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

What a week for volatility.

I know we all love volatility to set us up nicely for trading but my God last week was a humdinger as they say, the USD/JPY, in fact all the Yen pairs went berserk. Some great opportunities to make money, I hope that if you traded you kept your positions small and took profits before the savage pullbacks.

It never happened for me the way I thought in last weeks blog regarding the NZD/USD moving a lot lower. In fact, in the week overall the Kiwi dollar has strengthened quite a lot. I do expect a great shorting opportunity at the multi-year trend line of 0.8200 if we get there.

During this past week, I traded my favourite pairs AUD/USD and NZD/USD short until the Yen moves were so market moving that I decided to stop trading them and I incurred small losses. Subsequently, I have tried on a couple of occasions to go long the USD by shorting the AUD/USD and NZD/USD and in addition the EUR/USD and GBP/USD. Made great money one day last week and lost small on two other occasions.

Last night, I looked at my trading accounts, and, for the week my accounts have grown  a staggering 16%...absolutely ridiculous. 80% of the 16% gain was made from shorting the USD/JPY on many, many occasions.

One thing for certain; the volatility is going to carry on as the Nikkei 225 unwinds. Look at the following data relating to the Nikkei this year so far: -

2013 YEAR TO DATE: up 23%
ONE YEAR: up 51%
52 Week range: 8,328.02 – 15,942.60
FRIDAY’S CLOSE: 12,686.52
The Nikkei 225 is about 20% lower off the 2013 highs and it is now technically called as being in a “Bear” market.
The daily moves of 5% and 6% are now common……these are very volatile and not usual by any stretch of the imagination.

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<b>2. <span style="text-decoration: underline;">MY VIEW ON THE NEWS SEEN FROM MY TRADING DESK:</span></b>
<p align="center"><strong>AWAY FROM JAPAN……IT’S BACK TO GREECE AGAIN TO STIR THINGS UP</strong></p>
Who would have thought it?

You switch off the state TV station to save money and the outcry, quite staggering. Another 2,656 added to the unemployment lines. It has allegedly according to many reports been “A scandalous waste of money and a haven of waste and corruption”…this quote coming from a former  ERT TV anchor, now a government spokesman Simos Kedikoglou. Given all the reports I have read on Greece I was expecting about 25,000 employees in this state run TV station not 10% of that figure. The state media group in total operated three TV stations, 17 radio stations a satellite channel, and a magazine.

The shutdown was carried out unilaterally by the Greek Prime Minister Antonis Samaras. His two junior coalition partners the Pasok Party and Democratic Left reject the move and have stated they will not ratify the decision in a vote in September. Opposition parties have bolted into overdrive to oppose the decision, so much so it looks like elections will be called.

It is reported that the state TV had about a 13% market share, but that is an irrelevant number to the Greek population right now given what they have gone through and are still going through with austerity.

I strongly believe that had people been given a clean “Yes or No” vote to take the Euro currency,  that most of the existing 17 Eurozone single currency countries would not have the Euro as their currency. Most of the 17 member countries, Ireland and Spain are classic examples, had the adoption of the Euro single currency tied in with other Eurozone treaties so if you accepted the treaty then an automatic yes default on accepting the single currency was taken.

The Eurozone project basically if taken to 100% …removes a countries sovereignty…..a currency is the start point, then rule of law, foreign and social policies and so on.

From the Greek people’s perspective if you look at the Eurozone project so far and what has happened to their country over the past three/four years…..the state owned TV stations are the last straw, regardless of quality etc that is now irrelevant, or, whether they watch them or not. Brussels and Frankfurt together with the IMF have emasculated the Greek people so far that they see themselves being managed from Berlin and to them that means enough is enough. They are having to live with a lot, regardless of blame or fault.....the following just a few of the day to day issues: -
<p style="padding-left: 300px;">27% unemployment (Record numbers of teenagers without employment)
Social Welfare payments cut
Transport systems decimated
Direct and Indirect taxes raised
Government taxation income at it lowest rate ever causing massive social unrest
Housing market pretty much non existent
Government services cut or abolished
Hospitals under funded...real shortages of drugs for the sick and needy
Schools under -funded.....classroom sizes now too big to give effective teaching or coaching
Government and Private sector salaries and pensions cut</p>
This country once again is on virtually an "All out" strike in support of the TV staff, riots, tear gas, water cannons back on the street and petrol bombs being thrown once more at Police. The country is on a knife-edge according to the coalition partners. This is not good for a country that needs holidaymakers to come and spend money……tourism in Greece is a huge affair.

The opposition parties and coalition partners are saying that a reform of ERT should be done; carry out a re-structuring programme, but not black out the TV screens.

So, the coalition that has been fraught with friction since they joined forces looks like the ERT decision may be the one that breaks the camels back. And result in the calling for early elections.

This will be bad for the Eurozone bulls, as like most Eurozone countries the anti Eurozone vote has been growing in Greece and the market will once again be subject to fears / threats etc of Greece leaving the Eurozone. With the Greek economy still in recession, and, little or no growth prospects on the horizon the country needs elections like a hole in head.

What happens in Greece has a knock on effect in Cyprus…it’s all been quiet there of late…so a renewed pressure on the Eurozone could be the next event that hits the trading screens. I should also point out that Italy is still rumbling along as well……another political stalemate seems to have numbed politics in Italy. The Eurozone as I keep saying has many issues bubbling under…it just needs another banking weakness and bonds will rise. Draghi could be emerging from a Frankfurt or Brussels telephone booth soon with his underpants on top of a pair of blue pantyhose with this ECB cape and mask on.  If he flies over Athens ERT won’t be reporting about it anyways!

Keep your eyes on Greece this could be the catalyst that drives the EUR/USD through 1.3000 towards my year end target of 1.2

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

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

I have been in this trade with a small position for three days and quite honestly I am going to bear with it as I do believe  the Eurozone is due for negative news and the USD is going to strengthen across the board. Both thoughts are EUR negative.
<p align="center"><b>EUR/USD
Short
Entry/Cost Average: 1.3326
Stop Loss: 1.3450
Limit: 1.2650
Closing Price: 1.3344
Position Size: 20%
Present Position: +18 pips.</b></p>
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<b>4. <span style="text-decoration: underline;">LOOKING AHEAD INTO THE NEXT 5.5 DAYS OF TRADING:</span></b>
<p align="center"><b>THE MAJOR SUPPORT AND RESISTANCE LEVELS WITH THE USD MAJORS:</b></p>
<b>EUR/USD: Closing Price 1.3344. </b>The EUR/USD has really been caught in no man’s land for the past few days. It has threatened a breakdown and on a couple of occasions dived below 1.3300, which has been stubborn support only to pull right back up again. It has traded in the main in a very tight 1.3300 to 1.3450 range. I am hoping for a break below 1.3300, which should open up the move to sub 1.3200 at 1.3185.

<b>GBP/USD: Closing Price 1.5703</b>.<b> </b>This pair has remained quite strong over the past week and my flag pattern to 1.4300 and below is long gone. In fact, I think we are going to remain elevated until we test just below 1.5800 at 1.5775 again before we head lower. This level is major resistance, and, I intend to be all over this pair like a bad rash should we hit these numbers. I have a sell order at 1.5780 and again a little higher with tight-ish stops above 1.5800. The move lower should then see a re-test of the sub 1.5500 level in my opinion.

<b>AUD/USD: Closing Price 0.9468. </b>My thought process on the “Aussie” is changing as the Yen domination of the markets is screwing with my fundamentals for a while. I think we need to see a top of 0.9650 before moving lower again and once again I have sell orders in position just below with stops around 0.9685 or so. The Australian economy is still in the position of requiring a weaker AUD in the currency markets so I am viewing this higher entry price to go short the AUD/USD a golden opportunity.
For now we are in a 0.9400 to 0.9650 range.

<b>NZD/USD: Closing Price 0.8044. </b>Very similar to the way I view the Aussie is the way I view my next Kiwi trade. I am now of the opinion that a test of the long standing 0.8200 trend line needs to be tested before we finally play out the strength moves. I have sell orders up there with stops just above ready to take advantage of what I believe will be a great place to short. For now I think we will be well supported at 0.8000. Should we break lower…..my trade idea is dead. During the week Wheeler governor of the RBNZ still muttered about the strength of the Kiwi dollar, but I think he is going to have to come right out and play in the markets once more so that the message is really loud and clear.

<b>USD/CHF: Closing Price 0.9210. </b>I am not trading this pair at the moment as the Yen influence is affecting how this currency is behaving. There is a SNB (CHF) Central Bank statement this week but I do not think the attention will be other than the peg on the EUR/CHF. 0.9190 to 0.9350 seems to be the range for this pair in my eyes. It needs to break one way or the other to grab my attention.
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USD/CAD: Closing Price 1.0170. </b>Not a lot happening with the “Loonie” these days as far as I can see. 1.0150 to 1.0240 seems to be it’s tight range.
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USD/JPY: Closing Price 94.10. </b>Holy Crap………….not sure at all how to play this pair. I have made buckets of $$$ trading this pair through “scalping” this past week or so but the moves are so volatile and wild swings are the order of the day - it’s not for the faint hearted at times. We are so close to what I call the line in the sand position at 93.65. This number gives way and I think this pair has 90.00 written all over it. On the upside, I think that we have break through initially 96.00 and then 97.80- before I think the weakness in the Yen can be taken seriously again. Be extremely careful with this pair

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<b>5. <span style="text-decoration: underline;">NEWS EVENTS IN THE COMING WEEK THAT INTEREST ME:</span></b>

WEDNESDAY: USD – FOMC  Statement and Press Conference.
WEDNESDAY: NZD – GDP.
WEDNESDAY: CNY – HSBC Flash Manufacturing PMi.

THURSDAY: EUR – French and German Manufacturing PMi.

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<b>6.  <span style="text-decoration: underline;">MY FINAL THOUGHTS &amp; CLOSING COMMENTS:</span></b>

Not much news coming up that really takes my fancy. That does not mean that I will not be trading.

I am conscious of the fact that we are now entering the summer months, which, usually means thinner trading situations due to holidays/vacations. In fact thinking about the market turmoil that we see in particular in Asian sessions this may be due to the fact that there is always thinner trading periods prior to the London and New York sessions, hence the sometimes wild moves. We should. I believe, bear this in mind as it will only get worse in the coming weeks as vacation periods kick in.

As always trade smaller with wider stops as the roller-coaster ride of volatility is set to continue.

Take care and good luck,

Scott Pickering
The Pip Accumulator
Saturday 15th June 2013.

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