I looked back over recent blogs and I seem to be starting with the same few words over and over again, such as......"What an interesting week we just had" and "That was a very interesting  week in the Forex market". Not this week....

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

Welcome to the Fx Circus everyone...enjoy...enjoy..fun for all.

I want to remain 100% honest with my blog and the feedback suggests that it is the way to go. How the bloody hell do you trade the USD major currencies? I do not know at times whether I am fading tops or buying on pullbacks. After being a trader for some time the Forex market right now must appear bananas to new traders.

I took some interesting short trades early in the week, short the EUR/USD and GBP/USD, but after that success, the week has really been a voyeur approach. The "Straw that broke the camel's back" for me was Kuroda's speech in the week. I was reading the translation as it was made and the YEN should have weakened across the board......it strengthened. The Fx markets continual ability to buy on rumour and then sell on the news beggars belief at times. Are there sane people in the banks moving theses currencies around and what macro news are they looking at?

German and French PMi stats awful.......EUR/USD weakens. Now I realise the cross currency effect of the EUR/GBP has a lot to do with this as the GBP is well oversold and any news to lift cable is jumped on like a "Rat up a Drainpipe" but it is a difficult market to assess and quite frankly, its not that easy to be a scalping trader at the moment.

When the week was all over and done with and I look at my charts we are just range trading...false breakouts, the pullbacks, false breakdowns, spikes and then we move back within the ranges. Range trading should be easy but I am struggling to place a trade that I am happy with, knowing my risk before entering. The result......I am in cash 90% of the time. When Asia and Europe trade the USD strengthens and then when the New York session opens we reverse and follow stocks on their grind higher........what a false economy we are in. I blame Ben at the FED 100% for this and God only knows how it's going top play out because it has never been done before. Bernanke is probably hoping to be replaced, so his replacement can exit the QE programmes and let the bond purchases  mature, and then blame Ben's regime for the f**k up.

We live and trade in interesting times.......

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<span style="text-decoration: underline;"><strong>2. THE VIEW FROM MY TRADING DESK:</strong></span>
<p style="text-align: center;"><strong>CYPRUS: THIS HAS THE POTENTIAL TO BE THE BIGGEST F**K UP THE EUROZONE HAS EVER MADE</strong></p>
Trust and belief is everything in life, whether, personal or in business.

When I was growing up I would hear my parents and their friends make statement in general conversation along the lines of  "It's as safe as money in the Bank". What does that mean? Bugger all in Cyprus irrespective oh how the politicians end their debates in the Cypriot parliament this weekend ahead of Monday's cash crunch deadline.

If your cash is NOT safe in a bank where is it safe....under a mattress?

Whether deposits for the normal person who has less than €100,000.00 in a Cypriot Bank is left untouched by the proposed bank levy (once off my arse). There has been a breach of trust for those depositing funds in a bank. Whether you are a so-called Russian mobster or not..it is the principle. Governments tax you every which way that they can and now the bank account is seen as fair game...quite a pathetic, shameful and despicable approach. We the people vote these numpties into power....it's all our fault. In this case the population of Cyprus's fault to be exact.

The "Cat is now amongst the pigeons". It looks as if on the latest proposal I read that only those with Bank deposits over €100,000.00 will be targeted at about 15% for now.......will it end here? I think not.

The Cypriot parliament have stated for now that they want to remain in the Eurozone, as they ponder and debate the measures to come with the €5 Billion or so they need by Monday to satisfy Angela Merkel and the rest of the German's in Frankfurt. What happens if they think they have it this time and scrape by? but similar to Greece, and the Cypriot mentality is very similar to that of Greece, they need to come back again. Will the resolve to add more austerity to the island nation be as palatable again or will they just say "enough" like many commentators have already said is the way to go now and leave the Eurozone single currency.

CONTAGION.........The dye has been cast already!

I blame the German's 100% for this mess. Merkel is weak politically at home, she couldn't obtain parliament approval to bail out Cyprus with more cash, particularly with all the Russian involvement in Cyprus, so they gave the green light to bank levies.

Here's a potential scenario:

What happens if Italy's issues just go from bad to worse as they struggle on with parliamentary uncertainty?  Furthermore if the debt crisis starts to raise its head again in Spain and Italy....no more ECB monies, do they tax bank deposits to help pay the way as it's better than the rigid loan agreements and strong conditions that countries have to get into with the ECB and IMF. It's sold as a one off...that then becomes an annual tax. Let's face facts the Eurozone tax income in general is declining due to high unemployment and social welfare payments. Just saying............

If Cyprus decides this weekend, or the next time to leave the single currency and revert to the Cypriot Pound, it would be devalued and this would allow a lightening of the austerity measures and some increased degree of normality to return to everyday living in Cyprus.

Next their close neighbours Greece observe this and come to the simple conclusion......"What the F**K are we doing with this Austerity crap...we are only on the planet once, we will be paying for this, which wasn't all our fault for our entire lifetime. What's the point...let's vote for political party that will take us out the Eurozone single currency and re-value and re-print Drachma. The Italians, Spanish, and Portuguese could all follow suit and then you have the  southern based Eurozone members all pulling out of the the single currency.

Pressure groups grow and look at Cyprus and say "It's not such a big deal to leave the €uro " and the fact that you are no longer paying for Political mis-management of your country and the "Sub-Prime" fiasco from Wall Street that started all this gives you a few years of quality life back, a little bit of inflation in the exiting countries would help re-balance books and aid the pay down of debt. Away from the tight monetary controls of Frankfurt things start to breathe again. Could it happen........in my opinion it's potential path that the Eurozone could follow. It was engineered in the first place by Germany who have repeatedly stated they want ALL 19 members to stay in the single currency. Do you believe and trust politicians?

I believe a contagion could be on the cards.......

If every country in the Eurozone went to the polls in the next few weeks for a referendum on whether to stay in the €uro or not............What do you think the individual country by country result would be?

For those of you outside of Europe, you may not be aware but you have  to remember most countries gave up their sovereign currencies without a referendum. It was done sneakily attached top other treaties....vote yes to the obvious and you get the €uro too!!

Food for thought.

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<span style="text-decoration: underline;"><strong>3. MY LONGER-TERM TRADES:</strong></span>

None at the moment.

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<span style="text-decoration: underline;"><strong>4. LOOKING AHEAD INTO NEXT WEEK........THE KEY SUPPORT AND RESISTANCE  LEVELS IN THE USD MAJOR PAIRS:</strong></span>

<strong>EUR/USD: Closing Price 1.2988.</strong> We closed yesterday at the toppish end of the trading channel. 1.2850 to 1.3100 is the channel I am looking at. Play the confirmed breaks or take small positions within the range.

<strong>GBP/USD: Closing Price 1.5229.</strong> We are at the top of the range, be careful if you are looking to go long. 1.4850-1.5240 is my range.

<strong>AUD/USD: Closing Price 1.0443.</strong> This pair is still not following equities with the gusto it should and although it looks like it wants to test resistance at 1.0475, it is making a meal out of doing so. The range is 1.0330 to 1.0475.

<strong>NZD/USD: Closing Price 0.8356</strong>. We are currently sitting on resistance. A break higher here opens up 0.8450 in my eyes. Support is strong at 0.8250 and 0.8150 in particular on the way down but I think that if we get any sort of settlement out of Cyprus this pair may spike upwards to play it carefully.

<strong>USD/CHF: Closing Price 0.9405.</strong> We are at the point of a breakdown. If the EUR/USD breaks higher on Cyprus, the CHF will fall. We just need to verify is it a €uro spike along the lines of buy the rumour /sell the news and then it will sell off or is it going to squeeze higher. The EUR/USD will guide you how to trade the CHF next week.

<strong>USD/JPY: Closing Price 94.45.</strong> This pair is still very sensitive to world macro events and news events. Despite, the BOJ attempts to weaken the pair it has strengthened on the risk on/risk off playbook. Key support is at 94.00 and resistance is big at 96.75.

<strong>USD/CAD: Closing Price 1.0231.</strong> If there was a currency that is boringly stuck in its range here it is. 1.0180 to 1.0330 is the big range.

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<span style="text-decoration: underline;"><strong>4. MAJOR NEWS EVENTS THAT INTEREST ME COMING UP NEXT WEEK:</strong></span>

MONDAY: EUR - The Cyprus fallout/parliament settlement and Eurozone response.

TUESDAY: USD - Consumer Confidence

WEDNESDAY: CAD - Core CPi

THURSDAY: CAD - GDP

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<span style="text-decoration: underline;"><strong>5. FINAL THOUGHTS:</strong></span>

Get ready for massive false moves up and down, there will be soooooooooooooooooo many rumours surrounding Cyprus in the early part of next  week it may be better to be sidelined in cash. There will be volatility and politicians from every corner of the Eurozone will crawling out from under their rocks to get their 15 seconds of fame on a TV sound-byte or a column inch in the newspaper.

Beware and trade carefully.

Good luck,

Scott Pickering
The Pip Accumulator
Saturday 23rd March 2013.

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