WEEKLY FX DRIVE-THRU
08.02.2014

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

Well, that was a very difficult week to understand at times.

The three major news events in the week that interested me had me a little confused and perplexed:

<span style="text-decoration: underline;">RBA Interest Rate Announcement and Statement:</span>

Interest rates were left unchanged, this was strongly believed to be what would happen so there were no surprises but I found the policy statement a little confusing.
For the past few months RBA Governor Stevens had been talking down AUD strength and even went so far as to say that an exchange rate level of about 0.8500 would be a reasonable level as far as the Central Bank was concerned.
Now we witness an about turn, we are all bullish again, and things were maybe not so bad as we had been saying for the past few months. The comment in the press release regarding currency guidance has now been removed.
The result on this RBA “Hallelujah moment” (positive view) was that the AUD/USD rallied from near critical support levels of 0.8660 back towards 0.8900.
This move offers up the potential for some great entries short again in the near future if the equities markets sell off.
The downside of this change in RBA sentiment from a personal viewpoint were that my FUNDAMENTAL AUD and NZD (in sympathy) cross-rate trades, were whacked across the board, and I decided to exit with losses.

<span style="text-decoration: underline;">ECB Interest Rate and Press Conference:</span>

Once again I found the market reaction to Draghi’s comments a little strange to say the least. I am commenting later in the blog about this particular news event.

<span style="text-decoration: underline;">U.S. Non-Farm Payrolls:</span>

Another big miss, that’s two months in a row. As usual with NFP there is an instant ‘Knee-jerk” reaction probably in line with your thinking……then it turns and runs off in the opposite direction. It did exactly this once again, futures took a poor number on the chin and then they rallied back hard to end the day 23.59 points (1.33%) positive.
If you get suckered into move it can be very costly. I tweeted several times across both ‘Twitter Accounts” not to get suckered. I hope that you didn’t.
So the big question is of course, is the U.S. economy as strong as we are being told and is the FED on its tapering course no matter what because the cost of an expanding balance sheet through QE is having minimal effect and we are in economic terms seeing a decreasing returns to scale. By that I mean, what has QE (Quantitative Easing) actually done apart from give the greed of Wall Street support. What has it done for unemployment and housing?

The ramifications of two jobs misses will be debated for the next few weeks…watch this space.

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<b><span style="text-decoration: underline;">2. THE VIEW FROM MY TRADING DESK:</span></b>
<p align="center"><b> </b></p>
<p align="center"><b>DESPITE THE FACT DRAGHI DID NOTHING NEW TO HELP
THE EUROZONE PERIPHERY OR TACKLE DEFLATION THE EURO RALLIED!</b></p>
Another classic ECB press conference; I am now of the opinion, and maybe I am the last person to acknowledge this, but it’s not about what Draghi says, it’s more about what he doesn’t say.

Holy mother of God, the Eurozone is suffering from DEFLATION. Eminent European economists are talking about it quite openly now. Not only does Draghi ignore DEFLATION, he’s sh** scarred to even utter the word, he uses DIS-INFLATION instead. Does he think we are nuts? It is what it is!

Last Thursday just prior to Draghi pulling up his chair to the table the EURUSD was trading sub 1.3500. By the time the press conference was completed it rallied from sub 1.3500, through 1.3500 and 1.3600 towards 1.3620…wowie!!

Is everything in the Eurozone just fantastic?

To be fair, some data has improved and Draghi acknowledged the positive encouraging signs in the areas of recovery and the modest pickup in consumer demand, rise in confidence and stable savings rates across the Eurozone.

As far as was concerned, or did I miss this news? Isn’t the Eurozone in a bias to ease mode? In the press conference Draghi never mentioned ‘Emerging markets” concerns, worries about inflation, basic monetary conditions or the general pathetic Eurozone economic outlook. Having examined his comments last month and compared them to this latest presentation they were pretty much the same. All I can think is that the EUR bears just looked on as Draghi ignored worries about Eurozone growth and inflation; hence the rally.

I think Draghi’s very modest referral to a more positive outlook just took the EUR/USD through 1.3600.

Draghi still talked about the future concerns in the Eurozone being inflation or unwarranted market tightening as being triggers for further additional monetary actions from the ECB. The bottom line I suppose was he made it clear that the ECB was in no rush to increase any stimulus and he is no closer to easing, these things alone were probably enough to send the EUR higher.

The elephant in the room at the press conference is DEFLATION. Every economist is so scared of saying that the Eurozone is in DEFLATION for fears of the Eurozone mirroring what happened in Japan.

The best quote I found during the week was from Gilles Moec, chief European economist at Deutsche Bank.
<p align="center"><i>“We don’t know if we’re in deflation now, but we cannot afford to take the risk. The problem is that it’s very hard to know you’re in it, and usually when you do, it’s too late. That’s what Japan found”</i></p>
The Eurozone consumer prices were 0.7% higher in January (year on year) which matched the record low from October 2013. The ECB target is just below 2%. Why the big fear?

If a lack of inflation (DEFLATION or disinflation) takes hold, it leads to a decline in the following, the general level of pricing, it undermines growth, it has an effect on and lowers corporate earnings and it effects asset values, like real estate. If economies are burdened this way as pretty much all of the Eurozone is, DEFLATION can drive a downward spiral, in which borrowers are bankrupted by their inability to repay loans on assets that have dropped in value. It’s a nightmare. This happened in Japan, where land prices fell dramatically since the early 1990’s with catastrophic consequences for banks and companies, never mind ordinary individuals.

Inflation basically erodes the real value of loans, making it easier for borrowers to repay, DEFLATION does the opposite. It places stress on banks. Do you think all the Eurozone banks are ready for DEFLATION? Why is yet another bank stress test on the way?

Whichever way you want to view this, Greece and Cyprus have been issuing price declines, and Portugal, Spain and Ireland are not that far away from zero. Even the Eurozone power-house Germany is haunted as prices there rose just 1.2% last month (year on year).

However, Draghi did nothing to address DEFLATION concerns. He has said in the past that the ECB would consider all the tools at its disposal to fight DEFLATION. But he has also said that there is nothing to fear. He line is “The risks of DELATION or inflation are limited at this point of time”.

Interesting…

Here is my list from last week’s blog on my view on the issues that the ECB still has to fix, a week on and having had a chance to do something nothing has been done: -

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<p align="center"><i>UNEMPLOYMENT (in particular youth unemployment)</i></p>
<p align="center"><i>DEFLATION</i></p>
<p align="center"><i>BANK LIQUIDITY (yet another stress test is being planned)</i></p>
<p align="center"><i>BANKING STRENGTH (The long awaited banking union)
PERIPHERY GROWTH
RESTORE MARKET CONFIDENCE IN HOUSING MARKETS</i></p>
I still think that a Eurozone crisis is needed to bring matters to a head.

A crisis will add fuel to USD strength and drive the EUR/USD towards 1.3000 and possibly below.

Draghi, with Merkel (in Berlin) pulling his strings will procrastinate and say things are in-line with expectations. The backdrop is Germany has the chequebook and does not want the invoices to fix the Eurozone as well. I totally get it.

As a trader I want a Eurozone crisis….

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<b><span style="text-decoration: underline;">3. LOOKING FORWARD…THE KEY SUPPORT &amp; RESISTANCE LEVELS WITH THE USD MAJORS:</span></b>

<b>EUR/USD: Closing Price 1.3634.</b>  Despite all the shenanigans during the week we ended only 40 pips lower than last week. We had a major sell off and two bullish events and we still did not break the trading range of 1.3475 to 1.3650, although we are very close to resistance. Early next week we should know if we are are we heading back towards 1.4000 or aiming lower towards 1.3000. This pair holds the key to the currency moves ahead. I really hope that these trading ranges will break soon; it is becoming a little boring. The S&amp;P needs to hold resistance at 1800. At this level I think that there is a good chance that we turn lower once again.

<b>GBP/USD: Closing Price 1.6410.  </b>I have very similar comments regarding cable as I just wrote about the EUR/USD. We saw about a 60 pip reduction in the past week.  At the start of the day on NFP (Friday) I had in mind that a short at around 1.6400 in cable would be a good entry. We will have to wait into the start of next week to re-assess the position. The next stopping point upwards is 1.6500-1.6520 and support lies at 1.6250. I may well issue a FLASH trade tweet about cable short early next week. Recent economic data from the UK has been rather muted and it looks like a downside move may be on the cards once the bullishness of NFP is out of the way.

<b>AUD/USD: Closing Price 0.8958</b>.  I think that we are in a bullish trend at the moment with this pair. I am viewing this move as just a better entry price to head lower once again. Equities will have a lot to say about the future moves I think. Should the S&amp;P rollover at 1800 the AUD/USD should follow. Looking at the charts I think that we may see a run to the psychological 0.9000, maybe resistance as high as 0.9200. Big support is at 0.8876 and then below at 0.8750.

<b>NZD/USD: Closing Price 0.8293</b>.  Probably in sympathy will the AUD/USD this pair has held up very well in the past week. Like the GBP/USD just before NFP, I had in my mind that 0.8300 would be a great area to look to short. Once again early next week there could be a FLASH trade alert on this pair.  In addition and like the AUD/USD, equities will point us in the correct direction with regards to this pair. At the moment, I think we may test levels a little higher towards 0.8400. Support is really good at 0.8185.

<b>USD/CAD: Closing Price 1.1032.</b>  I think that the CAD currency is quite weak at the moment and should we break out through 1.1125; we should see 1.1200 pretty soon. Support is good at 1.0950.

<b>USD/CHF: Closing Price 0.8982</b>.  We are bouncing around in a range of 0.9850 to 0.9080. We need this range to break to give us direction. I think that it is pointless looking at this pair to trade at the moment.

<b>USD/JPY: Closing Price 102.31. </b> With all the movement, we only moved down one pip in the week! We have however consolidated at a lower level and this fact should not be missed. Moving forward the range is basically what it has been all week 101.75 to 102.80.

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<b><span style="text-decoration: underline;">4. THE PREMIUM SERVICE:</span></b>

As there are always new readers of this blog each week, I thought that I should mention the subscriber based option of the WEEKLY FX DRIVE-THRU that has been in existence now since the beginning of 2014; THE PREMIUM SERVICE.

It is an honest blog containing trade set-ups, profitable and losing trades, my ideas and thoughts and it also has for an instant communication to subscribers a dedicated protected TWITTER feed. All trades (profitable and losing) are monitored and recorded within the secure section of the WEEKLY FX DRIVE-THRU website.
<p align="center"><b><span style="text-decoration: underline;">WEEKLY FX DRIVE-THRU:
</span></b>(helping you to trade more consistently) <b></b>

</p><p align="center"><b><span style="text-decoration: underline;">PREMIUM SERVICE   </span></b>

</p><p align="center">Are you a part-time forex trader?</p>
<p align="center">Are you a novice trader still coming to terms with the complexities of trading the forex market full-time?</p>
<p align="center">Do you feel a little overwhelmed with terminology, when to enter a trade, when to exit, what is being over-leveraged, what is effective risk / money management and what is a trading plan?</p>
<p align="center">The PREMIUM SERVICE may be an option worthy of serious consideration.</p>
<p align="center">The PREMIUM SERVICE is not a robot.</p>
<p align="center">The PREMIUM SERVICE it is not an automated system.</p>
<p align="center">The PREMIUM SERVICE is not an expensive fleecing series of daily financial updates, pages long that do not give you trading ideas or trade set-ups.</p>
&nbsp;
<p align="center"><b><span style="text-decoration: underline;">What is the PREMIUM SERVICE?</span></b></p>
Firstly, the PREMIUM SERVICE is a subscriber only addition to The WEEKLY FX DRIVE-THRU. The WEEKLY FX DRIVE-THRU is a weekly blog that I started over two years ago. Its aim was to review my thoughts and ideas on the forex market. I then started to add trade set-ups and write about trades that would be on my mind if certain events took place.

I started to publish my future trade set-ups, which were predominantly profitable and as I approached my 100<sup>th</sup> blog, I decided that it was time to move to the next stage…. the PREMIUM SERVICE.

The PREMIUM SERVICE contains trade-set ups of my various styles of trades that I developed into a successful formula for trading the forex market with more profitable than losing trades.

As a subscriber to the PREMIUM SERVICE, you will receive all my suggested trades whether they are: - FLASH trades, RADAR trades or FUNDAMENTAL trades via an exclusive protected Twitter feed. I give you my thoughts on entry, exit, trade size and what type of lot to trade.

I do the risk assessment ahead of the trade. You decide whether you want to take the trade and what position size to take.

If you trade part-time: with the RADAR TRADE suggestions you simply load a limit order with your broker and the trade will enter and exit automatically, if you use the suggestions I provide, or you can chose your own exit strategy.

(Full details and definitions of FLASH, RADAR and FUNDAMENTAL trades are inside the secure members area of the PREMIUM SERVICE)<b> </b>
<p align="center"><b>What are the current trading success rates with the PREMIUM SERVICE?</b></p>
From my blogs published in December and January the following is an accurate trade by trade set up that was either “Blogged” or “Tweeted” via my twitter account @pipaccumulator (If you want more details please contact me directly via email - my address is at the foot of this document). I have my own history from the past 6 /7 years but it is displayed as below or in excel spread sheets as seen in my blog posts in the WEEKLY FX DRIVE-THRU <a href="http://www.weeklyfxdrivethru.com">www.weeklyfxdrivethru.com</a> and below.

<b><span style="text-decoration: underline;">December 2013 and January 2014: -</span></b>
<p align="center"><b><span style="text-decoration: underline;">FLASH TRADES:</span></b>

TOTAL TRADES: 28
TOTAL PIPS NET PROFIT: 871

MICRO LOT TRADERS: 1 x micro lot traded your risk = 28 x $0.10 = $2.80
Your reward was 871 x $0.10 = <b><span style="text-decoration: underline;">$87.10</span></b></p>
<p align="center">MINI LOT TRADERS: 1 x mini lot traded your risk = 28 x $1.00 = $28.00
Your reward was 871 x $1.00 = <b><span style="text-decoration: underline;">$871.00</span></b></p>
<p align="center">STANDARD LOT TRADERS: 1 x standard lot traded your risk = 28 x $10.00
Your reward was 871 x $10.00 = <b><span style="text-decoration: underline;">$8,710.00</span></b></p>
<p align="center"><b><span style="text-decoration: underline;"> </span></b></p>
<p align="center"><b><span style="text-decoration: underline;">RADAR TRADES:

</span></b>TOTAL TRADES: 36
TOTAL PIPS NET PROFIT: 646</p>
<p align="center">MICRO LOT TRADERS: 1 x micro lot traded your risk = 36 x $0.10 = $3.60
Your reward was 646 x $0.10 = <b><span style="text-decoration: underline;">$64.60</span></b></p>
<p align="center">MINI LOT TRADERS: 1 x mini lot traded your risk = 36 x $1.00 = $36.00
Your reward was 646 x $1.00 = <b><span style="text-decoration: underline;">$646.00</span></b></p>
<p align="center">STANDARD LOT TRADERS: 1 x standard lot traded your risk = 36 x $360.00
Your reward was 646 x $10.00 = <b><span style="text-decoration: underline;">$6,460.00</span></b></p>
<p align="center"></p>
<p align="center"><b><span style="text-decoration: underline;">COMBINED RADAR &amp; FLASH TRADES:</span></b></p>
<p align="center"> TOTAL TRADES: 64
TOTAL PIPS NET PROFIT: 1,517</p>
<p align="center">MICRO LOT TRADERS: 1 x micro lot traded your risk = 64 x $0.10 = $6.40
Your reward was 1,517 x $0.10 = <b><span style="text-decoration: underline;">$151.70</span></b></p>
<p align="center">MINI LOT TRADERS: 1 x mini lot traded your risk = 64 x $1.00 = $64.00
Your reward was 1,517 x $1.00 = <b><span style="text-decoration: underline;">$1,517.00</span></b></p>
<p align="center">STANDARD LOT TRADERS: 1 x standard lot traded your risk = 64 x $640.00
Your reward was 1,517 x $10.00 = <b><span style="text-decoration: underline;">$15,710</span></b></p>
If you go to <a href="http://www.weeklyfxdrivethru.com">www.weeklyfxdrivethru.com</a> and check back over the past 8/9 posts you can see very clearly the growth week by week to give this total.

I am NOT saying that this can be expected every month because I am a cautious trader.

However, I do trade currencies to make money.

Whilst I like the idea of longer-term trading, if the market looks false to me I will cut profitable trades and bank money. I am not looking for the glory of three/four week trades to show I have nerves of steel to make +300 pips or so. If I can make 300 pips from three or four 24/48-hour trades instead, who cares? It’s all about banking profits and minimizing risk.

I will have a balance of intra-day, swing and long term trades. It is your choice to pick what you want to take and what to risk. I am a low-risk very conservative trader.
<p align="center">FUNDAMENTALS MATTER TO ME</p>
<p align="center">I TRADE TO MAKE MONEY…NOT TO PICK TOPS OR BOTTOMS</p>
<p align="center">I TRADE LOW RISK</p>
<p align="center">I DO NOT CHASE MARKETS</p>
<p align="center">I LIKE THE TRADES TO COME TO ME</p>
<p align="center">I AM NOT A GREEDY TRADER</p>
<p align="center">I LIKE TO TRADE MOMENTUMS IN THE DIRECTION OF TRENDS</p>
<p align="center">I USE FIBONACCI LEVELS TO ENTER &amp; EXIT ON MANY TRADES</p>
<p align="center">PLUS</p>
<p align="center">MY TRADING STYLE IS MIXED EVEN WITH THE ABOVE KEY BASICS</p>
<p align="center">I USE THE PULLBACK STRATEGY TO ENTER AND I LIKE SWING AND LONGER-TERM TRADES (WHEN POSSIBLE)</p>
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The members area of the website contains not just the comprehensive trading history / journal of trades but it also contains as much support information as I can gather that is of use to help us all trade profitably. As time moves on, the support pages areas will increase so that it becomes a one-stop point of reference for all styles and types of traders regardless of experience.

I am hoping to have a chat room so that subscribers and myself can chat live about potential live trades. In addition, if the number of participants is economically viable, I will hold webinars on trading issues. Below is a list of questions so far that will either be addressed by webinar or by a future section within a blog post.
<p align="center"><b>Trade Plans and how to work with them
How to find a good broker to partner with</b>
<b>What trades for what broker
Micro, Mini or Standard lots
Placing Stops</b>
<b>Strategies on when to enter and exit trades</b>
<b>Risk Assessment</b>
<b>When to fade trades</b>
<b>How to cost average effectively</b>
<b>How to use Trade Zones effectively - Buy Zones and Sell zones</b>
<b>Working with Fibonacci levels</b>
<b>Basic Chart analysis</b></p>
The PREMIUM SERVICE will evolve as it moves forward. I have lots of ideas to integrate into this area, but I am also open to ideas from readers / followers and subscribers.

This is a very important step for me as well; I want the PREMIUM SERVICE to be different to other services currently available.

Whilst upon first look, it may appear that the Premium Service is directed solely at new traders, or those with intermediate skill levels. Please note this is not my intention. Trading can be lonely, and sometimes it is good to feel that you are part of a team. With this in mind, I am thinking that a “Chat Room” style area would be of benefit to all traders to share ideas and trade set-ups. Plus, whether you are a new trader or an experienced trader it is always good to have a library of information available close at hand.

What are the costs?

There will be 40 weekly blogs / issues per year. I will not write in the summer and over Christmas periods. There will be an unlimited amount of Twitter follow-ups to the exclusive subscribers on a Twitter secure feed during the week to review and act upon “FLASH, RADAR and FUNDAMENTAL trades” and issues emanating from previous blogs.
<p align="center"><b>There are three subscription options: </b></p>
<p align="center"><b>ANNUAL (40 WEEK) SUBSCRIPTION: $750.00 (this equates to $18.75 per week) </b></p>
<p align="center"><b>20 WEEKS SUBSCRIPTION: $450.00 (this equates to $22.50 per week)  </b></p>
<p align="center"><b>10 WEEKS SUBSCRIPTION: $250.00 (this equates to $25.00 per week) </b></p>
<p align="center"><b>(All Fees are quoted in USD
and
Please note: There are no refunds once a subscription is accepted)</b></p>
If you like what you have just read. Please click on the “SIGN -UP” link at the top of the welcome page of the WEEKLY FX DRIVE-THRU.

The registration is very straightforward to follow all you require is a PayPal account.

When the registration process is complete and, within 24 hours, you will receive an email from me confirming everything and welcoming you onboard so to speak.

Should you have any queries or encounter problems whilst trying to subscribe please contact me on the following email: -
<p align="center"><b><span style="text-decoration: underline;">premiumservice@weeklyfxdrivethru.com</span></b></p>
I do hope that if you look through the history of my blog posts on the WEEKLY FX DRIVE-THRU you will see that I do have a relevance to the forex market and that joining the PREMIUM SERVICE would add value to your trading.

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

<b><span style="text-decoration: underline;">5. MAJOR FOREX NEWS THIS WEEK THAT INTERESTS ME:</span></b>

SUNDAY: N/A

MONDAY: N/A.

TUESDAY: USD – Janet Yellen testifies

WEDNESDAY: GBP – BOE Carney speaks &amp; BOE Inflation Report
WEDNESDAY: EUR – Draghi speaks.
WEDNESDAY: AUD – Unemployment Rate.

THURSDAY: USD – Core Retail Sales &amp; Retail Sales and Janet Yellen testifies.
THURSDAY: CNY - CPi

FRIDAY: CAD – Manufacturing Sales.

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<b><span style="text-decoration: underline;">6. FINAL THOUGHTS:</span></b>

I am expecting consolidation early next week. So, with that in mind, always, always remember that there is a market everyday. You do not need to trade everyday to make your financial goals.

Good luck and trade within your TRADE PLAN guidelines and most importantly use MONEY MANGEMENT SKILLS to control your risks.

Scott Pickering
The Pip Accumulator
Saturday February 8th 2014

EMAIL / FOLLOW ME AT:
drivethru@weeklyfxdrivethru.com
Twitter: @pipaccumulator
<span style="line-height: 1.5em;">Google+/scottpickering
</span><span style="line-height: 1.5em;">StockTwits; thepipaccumulator</span>

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