04.01.2014

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

Happy New Year one and all, I trust that this blog finds everyone in good health and raring to get trading started in 2014, that is if like me you are still a 2014 trading virgin

This blog will be shorter than usual and will be a “Scott look at 2014” with my initial trading thoughts for this year. In addition, I will also provide you with an update on the launch of the PREMIUM SERVICE.

The normal blog will return next weekend and will continue until the PREMIUM SERVICE is launched.

<b><span style="text-decoration: underline;">2.  MY VIEWS ON THE USD MAJORS THIS COMING YEAR 2014:</span></b>

Over the holidays I have had plenty of time to sit back and strategize on my approach to 2014 and how it will vary from last year.

The major change in my recent trading style and strategy was brought about by the way the markets pushed and pulled traders around based on zero long term momentum, trend or direction. Inter-market correlations matter and count. There were huge disconnects in the second half of 2013.

I see this disconnect continuing, hence my forward thinking into 2014 shows disconnects between the majors. My thoughts are that there will be more extended periods when currencies will act independently this year. Correlations will come and go.
<p align="center"><strong>Typical examples of “the disconnect” are the following correlations: -</strong></p>
<p align="center"><strong> USD / Gold</strong>
<strong> AUD / NZD</strong>
<strong> Commodity currencies / equities</strong>
<strong> EUR / GBP</strong>
<strong> CAD / USD</strong>
<strong> JPY / S&amp;P</strong>
<strong> AUD &amp; NZD / Copper</strong>
<strong> EUR / CHF</strong>
<strong> EUR/GBP<span style="line-height: 1.5em;">/ GBP/CHF</span></strong>
<strong> JPY &amp; CHF / Gold</strong></p>
I know that it may be corny and you have probably read lots of 2014 predictions already, but I still want to do one, which, I will refer back to each quarter during 2014. I have not traded this year so far, I have just been looking at charts reading and listening to various pieces in the media and on the web.

I will for the purpose of review during this year go through each USD major one by one with thoughts associated to that currency pair.

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

My initial thoughts are that whilst I am a fundamental trader at heart and I believe this to be a good thing, it did impair my trading a little in 2013. Without doubt along with many traders fundamentally the belief was always that the EUR/USD was over-priced and that a correction lower was always on the cards towards to 1.2500 area. Even with a surprise rate cut late in 2013 we never really broke lower than 1.3000 last year.

The Eurozone is still starved of economic growth and there are many, many economic and social problems spread throughout the Eurozone.

My short list of issues facing the Eurozone is highlighted below: -
<p style="text-align: center;"> <i>AUSTERITY
</i><i>GDP
</i><i style="line-height: 1.5em;">UNEMPLOYMENT
</i><i style="line-height: 1.5em;">HOUSING
</i><i style="line-height: 1.5em;">LOW CPi
</i><i style="line-height: 1.5em;">DEFLATION
</i><i style="line-height: 1.5em;">BAD DEBT
</i><i style="line-height: 1.5em;">SOCIAL UNREST
</i><i style="line-height: 1.5em;">SOCIAL SERVICES
</i><i style="line-height: 1.5em;">HEALTH CUTBACKS</i></p>
The monthly EUR/USD chart below shows that despite the Eurozone negative talk (and I have done my fair share) the pair is extremely resilient. There are more green monthly candlestick bars than red ones; in fact, it’s a 66/33 ratio in 2013 green over red. This hardly shows a currency pair under threat for most of the time. The chart also shows that a longer term bearish down sloping channel is still in play. As you can see we are most definitely at the higher reaches of the channel almost breaking it over the recent holidays.

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<a href="http://weeklyfxdrivethru/wp-content/uploads/2014/01/EURUSD-M-04012014.png"><img class="aligncenter size-large wp-image-2459" alt="EURUSD M 04012014" src="http://www.thepipaccumulator.com/blog/wp-content/uploads/2014/01/EURUSD-M-04012014-1024x516.png" width="1024" height="516" /></a>

With the above in mind, I am expecting that equity markets will pullback and aid USD strength, plus do not forget that “Tapering” has started and this is a major shift in FED policy. These two events will drive the EUR/USD lower,

Additionally, with the ECB under Draghi’s leadership and Merkel the puppet mistress at the controls they have yet to properly attack under funded banks, deflation and negative growth in the periphery. So far ECB hot air has kept the markets reasonably happy, but only to a point. Sooner or later a full-on bond-buying scheme like the FED’s QE programme will be required to add liquidity to the Eurozone economies, which should provide the necessary fuel to initiate growth. The banks need to lend to underpin the future prospects of the Eurozone.  I am not sure the LTRO approach will actually give the gusto required. To me, a further LTRO is yet another can being kicked down the road.

During 2014 I think that Brussels will run out of cans to kick down the road and the Belgium hospitality industry should be a great investment. The reason for this investment tip is clear, as we will have umpteen Cheese and Wine ECB and Eurozone crisis meetings to finally fix things once and for all. Improvements in the U.S, will highlight how bad the Eurozone economy is in general in comparison and this will fuel the fire to demand action.

<b><span style="text-decoration: underline;">My EUR/USD prediction: -</span></b>
With the above happening, I see the EUR/USD trading below 1.3000 by the year-end; initially I see a test of the 1.2500/1.2600 lows.

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

Without doubt, the recovery in the UK was for me the joker in the pack towards the end of 2013. Carney (Bank of England, Governor) is doing his best to keep a lid on matters but the UK unlike the Eurozone and the U.S. is NOT suffering from a deflationary set of economic statistics. Whilst some economic data is patchy there is no denial that the UK is on a better economic footing than the Eurozone. It highlights that the one size fits all approach of the Eurozone does NOT work.

The chart below shows the 2008 high of the GBP/USD just over an exchange rate of 2.000, just before the BOE Inflation hearing from the then governor Merv “The Swerve” King. It dropped on his statement for 6 straight months to 1.3520.

We are now in a channel from 1.5000 to 1.6900.

<a href="http://www.thepipaccumulator.com/blog/wp-content/uploads/2014/01/GBPUSD-M-04012014.png"><img class="aligncenter size-large wp-image-2460" alt="GBPUSD M 04012014" src="http://www.thepipaccumulator.com/blog/wp-content/uploads/2014/01/GBPUSD-M-04012014-1024x516.png" width="1024" height="516" /></a>

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<b><span style="text-decoration: underline;">My GBP/USD prediction: -</span></b>
Cross–rates I am hoping will be my big trades in 2014 (see much more later). I feel that if the EUR/USD falls, the EUR/GBP will go with it and the GBP/USD which used to drop in sympathy with the EUR, will this year instead rise and I am predicting a re-test of the 61.8% retracement of the big monthly move on the chart above of 1.8250 will take place. The EUR/GBP is crucial to this predicted move. Should this move happen some great unwinds of cross-rates will happen and 2014 could be an excellent trading year with momentum and direction.

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

The worst kept secret in the Central Bank Governors world is out...RBA Governor Stevens wants the AUD currency weakened and he sees a AUD/USD exchange rate of about 0.8500 as a rate for the markets to aim for. Without doubt the equity markets will have the ultimate say here but tapering in the U.S. has started and equities should come under pressure, which, should force this pair lower.

<a href="http://weeklyfxdrivethru/wp-content/uploads/2014/01/AUDUSD-M-04012014.png"><img class="aligncenter size-large wp-image-2462" alt="AUDUSD M 04012014" src="http://www.thepipaccumulator.com/blog/wp-content/uploads/2014/01/AUDUSD-M-04012014-1024x516.png" width="1024" height="516" /></a>

<b><span style="text-decoration: underline;">My AUD/USD prediction: -</span></b>

I see the 50% retracement on the monthly chart above as the initial target and after that 0.8000 as the second objective in 2014 for this pair. This pair will yo-yo a bit given the fact of its relationship to the equity markets but the RBA is determined to weaken the AUD currency. If you learn anything…never argue or trade against a central bank.
In addition do not forget Gold, Copper and China. All three have huge impacts on this currency pair. Gold is under pressure because as a hedge against inflation, there is zero inflation to worry about so it is overpriced. It tested critical $1180.00 support over the holidays and bounced but it will re-test again. A break lower will take the AUD/USD with it. <span style="line-height: 1.5em;">These factors make my 0.8000 target in 2014 look pretty tame.</span>

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

Contrary to the AUD, the RBNZ Governor Wheeler “the dealer” wants to raise rates and send the NZD higher in 2014 to control bubbles in the New Zealand economy. I can feel a cross-rate sermon coming on again. The AUD/NZD will be a focus for me in 2014, given that the RBA and RBNZ are on different paths.

<a href="http://weeklyfxdrivethru/wp-content/uploads/2014/01/NZDUSD-M-04012014.png"><img class="aligncenter size-large wp-image-2461" alt="NZDUSD M 04012014" src="http://www.thepipaccumulator.com/blog/wp-content/uploads/2014/01/NZDUSD-M-04012014-1024x516.png" width="1024" height="516" /></a>

Looking at the chart above and taking into considering equities, Gold, Copper and China. Common sense tells me that this pair should follow the AUD/USD lower, but I am 100% convinced. The cross-rate effect on the AUD/NZD could keep this pair well supported and inflated, add to this the RBNZ desire to raise rates and this pair could stay in the lofty heights of 0.7800 to 0.8800 for the year.

<b><span style="text-decoration: underline;">My NZD/USD prediction: -</span></b>

This is hard to write as for most of 2013 I have been trying to short this pair almost continually. This year for reasons already stated (RBA determination and the AUD/NZD cross-rate effect) I believe this pair will be the surprise and stay above 0.7800. I see a test of all-time highs being on the cards if the RBA forces the AUD lower and directly intervenes. Do not rule that out.

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

It is very easy to say 110.00 and maybe 120.00 is the target for this pair in 2014. Given the reputations and testicles on the chopping block, plus the amount of YEN being thrown at the markets an exchange rate of 120.00 seems achievable in the long term. The BOJ has committed considerably more funds than BEN at his best at the FED ever did.  It would therefore be brave nay foolish to stand in front of the USD/JPY freight train whilst the currency pair weakens to places not seen for years. Having written this, I think in true forex style we need to back test a breakout first before heading higher to the dizzy heights where the air is thin!!

<a href="http://weeklyfxdrivethru/wp-content/uploads/2014/01/USDJPY-M-04012014.png"><img class="aligncenter size-large wp-image-2465" alt="USDJPY M 04012014" src="http://www.thepipaccumulator.com/blog/wp-content/uploads/2014/01/USDJPY-M-04012014-1024x516.png" width="1024" height="516" /></a>

The monthly chart above shows the move from the highs of 124.23-pre financial crisis to the lows of 75.47-post financial crisis.

A test of the 61.8% retracement seems to be on the cards at 105.59. This will be huge resistance.

<b><span style="text-decoration: underline;">My USD/JPY prediction: -</span></b>

Breakouts are nearly almost always re-tested for validity. I believe that the USD/JPY will re-test lower than 100.00, probably 98.00 which was a major psychological number on the way higher and lower with this pair. After a test of 98.00 we head higher (Yen weakness). Equities will play their part taking this pair lower.

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

Basically, we have been held by 0.8750 for the past two years and we recently re-tested this low to bounce off it. If my Eurozone issues are predicted correctly I see this pair heading higher once again. This pair is one of my long, long, longer term trades for 2014, and I am looking to buy on a dip very soon.

<a href="http://weeklyfxdrivethru/wp-content/uploads/2014/01/USDCHF-M-04012014.png"><img class="aligncenter size-large wp-image-2464" alt="USDCHF M 04012014" src="http://www.thepipaccumulator.com/blog/wp-content/uploads/2014/01/USDCHF-M-04012014-1024x516.png" width="1024" height="516" /></a>

<b><span style="text-decoration: underline;">My USD/CHF prediction: -</span></b>

If the EUR/USD falls as predicted this pair will test parity in 2014. A break through resistance at 0.9415 will give my prediction the weight it needs to push onwards and upwards.

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

This is the most stubborn pain in the ass currency pair in the market, for me to follow anyway. I do however see that this pair should stay above parity in 2014. I think that we move higher as equities fall and then as equities stabilize later in 2014 we will pullback a little.
The monthly chart below shows that we are in an uptrend off the lows of 0.9640, to me I see this pattern continuing as we re-test higher levels.

<a href="http://weeklyfxdrivethru/wp-content/uploads/2014/01/USDCAD-M-04012014.png"><img class="aligncenter size-large wp-image-2463" alt="USDCAD M 04012014" src="http://www.thepipaccumulator.com/blog/wp-content/uploads/2014/01/USDCAD-M-04012014-1024x516.png" width="1024" height="516" /></a>

<b><span style="text-decoration: underline;">My USD/CAD prediction: -</span></b>

There may be a re-test of the bullish trend line on the chart above but I do feel overall that we will be re-testing the 50% and maybe even the 61.8% Fibonacci levels of 1.1200 and 1.1665.

<b style="line-height: 1.5em;"><span style="text-decoration: underline;"> </span></b><b><span style="text-decoration: underline;">3. MY KEY FOCUS IN 2014:</span></b>

You would have noticed in the later blogs of 2013 my trading style and emphasis on what to trade took on a new direction.

The main reason for this was due to disconnects in the marketplace. Fundamentals count, but so do inter-market relationships/correlations. There were so many disconnects in 2013, I had to adjust my way of thinking and trading. I see this continuing in 2014 as well as this has been reflected already in the way I view the moves in the USD majors. There is a knock-on effect and this is my key focus this year.

The lack of momentum and direction in the USD majors, in particular, since the summer last year, required me to focus on a different style of trading. The push and pull moves for no reason, were frankly just annoying me, and, news events or poor news sound-bytes were causing wild swings in the major pairs that were just crazy and on many occasions based on nothing concrete, or remotely resembling factual data.

This prompted the introduction of pull-back strategy trades I called FLASH TRADES, and, a more disciplined approach to longer-term trades that I defined as RADAR TRADES.
<p style="text-align: center;"><strong>RADAR TRADES: These are pre-meditated limit order trades. I hope that these will be longer-term trades.</strong></p>
<p style="text-align: center;"><strong>FLASH TRADES: These are more of an intra-day trade. They may develop into “Swing style” trades but will probably be more short term.</strong><strong> </strong></p>
At the same time, I started to look more and more at cross-rate pairs and exotic crosses. These were largely successful from September 2013. This focus will continue in 2014. I will still trade the majors, but I think more from a FLASH TRADE perspective. My initial focus in 2014 will be to look at the cross-rates. My primary reason for this is that since 2008 these pairs have largely been directionally lower as equities have risen to all time highs. When equities roll over “The unwinding will begin”. With the commodity currencies it has already started and there are 1,000’s of pips still available. We will be unwinding 5 and 6 years of moves.
<p style="text-align: center;">Be prepared for many trades in the following pairs in 2014: -</p>
<p style="text-align: center;"> EUR/AUD
GBP/AUD
EUR/NZD
GBP/NZD
EUR/CAD
GBP/CAD</p>
<p align="center">Plus the
AUD/NZD
EUR/GBP
AUD/CHF
<span style="line-height: 1.5em;">NZD/CHF</span></p>
The moves can be wild in most of these pairs as they are not well-funded but they can be very directional with risk off or risk on conditions and offer good returns. The key is to take smaller positions with wider stops to cope with the volatility. A point to note is that these pairs can be very costly overnight carry trades. To trade these we will have to be clever, at the same time I will be assessing risk prior to entries to ensure minimum risk maximum profitability ratios.

Trading these pairs is all about a trading discipline

Look my trading style - it’s simple: -
<p align="center"><strong><i>FUNDAMENTALS MATTER TO ME</i></strong></p>
<p align="center"><strong><i>I TRADE TO MAKE MONEY…NOT TO PICK TOPS OR BOTTOMS</i></strong></p>
<p align="center"><strong><i>I TRADE LOW RISK</i></strong></p>
<p align="center"><strong><i>I DO NOT CHASE MARKETS</i></strong></p>
<p align="center"><strong><i>I LIKE THE TRADES TO COME TO ME</i></strong></p>
<p align="center"><strong><i>I AM NOT A GREEDY TRADER</i></strong></p>
<p align="center"><strong><i>I LIKE TO TRADE MOMENTUMS IN THE DIRECTION OF TRENDS</i></strong></p>
<p align="center"><strong><i>I USE FIBONACCI LEVELS TO ENTER &amp; EXIT ON MANY TRADES</i></strong></p>
<p align="center"><strong><i>PLUS...</i></strong></p>
<p align="center"><strong><i>MY TRADING STYLE IS MIXED EVEN WITH THE ABOVE KEY BASICS</i></strong></p>
<p align="center"><strong><i>I USE THE PULLBACK STRATEGY TO ENTER AND I LIKE SWING AND LONGER-TERM TRADES (WHEN POSSIBLE)</i></strong></p>
<b><span style="text-decoration: underline;">4. MAJOR FOREX NEWS THIS WEEK THAT INTERESTS ME:</span></b>

SUNDAY: N/A

MONDAY: USD – ISM Non- Manufacturing PMi.
MONDAY: AUD – Trade Balance.

TUESDAY: CAD – Trade Balance
TUESDAY: USD – Trade Balance
TUESDAY: CNY – CPi, GDP and Trade Balance.

WEDNESDAY: USD – ADP Non- Farm Employment change and FOMC minutes.
WEDNESDAY: AUD – Retail Sales.

THURSDAY: GBP – Interest Rates
THURSDAY: EUR – Interest Rates and ECB Press Conference.

FRIDAY: CAD – Employment rates/changes
FRIDAY: USD – Non-Farm Employment Change and Unemployment Rates.

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<b><span style="text-decoration: underline;">5. THE PREMIUM SERVICE:</span></b>
<p align="center"><b><span style="text-decoration: underline;">THE WEEKLY FX DRIVE-THRU</span></b><b>
<span style="text-decoration: underline;">PREMIUM SERVICE  2014 </span></b>

I am still working with my software developer to have this addition to the WEEKLY FX DRIVE-THRU ready within the next two weeks. My intention is to launch the PREMIUM SERVICE subscription service as soon as the markets revert back to normal liquidity.

We have noticed however that a number people have tried to register already., For anyone who has tried to register their details were deleted by the system under beta testing and even if you believe that you have an existing login or username that is not the case. As soon as I write announcing that the PREMIUM SERVICE is ready, sorry, but you will have to register again.

For those new readers below I detail the salient points regarding the premium service: -

As soon as the PREMIUM SERVICE is launched THE WEEKLY FX DRIVE-THRU in its current format will change. It will remain a weekly blog post although it will be more concise in length.

My “RADAR and FLASH TRADES” will now only be available via the Premium Service. In addition, “TRADE IDEAS &amp; SET UPS” that are tweeted will now only be available to Premium Service subscribers by email and in addition they can be viewed inside the secure section of my website.

Below as examples of the RADAR and FLASH TRADES excel spreadsheets I show the monthly statements for December 2013. (These were real trades that were tweeted or posted in this blog).

<a href="http://weeklyfxdrivethru//wp-content/uploads/2013/12/RADAR-TRADES-21122013.png"><img class="aligncenter size-full wp-image-2379" alt="RADAR TRADES 21122013" src="http://www.thepipaccumulator.com/blog/wp-content/uploads/2013/12/RADAR-TRADES-21122013.png" width="455" height="460" /></a>

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<a href="http://weeklyfxdrivethru/wp-content/uploads/2013/12/FLASH-TRADES-21122013.png"><img class="aligncenter size-full wp-image-2378" alt="FLASH TRADES 21122013" src="http://www.thepipaccumulator.com/blog/wp-content/uploads/2013/12/FLASH-TRADES-21122013.png" width="411" height="437" /></a>

In 2013, feedback from subscribers to the “Drive-Thru”, or from readers of the blog via Google+, LinkedIn or Twitter have been raising many questions about Forex Trading in general, such as: -

</p><p align="center"><b> </b></p>
<p align="center"><b>Placing Stops</b></p>
<p align="center"><b>Strategies on entry and exit</b></p>
<p align="center"><b>Working with a Trade Plan</b></p>
<p align="center"><b>What is a Trade Plan?</b></p>
<p align="center"><b>Risk Assessment</b></p>
<p align="center"><b>When to fade trades</b></p>
<p align="center"><b>How to cost average effectively</b></p>
<p align="center"><b>How to use Trade Zones effectively - Buy Zones and Sell zones</b></p>
<p align="center"><b>Working with Fibonacci levels</b></p>
<p align="center"><b>How to find a good broker to partner with</b></p>
<p align="center"><b>Chart analysis</b></p>
Inside the secure area of my website, you will be able to reference information on all of the above topics plus much more. The library of information will grow during 2014 and my goal is to provide a comprehensive support area to traders of all experience levels. The PREMIUM SERVICE in its secure area will be a learning and reference area to subscribers.

I am also looking to offer training and information based “Webinars” to Premium Service subscription members, if I have sufficient participants. These will be fee based to cover costs.

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 a new trader or experienced trader it is always good to have a library of information available close at hand.

What are the costs of membership?

There will be 40 weekly blogs / issues per year (I will not write in the Summer and over Christmas periods), with an unlimited amount of follow ups during the week to review and act upon “Radar Trades” and issues emanating from previous blogs. In addition trade ideas for trades already in play would also be part of the service, as I will be trading the posted set-ups.

I do not want to become a finance administrator on a daily basis so I want to keep the subscription options as few as possible.
<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 IN USD)</b></p>
Should you have any questions regarding the PREMIUM SERVICE please email me at premiumservice@thepipaccumulator.com

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<b><span style="text-decoration: underline;">9. FINAL THOUGHTS:</span></b>

It is a busy week for my first week back in the saddle.

We should see liquidity come back to the market this week and currency moves should be more sustainable.

I will be posting RADAR and FLASH trade set ups via twitter as the week progresses and they will be performance measured via spreadsheets in next week blog.

Until we reach full liquidity if you are going to trade keep the positions smaller.

Good luck,

Scott Pickering
The Pip Accumulator
Saturday January 4<sup>th</sup> 2014

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

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