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<strong>1. INTRODUCTION:</strong>

Well…my thoughts from last weekend that the JPY would dominate the marketplace this past week like it did last year never materialized. That was a bummer piece of news for me, I have maintained my shorts in the EUR/JPY and CHF/JPY but I lost money on my USD/JPY short.

The standout Forex news that stuck out for me over the past trading week was the AUD performance. After improving but still in contracting mode the Chinese HSBC Manufacturing PMi still below 50.0, but improved off last months 48.1 provided the AUD/USD with a bolt off the lows of 0.9210 up to 0.9270. The bullish move lasted 12 hours. Since then the AUD/USD and NZD/USD have both been trading very heavy and are well inside striking distance of key support levels at 0.9200 and 0.8500.

As I mentioned last week, I am in the middle of writing a review on Forex brokers. Since, I started the PREMIUM SERVICE I added 3 new brokers to my accounts list. I have inside 5 months parted company with two of them.

I had to stop trading with one due to execution speeds and slippage. It was a shame as the Account Manager was 100% solid.

The other broker was terminated quite frankly because promises were never met and the Account Manger left under a bit of a cloud. Communication was awful and they removed money from my trading account without advising me why. The reason was regulatory, not a problem but why not advise me. Why Do I have to the one to notice and initiate the conversation? This is 2014, when you are opening a series of accounts, the brokers are over you like a rash, SKYPE, email, or telephone, but not when something goes wrong. In addition, they lied to me, talk about a big RED FLAG.

Originally, my article was going to be based around why I have multiple brokers and how I utilize them. However, after having one or two conversations with subscribers, I decided to expand the article.

My goal with the PREMIUM SERVICE was to offer subscribers a deal with a broker that I had vetted for a few months. I still have my relationships with my longer-term brokers and they are excellent. I have almost signed off on special introductory deals with them for my followers. It will be another week or so before this article will be ready to print.

The PREMIUM SERVICE continues to add $$$ on the trade set-ups, I am very happy with the return given the market conditions.

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<strong>2. THE VIEW FROM MY TRADING DESK:</strong>
<p style="text-align: center;"><strong>EUROZONE IS BACK IN THE FRAME…HOWEVER, WATCH THE SNB (CHF)</strong></p>
<strong> </strong>In the next week we have “DRAGHI SPEAK” three times.

I think we should get a clearer indication (subject to a sanction from the Bundesbank and Merkel) of what the ECB is considering by way of tackling DEFLATION and the single currency high exchange rate in the Eurozone.

What happens, if there are no initiatives at the June ECB meeting and all we have is the usual ECB bravado of verbal intervention? Is there a chance of that happening? There is a chance of no action, but if that were to happen the credibility of the ECB and the personal credibility of Mario Draghi would not recover for a very, very long time. If the action taken was “wishy washy” this would also affect credibility and quite frankly the markets would never believe a word that would be uttered in the future from either the ECB or Draghi. So, I am in the corner that something is going to be done.

Draghi announced at the last ECB meeting in May that the ECB governing council had agreed to act at the next months meeting.

The EUR/USD reached 1.3993 (1.4000) at the ECB Press Conference; several analysts promoted this level as the limit level. As soon as Draghi announced action the following month, the EUR/USD started to fall, the low so far from the high is 1.3615, which represents just under a 400-pip move lower. What is the ECB target exchange rate? Who knows? What is the equitable exchange?

We are told that the ECB is 100% independent and that politicians have zero impact or influence….yeah right!!

Politicians will work in terms of round numbers, and, therefore this may be why 1.4000 was the straw to break the camels back. On the other side it is a far more difficult number to predict and I believe that it is guesswork more than anything.

However, lets briefly look at what Draghi has to achieve. He needs to get inflation moving up to his 2% inflation target. He needs to spur business investment and growth in many countries, by getting the unemployed back to work, through banks lending money to businesses to grow and export goods. He needs to create a business confidence in the Eurozone. It’s not much!!

To achieve this the ECB will have to dig deep enough to meet the markets expectations so that the ECB achieves a 100% value for the € millions that is going to be spent

Let me list the major options he has once again as I see them: -
<ol>
	<li>An interest rate cut from the existing 0.25%.</li>
	<li>A further LTRO (Long Term Refinancing Option).</li>
	<li>Full on Quantitative Easing.</li>
	<li>Negative deposit rates for Eurozone banks depositing money in the ECB.</li>
</ol>
Looking at the EUR/USD monthly chart below.

There are no real levels/ targets that stand out for me.

The ECB however, has to set a realistic objective with what it wants to achieve as an equitable exchange rate that is commensurate with the € cost to achieve the desired level.

I think Draghi and governing council of the ECB can verbalize the cr*p out of the market to achieve an exchange rate of 1.3000; but to see maybe a level than this and perhaps an exchange rate of 1.2500, which, lies just below all the noise of the candlesticks on the monthly chart may be the ultimate goal that they have in mind.

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<p style="text-align: center;"><strong>To achieve this lower level however would require: -</strong></p>
<p style="text-align: center;"><strong>100% consistency of the message to be delivered
</strong><strong>100% unity
</strong><strong>100% determination</strong></p>
<p style="text-align: center;"><strong>None of the above are traits of the ECB given the past history. It does make you concerned.</strong></p>
<p style="text-align: center;"><strong> </strong></p>
<a href="https://weeklyfxdrivethru.com/wp-content/uploads/2014/05/EURUSD-MONTHLY-24052014.png"><img class="aligncenter size-large wp-image-3722" src="https://weeklyfxdrivethru.com/wp-content/uploads/2014/05/EURUSD-MONTHLY-24052014-1024x452.png" alt="EURUSD MONTHLY 24052014" width="1024" height="452" /></a>

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I do not believe that the ECB will want a waterfall drop to the proposed level, and, I am NOT expecting Draghi to indicate the target other than say below 1.3000, quite simply because he has to at least indicate something to the markets.

Moving on from the Eurozone, Draghi and the ECB…..let me just briefly mention the Swiss National Bank.

Anything that the ECB/Draghi decides to do will be talked through ahead of the time with the SNB as the CHF will be the currency greatly affected by whatever easing the ECB carries out. Right now the EUR/CHF has an SNB exchange rate floor level supported at 1.2000. Given the effect that easing would have on the EUR across all currencies the SNB will want to protected itself against currency flows.

Ahead of the ECB June Press Conference it is widely expected that the SNB will introduce measures as well to avoid the CHF strengthening too far. Negative deposit rates, increases in the present EUR/CHF floor limit to 1.2500 or higher are being talked about.

I think that we should be able to gage the level of € easing by how far the SNB acts to protect the CHF. The markets are expecting something, so it is not a good time to be short the USD/CHF, EUR/CHF, GBP/CHF etc…..

So, with a little luck we should see two major market moves as a result of pending ECB action. If the SNB does nothing ahead of the ECB and it not coordinated to the same time of day as the ECB Press Conference in June, it will be a shocker!

Pre-warned is being pre-armed; as traders we now need to load up and think now about the June ECB meeting and subsequent Press Conference. I believe there are some great opportunities ahead. We may the equivalent of the 2013 USD/JPY move on our doorstep.

<strong> </strong>

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

<strong>EUR/USD: Closing Price 1.3624.</strong> This pair is now under pressure. We closed the week below the 200 SMA at 1.3635, which is a very bearish event. All week this pair has found it very hard to get a support level from which to bounce and therefore the bears are well in control. Moving forward, I really do not think that the bulls get back in the driving seat unless we break 1.3740. To the downside, obviously there is big support just below 1.36000 at around 1.3580.

<strong>GBP/USD: Closing Price 1.6829</strong>. I think that the 1.6990 recent high on the day of the last ECB Press Conference earlier this month may have been the 2014 high for this pair. Moving forward unless we see a break above 1.6920, which would be a great area to get short at, I fear that much lower levels are coming into play. The next support level is the double top measured move target of the daily chart, which, is at 1.6780. Personally, I see that if that level does not hold 1.6500 could be the target.

<strong>AUD/USD: Closing Price 0.9230</strong>. We ended last week just above critical support of 0.9210. This pair has been trading heavy all week and quite frankly it looks like it is just a matter of time before we are within striking distance of 0.9000 again. Resistance is at 0.9315.

<strong>NZD/USD: Closing Price 0.8541</strong>. Key support lies at 0.8500, with resistance at 0.8600. If the support gives way I am targeting 0.8000 as my short level objective.

<strong>USD/CAD: Closing Price 1.0859.</strong> No change in the closing price this week in comparison to last week. I have been avoiding the “Loonie” of late as I was stung quite badly recently. I think we have to see a range break before I could be tempted to enter a trade. The range that I am looking at is1.0800 to 1.0940, if we see a nice GAP lower at the open on Sunday night, I may be tempted but in all honesty the Ian Hunter song “Once Bitten Twice Shy” is ringing in my ears<strong> </strong>

<strong>USD/CHF: Closing Price 0.8953</strong>. We are trying to break out and talk of the SNB raising the floor limit in the EUR/CHF to 1.2500 ahead of the next ECB Press Conference is keeping interest high in this pair. I am long and sticking with it. If you have yet to enter long 0.8900 support if you can get it would be an excellent entry level, I would add to my position if we get down there. The resistance level that gives the breakout confidence is 0.8970.

<strong>USD/JPY: Closing Price 101.95. </strong>I am looking to get short this pair once again. I took a hit earlier this week on a nasty little bounce. The range for me is support at 100.80 and resistance at 102.40

<strong> </strong>

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

SUNDAY: EUR – Draghi Speaks.

MONDAY: EUR – Draghi Speaks.

TUESDAY: EUR – Draghi Speaks.
TUESDAY: JPY – Kuroda Speaks.

WEDNESDAY: N/A.

THURSDAY: N/A.

FRIDAY: N/A.

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<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>MAY 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.</p>
<p style="text-align: left;"> <a href="https://weeklyfxdrivethru.com/wp-content/uploads/2014/05/PREM-SERV-PROFITS-1-24052014.png"><img class="aligncenter size-full wp-image-3727" src="https://weeklyfxdrivethru.com/wp-content/uploads/2014/05/PREM-SERV-PROFITS-1-24052014.png" alt="PREM SERV PROFITS 1 24052014" width="449" height="419" /></a></p>
<a href="https://weeklyfxdrivethru.com/wp-content/uploads/2014/05/PREM-SERV-PROFITS2-24052014.png"><img class="aligncenter size-full wp-image-3728" src="https://weeklyfxdrivethru.com/wp-content/uploads/2014/05/PREM-SERV-PROFITS2-24052014.png" alt="PREM SERV PROFITS2 24052014" width="460" height="417" /></a>

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.

Just to provide more information 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.

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

Not a lot of the news items scheduled for this week really interest me much. I am only really interested in watching for moves on the back of the ECB (Draghi) and BOJ (Kuroda).

Just because there are not a huge number of events does NOT mean that my guard will be down.

Whilst it is a short trading week if you count the USA Memorial Day holiday, at the back of my mind I am also becoming a little concerned that summer may be arriving earlier this year. This will add to volatility but it will be on the back of thinner market volume, and this always concerns me as moves can be exaggerated. This usually means false breakouts and false breakdowns can be the normal.

So, keep your eyes and ears on the Eurozone, plus whatever is done in Frankfurt will have a direct line access to Zurich and the SNB.

There is enough therefore to keep the brain active this week.

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

Scott Pickering
The Pip Accumulator
Saturday May 24th 2014

EMAIL / FOLLOW ME AT:
drivethru@weeklyfxdrivethru.com
Twitter: @pipaccumulator
Twitter: @ThePremService
Google+/scottpickering

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