am targeting 0.8000 as my short level objective.

<strong>USD/CAD: Closing Price 1.0932.</strong> Boring, boring, boring. Trade extremes for the range are 1.0815 to 1.0960.

<strong>USD/CHF: Closing Price 0.8932</strong>. We are back in the lower trading range once again. This pair has failed now on several attempts to scale through 0.9000. I now see the range as 0.8910 to 0.8950.

<strong>USD/JPY: Closing Price 102.46</strong>. We have tested the upper end of last weeks range and fell back within. I still think the move here is towards 98.00 not 110.00. I think we will go lower first then bounce. The range is 102.15 to 102.85.

<strong> </strong>

<strong>4. MAJOR FOREX NEWS THIS WEEK THAT INTERESTS ME:</strong>

SUNDAY: N/A.

MONDAY: AUD – RBA Governor Stevens speaks &amp; New Business Confidence.
MONDAY: CNY – CPi.

TUESDAY: N/A.

WEDNESDAY: GBP – Unemployment Rates.
WEDNESDAY: NZD – RBNZ Cash Rate and Policy Statement..
WEDNESDAY: AUD – Unemployment Rates.

THURSDAY: USD – Core Retails Sales.

FRIDAY: N/A.

<strong> </strong>

<strong>5. THE PREMIUM SERVICE:</strong>

I refer quite a bit in my blog about the PREMIUM SERVICE. This is a subscription membership with exclusive content for subscribers, both on the website and daily by way of an exclusive twitter feed and a morning news letter THE DAILY FX POST that is posted to the PREMIUM SERVICE section of my website.

If you want an alternative view on the Forex Market or just someone else’s thoughts to bounce off your own, maybe it’s worth a look. Introductory special offers are available from time to time, it maybe the best small investment you make this year.

For more information about the PREMIUM SERVICE check out the welcome page of <a href="http://www.weeklyfxdrivethru.com">www.weeklyfxdrivethru.com</a> situated on the top of the page there are a number of drop down menus that contain all the things required to join.<strong> </strong>
<p style="text-align: center;"><strong>RADAR, FLASH and FUNDAMENTAL TRADES
</strong><strong>JUNE 2014 and YEAR to date:</strong></p>
<p style="text-align: left;">
Below I show the up to date performances for my various trading styles. Full excel spreadsheets are in the subscriber area of the PREMIUM SERVICE. I also show you the year-to-date performance by trade style.</p>
There is a lot to data to absorb, if you have queries just email me.

<a href="https://weeklyfxdrivethru.com/wp-content/uploads/2014/06/PREM-SERV-PROFITS-1-06062014.png"><img class="aligncenter size-full wp-image-3832" src="https://weeklyfxdrivethru.com/wp-content/uploads/2014/06/PREM-SERV-PROFITS-1-06062014.png" alt="PREM SERV PROFITS 1 06062014" width="444" height="426" /></a>

<a href="https://weeklyfxdrivethru.com/wp-content/uploads/2014/06/PREM-SERV-PROFITS-2-06062014.png"><img class="aligncenter size-full wp-image-3833" src="https://weeklyfxdrivethru.com/wp-content/uploads/2014/06/PREM-SERV-PROFITS-2-06062014.png" alt="PREM SERV PROFITS 2 06062014" width="463" height="415" /></a>

&nbsp;

The above examples are for illustration purposes only:

The profitability examples detailed above are based solely upon single lot trading, regardless of lot type. If multiple lot sizes are traded the profitability margins will be different than those shown.

In order to provide you with more information and clarification, so you understand where I am coming from with the risk / reward statements above. All of my trades are of different sizes and different size lot types. The above does not reflect the actual trading performance, but it does show you the direction of the performance of the trades placed.

I like to add to trades, profits are taken as the trade progresses and my overall cost average moves several times. All of my trades are of different lot styles. I trade a mixture of micro lots, mini lots and standard lots across my brokers.

The above results simply display your profit or loss if you placed a single lot trade on all the set-ups suggested and did nothing else.

<strong> </strong>

<strong>6. FINAL THOUGHTS:</strong>

Next week is a little slower on news, but I feel that the fallout from the ECB meeting last week will roll over.

This is not a time for complacency; we are entering times when traders go on vacations, the markets, which are already thinner just, get stupid. A major bank move by fulfilling a simple trade order can literally take a pair off for tens of pips in the opposite trending direction. This is the time to be clever. Trade smaller and be nimble. Do not look for 200-300 pip moves, they can happen but it takes much longer. Look for the 20-30 pip moves.

Take care and good luck. Be careful with position sizes.

For PREMIUM SERVICE subscribers there will be no DAILY FX POST on Monday morning, I have to take one of our vehicles to the garage for repairs. I can already feel the stress levels increasing as I write this…..

Scott Pickering
The Pip Accumulator
Saturday June 7th 2014

EMAIL / FOLLOW ME AT:
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Twitter: @pipaccumulator
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