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

At the risk of sounding boring and repeating myself…last week was once again a record profit trading week for me in 2013. The AUD/USD and NZD/USD short trades once again dominated my trading history. I had a few USD/JPY short and long trades and a few EUR/USD short trades but the AUD &amp; NZD dominated my attention.

Chinese liquidity issues, Gold and the U.S. Bond yields dominated the news and combined they served up the basis for the uncertainty that fed the need for USD long positions. The equity markets rallied most of the week but the commodity currencies never really moved with equities hence it made good sense to hold AUD/USD &amp; NZD/USD shorts.

The big story for me in the week was the continued sell off in Gold. I will to refer to the move in Gold and my thoughts on where we are going to in a little more detail later in the blog.

There are some great moves in the making in the Fx market at the moment and I am in two core longer term trades at the moment that I want to add to, hopefully next week as these trades develop. I am conscious that we are entering the sleepy season of the markets. Historically, July and August are dull….I mean dull.  Liquidity is thin as traders are on vacations and market moves can be extreme based upon a big sell or buy order so I do not want to get carried away, with any moves that might happen. The “Dull” season is usually full of false breakouts, so for parts of the trading days going forward I will be sitting on my hands with my fingers away from the keyboard.

Next week offers some great opportunities for the markets to really move. The ECB has an interest rate decision and a Draghi press conference and we also have Non-Farm payrolls in the U.S. These will be market moving events and I will be on vacation for a wedding in the UK, stopping in Ireland first for a few days, so I will not be trading these news events. I should also mention at this juncture that there will be no Weekly Fx Drive-Thru after this week’s effort until July 27<sup>th</sup> 2013.

The big debate for me is…..how am I going to trade when away? I will want to keep in touch.

I should also apologise for my reduced “Tweeting” recently.  We can call it senility, if we want to……I just keep forgetting. After my vacation, I need to put a post-it note on my computers to remind me.

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<span style="text-decoration: underline;"><b>2. MY VIEW ON THE NEWS SEEN FROM MY TRADING DESK:</b></span>
<p align="center"><strong>A USD OUTLOOK PLUS WHERE IS GOLD GOING NEXT?</strong></p>
As you know if you regularly read my blogs, I have been a USD bull for the past few months. The USD index has moved down and up and down again recently and we are now easing back into an uptrend.

The USD index is a great lead indicator to market direction and is an essential tool to look at and when used, in conjunction with other lead indicators it gives a huge bolt to your confidence when placing a trade in today’s volatile Fx market. I use it  along with a few other indicators. I have often referred to these in the past.

My daily routine, first thing I do when I sit in front of my computers is look at the following: -

USD index
THE HOLY TRINITY of GOLD, COPPER AND OIL
AUD/USD
USD/CAD
USD/SEK and sometimes USD/NOK

I have blogged several times about this in the past, inter-market relationships and correlations work the majority of the time and should never be dismissed out of hand if they are not syncing. When they are not working as usual you are on guard, but when they are in sync it is a great tool and guide  that we have as traders. In addition, if my lead indicating Fx currency pairs have short, medium and long term trends all in the same direction, this gives even more confidence in my trades, if I am trading in the same direction. In fact at times without this I sometimes walk away from placing trades.

So, focusing for a moment on Gold: -
<p style="padding-left: 270px;">GOLD: 52 week high almost at $1800.00.
CLOSE YESTERDAY (FRIDAY 27<sup>th</sup> June 2013) $ 1,234.00
DROP: Roughly thereabouts 33%</p>
The recent Gold sell-off has been coming. The flight to safety, hedge calls long associated with the buying of Gold are now really being seen as a bit off the mark, given the economic improvement in the U.S. and the “Tapering” talk from Ben Bernanke. Money has been for some time  transferred from one asset class to another, and the need for Gold has been called into question. It offers safety…but unless it is constantly rising offers no return. Therefore, it stands to reason that with a brighter economic outlook it should not be as popular.

This move out of Gold, which, is strongly correlated to the USD, has fuelled the recent USD strength, which, in turn, has had a topping effect on the price of Crude Oil and at the same time kept the dollar well bid across the commodity currencies. Although equities markets globally have continued in the main to be bullish, the S&amp;P has continued to hold support levels and it is fighting not to roll over.

Everything is linked;  the AUD/USD which as a currency pair is now broken as the key 61.8% retracement Fibonacci level of the 2008 Financial Crash lows to recent highs of 0.9150 gave way yesterday. If this currency pair moves the Gold price lower with it, so much more pressure is placed on Gold as the AUD/USD falls.

What adds fuel to the fire here is that most analysts are expecting a bounce in the AUD/USD and it is just not happening , which makes me think it has along way to go yet. This places more downside pressure on Gold. We hit lows of $1,180 in yesterdays trading, this is over a 30% fall from the 52 week highs, that's $600.00…..huge.

If there were Gold buyers in place between $1250 and $1200 expecting a bounce that hasn’t really happened yet. What do you think will happen if the momentum carries Gold down to key support around $1,160, and it gives way. Those buyers who bought hoping for a bounce will get out of their long trades placing more downside pressure on Gold and the AUD/USD will follow suit lower.

Gold rallied after hitting lows yesterday at $1,180 back above $1,200. But as long as it is below $1,250 there will still be downside pressure.

So where do I think Gold is ultimately going? I think a test of $1,160 is on the cards…it is too good not to be tested. If this level breaks, watch the AUD/USD, NZD/USD, Copper and USD strength overall…I think a potential waterfall chart to say the least. But I am expecting buyers and lots of them at $1,160 in Gold.

So we have a few ingredients in the mixing bowl. Add in FED tapering probably in September/October, the market needs to adjust to take this on board. This week’s economic data will be crucial, there are ISM’s and Non Farm Payrolls. If the numbers are decent, the USD will extend it’s gains.

Then we have the subject of the replacement of BEN at the FED. The markets hate uncertainty and this will place pressure on equities and add to the USD strength. There are a number of front running candidates to replace BEN but if a less familiar name appears on this list this will be a wild card to add to the mix.

So….a big week ahead and lots to juggle…….

There are multiple trades ahead in the Fx market linked in particular to the movements of the AUD$ and Gold.

The support level in Gold of $1,160 is critical. If Gold does not bounce at this level…….look out below. I think then it is the psychological level of $1,000 per ounce that will come into view very quickly. USD strength in the currency markets will be tasty to trade.

The AUD/USD closed below 0.9150 yesterday. This sets a very bearish tone. If you read all the reports from fund managers and TV analysis this past seven days, in the main they were all long expecting a bounce in the AUD$. It has NOT happened, any pullback has been so shallow not to cause a flicker of worry in my short trade set ups at all.

What about Copper?

All eyes are on Gold and the AUD$ at the moment, but add Copper into the equation. If Copper breaks below $3.00, this will also fuel the moves lower in Gold, Oil, AUD/USD maybe to 0.8540, NZD/USD towards 0.7350, EUR/USD finally into a re-test of the 1.2650 area , send the USD/CAD towards 1.1000 and the USD/SEK and USD/NOK much higher also.

In the event Gold falls away, the commodity currencies will move like “Wildfires”. Make sure the moves are confirmed before getting in too heavy on trades as these levels are huge technical levels and they will not be given up easily.

But do not rule out the AUD/USD bringing Gold down all by itself it maybe a bit oversold but WTF. The USD/JPY was soooooooooo overbought recently and no-one gave a rat’s ass as it leapt well above 100.00.

There are massive pip opportunities with these moves if they happen. I know that there are lots of “if’s” “and’s” and “but’s” flying around but we as traders have to have plans for whatever happens.

These are just my thoughts and the actions that I am getting prepared for. We need to have strategy’s ready and waiting and we have to be on the lookout and be alert to the market.

I could not let this section of the blog pass by without a comment about Peter Schiff from Euro Pacific Capital, the ultimate Gold bull. The guy who was two/three months ago quoting Gold at $5,000 this was early on when Gold was moving lower, the thought was a 5-10% correction.  A believed modest pullback…….well 33% later, a $5,000 price target seems a hell of a long way away.

I have no doubt Gold will rise again as the world economies start to show improvement, but,  I just cannot see the rise being so dramatic again. Where is Peter Schiff? This guy does not usually allow the TV show hosts a word in edgeways….it is so quiet and not as much fun watching the likes of CNBC without him.

My guess knowing CNBC..he will be wheeled in if the Gold support at $1,160 holds and we see a bounce back above $1,250. At this point it will be usual CNBC approach of: -

“Buy buy buy”

Joking apart, you must trade carefully around the crucial support levels. Whilst I think we are going much lower in all areas…who the hell am I? If I was that good I would not be blogging I would be on a beach somewhere or by the side of a pool with unlimited Jack and diets being brought to me by Cameron Diaz look-a-likes.

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<b>3.   </b><b>MY LONGER-TERM TRADES:</b>

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

I have been in this trade with a small position for over two weeks, almost three now. I have taken profits along the way, added to my position several times and managed this trade lower being quite cautious in my trade sizes. My fundamental views on the Eurozone have not altered and my limit targets are aggressive to say the least.
<p align="center"><b> </b></p>
<p align="center"><b>EUR/USD
Short
Entry/Cost Average: 1.3236
Stop Loss: 1.3157
Limit: 1.1850
Closing Price: 1.3009
Position Size: 10%
Present Position: +227 pips</b></p>
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<p align="center"><b> </b></p>
The following two trades, I have been in and out of in the past week or so. I have taken lots and lots of profits along the way and I am holding these positions for a while longer.<b></b>
<p align="center"><b> </b></p>
<p align="center"><b>AUD/USD
Short
Entry/Cost Average: 0.9194
Stop Loss: 0.9224
Limit: 0.8540
Closing Price: 0.9137
Position Size: 20%
Present Position: +34 pips</b></p>
<p align="center"><b>USD/CAD
Long
Entry/Cost Average: 1.0529
Stop Loss: 1.0477
Limit: 1.1200
Closing Price: 1.0516
Position Size: 20%
Present Position: -13 pips</b></p>
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<span style="text-decoration: underline;"><b>4. LOOKING AHEAD INTO THE NEXT 5.5 DAYS OF TRADING:</b></span>
<p align="center"><b>THE MAJOR SUPPORT AND RESISTANCE LEVELS WITH THE USD MAJORS:</b></p>
<b>EUR/USD: Closing Price 1.3009. </b>Bloody Hell…somebody does not want the fe***r below 1.3000. It’s boring…I am well up in my long term trade, but I expected this pair to be testing 1.2800 about this time. Is it the Chinese, or the Germans who is protecting a sub 1.3000 move? Upside moves are well resisted at 1.3150 a great place to short if you want to take a trade. Support is 1.3000, or rather 1.2985. A break below here sets up a test of the May lows of 1.2797 (1.2800). Maybe Super Mario will p**s everyone off on Thursday and we will finally head lower…do not hold your breath. This bad boy is very well supported at these levels.

<a href="http://www.thepipaccumulator.com/blog/wp-content/uploads/2013/06/EURUSD-MONTHLY-29062013.png"><img class="aligncenter size-large wp-image-1867" alt="EURUSD MONTHLY 29062013" src="http://www.thepipaccumulator.com/blog/wp-content/uploads/2013/06/EURUSD-MONTHLY-29062013-1024x655.png" width="1024" height="655" /></a>

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<b>GBP/USD: Closing Price 1.5210</b>.<b> </b>The cable is very weak. The poor economic data keeps coming back just after you think its bouncing off the worst. We held 1.5180 and pushed back above 1.5200 yesterday. This is a big level, the 61.8% retracement of the March-June upward move. If the EUR/USD breaks lower the GBP will follow and a break below 1.5180 sets up 1.5000 then 1.4830. Upside resistance is good at 1.5345 and even better at 1.5480.

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<b>AUD/USD: Closing Price 0.9137. </b>I have written a lot about this pair already in this blog, and although originating from Liverpool I do not want to keep repeating myself, even though us scousers love to keep going! Upside resistance is now 0.9150, then 0.9285 and 0.9350. Support is obviously the psychological 0.9000 and then 0.8540 is my next target. I think the RBA and Aussie government would be very happy sub 0.9000, given their recent comments. The Armageddon target is a 61.8% Fib of the 2008 crisis to the highs retracement at 0.7940. If we get there happy days…..”Say goodnight to the kids Gracie”.

<b><a href="http://www.thepipaccumulator.com/blog/wp-content/uploads/2013/06/AUDUSD-MONTHLY-29062013.png"><img class="aligncenter size-large wp-image-1868" alt="AUDUSD MONTHLY 29062013" src="http://www.thepipaccumulator.com/blog/wp-content/uploads/2013/06/AUDUSD-MONTHLY-29062013-1024x655.png" width="1024" height="655" /></a>
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<b>NZD/USD: Closing Price 0.7736. </b>I have traded this pair quite a bit recently but following “Wheeler’s” (RBNZ governor) comments it has NOT dropped as much as I had hoped, in fact, it’s only about 20 pips or so off last weeks closing position. Compare that to the AUD/USD. So it’s all down to the AUD/NZD cross-rate effect. It is as they in sporting circles, “Playing a blinder”. It may well be, but it is annoying the crap out of me. The good news is that if Gold goes parabolically lower and the AUD/USD follows and the EUR/USD heads to 1.2800…this pair will be like Lewis Hamilton’s qualifying lap at Silverstone today…unstoppable.  A quote will be “The Ar*e will kicked out of it” and that is the polite quote. 0.7000 will be in view so fast and the Armageddon 0.6500 comes into view following that. Upside resistance is 0.7850.

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<b>USD/CHF: Closing Price 0.9448. </b>Not interested in this pair at all right now……boring, boring boring.  The continued Eurozone uncertainty despite so called fiscal arrangements and banking unions announced this week are as usual all hot air as they are so far from being implemented..it may never actually happen. In the Eurozone uncertainty rules, it's always “Fur coat and no knickers” stuff from the Eurozone leaders. Implementation is far from “easy peasy”, more “can’s down the road” and all that stuff….

More and more uncertainty is not helped by election fever and IMF quotes in the region surrounding Greece and Cyprus, to name just two members of the single currency union.

This means that upside moves are difficult and it will remain strained as it is seen as the European safe haven option. We have a very tight range that will need a real push to break properly. 0.9400 to 0.9520 is the range I see on the charts. The EUR/USD will lead this pair a little but I do think that major moves will be contained.

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<b>USD/CAD: Closing Price 1.0515. </b>What can I say?  At long last we are on the move with the loonie!! There is a bull flag formation in play here and remember this pair has literally been tied down for about three years. We are finally breaking out above 1.0420 and the flagpole extension takes us to 1.0850. Big pip opportunities ahead. Resistance levels are 1.0600, 1.0670 then 1.0800. Support is mega at 1.0420.

<a href="http://www.thepipaccumulator.com/blog/wp-content/uploads/2013/06/USDCAD-MONTHLY-29062013.png"><img class="aligncenter size-large wp-image-1869" alt="USDCAD MONTHLY 29062013" src="http://www.thepipaccumulator.com/blog/wp-content/uploads/2013/06/USDCAD-MONTHLY-29062013-1024x655.png" width="1024" height="655" /></a>

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<b>USD/JPY: Closing Price 99.11. </b>Where is this pair going? I really do not know what to write here. I hate being on the fence but, I am confused by this pair. My gut tells me to short the “be jesus” out of it around 99.85 to 100.00, but would I?
Support is 98.50 and I suppose resistance is 99.90…but be careful.

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

A complete u-turn from last week, this week is full of goodies on the news front.

SUNDAY: CNY – Manufacturing PMi

MONDAY: GBP  - Manufacturing PMi
MONDAY: USD – ISM Manufacturing PMi

TUESDAY: AUD – RBA Rate Statement
TUESDAY: GBP – Construction PMi
TUESDAY: AUD – Retails Sales and Trade Balance

WEDNESDAY: GBP – Services PMi
WEDNESDAY: USD – ADP Non Farm Employment Change
WEDNESDAY: CAD – Trade Balance
WEDNESDAY: USD – ISM Non-Manufacturing PMi

THURSDAY: GBP – Asset Purchase Facility and Interest Rate
THURSDAY: EUR – Interest Rate and Press Conference

FRIDAY: CAD – Employment Change and Unemployment Rate
FRIDAY: USD – Non-Farm Payrolls.

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

There is a massive week coming up for Fx related economic data. Not sure how much of this stuff I will trade due to my short vacation but I would say, this week has the potential to define the summers direction.

Trade carefully and watch out for elephant traps being set on low liquidity false breakouts.

Back on July 27<sup>th</sup>.

Take care and good luck,

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Scott Pickering
The Pip Accumulator
Saturday 29th June 2013.

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