&nbsp;
<ol>
	<li><span style="font-size: 14pt;"><strong> INTRODUCTION:</strong></span></li>
</ol>
<strong>“Holy smokes… was that a week of volatility or what?”</strong>

The above was how I started last week’s blog. That was nothing in terms of volatility compared to what we saw last Wednesday and Thursday. That was real volatility.

During the last 72 hours or so, I have had several emails and twitter exchanges with PREMIUM SERVICE subscribers about what happened and why there was such a dramatic chain of events so quickly.

From my perspective it was a number of factors all hitting at the same time and FEAR took over.

(PREMIUM SERVICE subscribers will be well versed in my thoughts on the two primary drivers of the Forex markets; FEAR and GREED. I have several articles in the PREMIUM SERVICE library under the section TRADING ESSENTIALS that refer to FEAR and GREED).

The contributing factors in my opinion were: -
<ol>
	<li>We have been in a one sided market for the better part of six years.</li>
	<li>Only very recently have the bears raised their heads.</li>
	<li>The FED is ending Quantitative Easing (QE).</li>
	<li>The ECB is as effective as a “Headless chicken running around a farmyard”. Draghi is too weak to do anything other than talk. Germany runs the EUROZONE and the ECB. Germany does NOT want Quantitative Easing (QE).</li>
	<li>The FED and ECB are on divergent monetary policies. The FED tightening and ECB loosening.</li>
	<li>WTi (OIL) was close to key $80.00 support.</li>
	<li>ISIS.</li>
	<li>EBOLA.</li>
	<li>Russian sanctions.</li>
	<li>Russia / Ukraine issues.</li>
</ol>
Above there are 10 reasons / factors that spring to my mind immediately.

Let me add factor number 11 below: -

Now lets face simple facts. Most traders in the equity markets know nothing about a two-sided market as the experienced ones from the past have moved on. All the present incumbents know is “BUY THE DIP”…”BUY THE DIP”…”BUY THE FECK** DIP”. Therefore, FEAR will be something they do NOT react to very well. They also believe, probably correctly that the FED will ultimately step in and backstop them at some stage. They see their jobs as “jobs for the boys”… Stock markets (in particular the U.S. because of the 401K mentality) will always be supportive irrespective of company valuations, which are extreme in many cases… I have NOT said the word bubble yet…I will save that for another blog.

Given these factors, the domino effect takes over and FEAR rules. I know many of you will say bulls**t, but these are my thoughts. For the past three weeks, I have been referring to my blog of three weeks ago stating that a collapse in the equity markets was on the cards. If you have not read the previous blogs they are all on the welcome page of my website THE WEEKLY FX DRIVE THRU at www.weeklyfxdrivethru.com

The funniest FX event of the week took place Thursday evening (EDT). At about 18:30 EDT the NZD/USD collapsed about 70-100 pips on the back of a RBNZ release stating that the NZD was way over-valued and needed to be weakened to achieve the RBNZ fair value level. About 5 minutes later the release from the RBNZ was withdrawn stating that is was an old data press release and was leaked in error. The NZD/USD gave back its entire move lower in about 5 minutes.

Therefore…. Mr. Wheeler, governor of the RBNZ… here’s what you do to bring down the value of the NZD.

<em>Apparently, the markets are NOT clever enough to distinguish between old and new economic data releases. Pick out some old RBNZ minutes saying that you are going to intervene directly into the Forex market. Then release them once a week and inside 4 months you will have your desired NZD exchange rate in the NZD/USD. Throw in the odd personal appearance for good measure. This is, simple, clear, unambiguous guidance to the RBNZ from me… you are most welcome my invoice is in the mail.</em>

I spent the last couple of days, sidelined doing voyeur trades and nursing some open trades from the Wednesday fallout…still doing that now!

<strong> </strong>
<ol start="2">
	<li><strong><span style="font-size: 14pt;"> THE PREMIUM SERVICE: –</span>

</strong></li>
</ol>
<p style="text-align: center;"><span style="font-size: 12pt;"><strong>OVERVIEW, TRADING ACTIVITY, NEWS UPDATE &amp; MONTHLY AND
</strong><strong>YEAR TO DATE TRADING SUMMARIES</strong></span></p>
<span style="text-decoration: underline;">2.1 OVERVIEW:</span>

For new readers who may not be aware, I refer to the PREMIUM SERVICE quite a lot in this blog and for more details about what it is, and, how much it costs, you will need to go the welcome page of <a href="http://www.weeklyfxdrivethru.com">www.weeklyfxdrivethru.com</a> At the top of the page there are three drop down menus: PREMIUM SERVICE, SIGN-UP and DISCLAIMER. Further details and how to join are all contained there. You will need at PayPal account to subscribe.

<span style="text-decoration: underline;">2.2 TRADING ACTIVITY:</span>

What a week for trading. It was so fast and furious on Wednesday, I scalped trades “OFF / AWAY” from the PREMIUM SERVICE as it was just impossible to trade / communicate / tweet when things were moving so fast.

Thankfully, as regular followers know, when I trade my FUNDAMENTAL TRADE set-ups these trades are HEDGED from losses between 100 and 150 pips. Everything was hedged last Wednesday. I sat in very large loss trades through Wednesday / Thursday as I scalped away from my core trades. On Thursday morning when commodity crosses ripped higher I exited 4/5 trades with nice profits.

Now, I just have 3 LIVE trades left all are hedged. My maximum loss would be 325 pips, which is well within my RISK MANAGEMENT and RISK TOLERANCE guidelines.

(Further details on HEDGING, RISK TOLERANCE and RISK MANAGEMENT can be found inside the PREMIUM SERVICE under TRADING ESSENTIALS)

However, after all that drama, at the end of the week, I had nice trading profits. During the week from single lot trades more than 600 pips were generated, which is in line with my objectives. Obviously, those who trade multi-lot would have generated a further extra income over and above the amounts quoted. I hope that my PREMIUM SERVICE subscribers benefited greatly from these set-ups as well.

<span style="text-decoration: underline;">2.3 MONTHLY AND YEAR TO DATE TRADING SUMMARIES<strong>:</strong></span>

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 websit

Below are the excel spreadsheets covering this month so far and the year 2014 to date.

<a href="https://weeklyfxdrivethru.com/wp-content/uploads/2014/10/PREM-SERV-PROFITS1-18102014.png"><img class="aligncenter size-full wp-image-4579" src="https://weeklyfxdrivethru.com/wp-content/uploads/2014/10/PREM-SERV-PROFITS1-18102014.png" alt="PREM SERV PROFITS1 18102014" width="448" height="421" /></a>

&nbsp;

<a href="https://weeklyfxdrivethru.com/wp-content/uploads/2014/10/PREM-SERV-PROFITS-2-18102014.png"><img class="aligncenter size-full wp-image-4580" src="https://weeklyfxdrivethru.com/wp-content/uploads/2014/10/PREM-SERV-PROFITS-2-18102014.png" alt="PREM SERV PROFITS 2 18102014" width="458" height="417" /></a>

<span style="text-decoration: underline;">PLEASE NOTE:</span>

The above examples in sections 2.2 and 2.3 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.

You must always remember to follow properly executed RISK MANAGEMENT and POSITION SIZING disciplines with all your trades and remember that Forex trading with a high degree of leverage can significantly increase your profits and losses. You should trade with a TRADE PLAN and NOT risk monies that you cannot afford to lose.

<strong> </strong>
<ol start="3">
	<li><span style="font-size: 14pt;"><strong> THE VIEW FROM MY TRADING DESK:</strong></span></li>
</ol>
I am NOT going to talk about dominoes this week, or refer to my previous blogs about dominoes.

<em>
</em>
<p style="text-align: center;"><span style="font-size: 12pt;"><strong>WHATS’S NEXT… DRAGHI’S RESIGNATION?</strong></span><strong> </strong></p>
The title if nothing else will attract a few more readers.

Since I started writing blogs three years ago, I have been a constant skeptic about the EUROZONE, not the trading community, I think that is an excellent idea in many areas, laughable in others.

My skepticism emanates from the single currency.

I have written so many times that 18 counties or so using the same chequebook just will not work. One central bank (the ECB) trying to do what’s best for 18 countries all with different issues / problems is just impossible. It is further exacerbated by the fact that there is one super almighty economic powerhouse within the single currency (Germany) that has power, money and greater financial stability than most of the other member countries.

When, the world suffered through the financial crash of 2008, the FED, BOE and BOJ sought Quantitative Easing (QE) as the route to support their equity markets. The ECB through a German order used austerity. Lets make the people pay more taxes, reduce services… make the bastards suffer.

Well that didn’t work…

Eight years later the FED and BOE are looking at raising rates, probably the FED sooner than the BOE (proximity issues to Europe, could affect the BOE more than we think).

Where is the EUROZONE now…six years later?

More fecked up than ever before…

Even Germany is now releasing poor economic data. The periphery countries, ITALY, SPAIN, GREECE, PORTUGAL, IRELAND and CYPRUS are still struggling after bailouts to get their economies motoring. Economic growth is one of the major issues, no growth, DEFLATION… or as the ECB says DIS-INFLATION… call a spade a spade - it is what it is DEFLATION

Now at this point, I could lay down a plethora of economic data from the EUROZONE countries, but I am going to be selective but wide ranging at the same time in the chart below.

<a href="https://weeklyfxdrivethru.com/wp-content/uploads/2014/10/EZ-ECON-DATA-18102014.png"><img class="aligncenter size-full wp-image-4586" src="https://weeklyfxdrivethru.com/wp-content/uploads/2014/10/EZ-ECON-DATA-18102014.png" alt="EZ ECON DATA 18102014" width="719" height="493" /></a>

Statistics such as those above can be manipulated in numerous different ways and as Forex traders reading and interpreting economic data on a daily basis as well as observing politicians in action, I need say no more on this topic.

However, six years on and with people suffering through Austerity measures, I ask the question how far has the EUROZONE progressed.

Here are my highlights: -
<ol>
	<li>Unemployment stubbornly high in Spain and Greece.</li>
	<li>Debt to GDP – Italy, Ireland, Portugal, Greece and Cyprus way too high.</li>
	<li>Retail Sales – very patchy</li>
	<li>Consumer Confidence numbers are in the main below 100.</li>
	<li>PMi statistics are patchy. By now the averages should be well above contracting levels of sub 50. Germany now below 50. This has all the signs of RECCESSION on the cards in the near future.</li>
	<li>GDP – there is zero inflation in the EUROZONE. The target has been revised down and down again and even now the area average is 0.70% against the latest lowball revision of 1.2%. This equals DEFLATION.

Plus,</li>
	<li>The high exchange rate of the EUR against it’s key trading partners the USA and Japan in particular. This is making exports very expensive and uncompetitive.</li>
</ol>
The world in generally on a slowdown (its not just the EUROZONE), consumer confidence worldwide is low…. consumers are generally not spending (USA, UK and Japan following Sales Tax hike)… if no one buys why produce finished goods… if you are now producing finished goods … why buy raw materials? Hence the Manufacturing PMi issues in Germany.

Six years on and the ECB and the politicians should be patting themselves on the back for a job well done in the EUROZONE. Instead it is mainly a shambles.

The Financial sector was stabilized in the initial period after the 2008 crash, but, six years on there are still EUROZONE bank stress tests being undertaken… give me a break shouldn't this have been resolved on first, second or maybe the third attempt of stress tests.

This sums up the EUROZONE, wishy-washy and totally 100% useless at completing anything effectively.

Draghi is guilty of a lot of things and frankly, for six years he has been talking, talking and talking but has been very low on actual action. Apart from interest rates no extraordinary measures or unconventional measures have really been used to arrest the decline of the EUROZONE and tackle growth, unemployment or confidence.

The EUROZONE is now bordering on RECCESSION never mind struggling with DEFLATION.

This does NOT look good for the population living under the EUROZONE flag.

If there were no EUROZONE, could each individual country have tackled the problems better on their own rather than being under the constraints of a centralized policy governed allegedly by a central bank to represent all…. the ECB, which is basically, in my opinion, a sub-branch of the Bundesbank?

Personally, I think on their own most countries after the crash would have protected their financial systems and then revised their currency valuations probably against the USD to move forward. This is where the periphery countries in particular have suffered most. They have not been able to tackle issues head on, fix and move on, instead they are under a very tight fiscal regime, because that is how Germany operates.

What next?

Ultimately, I think that the FED will rescue the EURZONE through a strengthening USD. However, this is not the point, a strong, direct and unambiguous Central Bank is paramount to give the people and the financial markets in the area or country it represents confidence. If a poll were undertaken today in the EUROZONE about the effectiveness of the ECB I would love to see the results.

One size does NOT fit all in this instance and a huge amount of financial pain and stress has been thrown at people for what? Six years of a non-event, back to square one.

We live in a results orientated society wanting instant gratification.

The master plan for the EUROZONE was hatched years ago over a glass of Chateauneuf du Pape, a bottle of Cognac and fine cigars. It was NOT thought properly through to cope with a mix of diverse multi cultures, with completely different ways of coping with and addressing core problems that face individual countries. Never mind what would happen if… scenarios put in place. This is hardly surprising when you look at the achievements of the EUROZONE.
<p style="text-align: center;"><strong>The effectiveness of the currency union is questionable in fact I think a failure.</strong></p>
<p style="text-align: center;"><strong>There is NO coordinated foreign policy in the EUROZONE.</strong></p>
<p style="text-align: center;"><strong>There is NO coordinated present or future energy plan in the EUROZONE.</strong></p>
<p style="text-align: center;"><strong>There is NO tax harmonization plan in the EUROZONE.</strong></p>
<p style="text-align: center;"><strong>There is NO “how to tackle” EUROZONE unemployment plan in the EUROZONE.</strong></p>
<p style="text-align: center;"><strong>There is NO universal social chapter, minimum wage, weekly working hours, retirement age agreement in the EUROZONE.</strong><strong> </strong></p>
I am not saying that Draghi is single handedly responsible for the above, but he is a vital cog in the EUROZONE machine.

In my opinion, Draghi has failed in his areas of responsibility. I know people will say he has calmed the banking sector. But the banks do not lend. It's a failure. It is so much a failure he had to introduce negative deposit rates in a last ditch attempt to try and force the banks to lend again and to try and get some growth into ailing economies.

His tenure is a failure based on his inability to use his powers effectively or to persuade or demand powers to enable the ECB and himself to manage effectively. Either way; I think its time for him to say goodbye and move on, if he were a manager of a Barclays Premiership Football Team he would have been long gone by now.

Coming up he has another opportunity at the next press conference to deliver once and for all what the markets are demanding.

A fully explained package of measures including:

Quantitative Easing (QE) that will drag the EUROZONE away from recession. He needs something dramatic like QE to reduce the EUR exchange rate to reduce export costs and in so doing this will make EUROZONE exports of finished goods and services cheaper to sell in the open market. This will provide employment, which will reduce the social burden and add more money to a countries tax income. If the increased tax income is used for larger scale infrastructure this will further reduce unemployment and increase the tax income and once again reduce the social burden.

If he talks at the next ECB Press Conference and once again “kicks the can down the road” and delivers no comprehensive action, then I think that he should step down.

This would be the first step in the break –up of the single currency union. The ECB has been shown up with all it’s shortcomings for the world to see.

The EUROZONE needs change and it needs a new fresh mandate for the ECB to allow it to function, it’s not just about Germany. Draghi has not fought the fight to do this.

In my opinion it's a long overdue time for him to move on and if at the next ECB Press Conference he does NOT deliver this would be the time to step aside.

&nbsp;
<ol start="4">
	<li><span style="font-size: 14pt;"><strong> LOOKING FORWARD…THE KEY SUPPORT &amp; RESISTANCE LEVELS WITH THE USD MAJORS:</strong></span></li>
</ol>
<strong>EUR/USD: Closing Price 1.2757.</strong> After a very eventful week, the EUR/USD ends the week not too far for where it started. Moving forward, I am uncertain as to how sentiment will play out early next week. Basically nothing has changed. The ECB and FED are on divergent monetary policies and as such the EUR should weaken moving forward. We may see some consolidation at present levels for a while and be somewhat range bound. The support level that interests me is 1.2650 and the resistance level at 1.2885.

<strong>GBP/USD: Closing Price 1.6088</strong>. Like the EUR/USD; after a very eventful week literally no change in the closing weekly price. Am I bullish or am I bearish this pair? I am for once not sure. If push came to a shove I would have to say bearish. My reasons would be to look where it is following the Scottish referendum and following Carney’s Mansion House speech. It is a bit of wait and see for me with this pair, but there lies good support at 1.6020 and 1.6125 has nice resistance, in fact above 1.6130 and I think that there is a chance of a squeeze.<strong> </strong>

<strong>AUD/USD: Closing Price 0.8748</strong>. Probably not to Glenn Stevens liking, but the AUD/USD will finish the week about 100 pips higher than last week. As long as we consolidate in equities after the turmoil the Aussie will stay inflated in my opinion. Support is at 0.8690 and resistance will be strong at 0.8825.

<strong>NZD/USD: Closing Price 0.7913</strong>. Just like the Aussie about a 100 pips higher closing this week in comparison to last week. I am still bearish this pair, but I do find it very frustrating to trade at times. It is quite illiquid in comparison to other USD pairs and in the past it was quite directional. Now at times it’s a pain in the a**. Support for the coming sessions should be good at -.7850 and resistance should be strong at 0.8000.

<strong>USD/CAD: Closing Price 1.1276.</strong> I am long the damn “loonie” again…why do I inflict this pain upon myself? In the immediate future we have a BOC rate decision, press conference and Interest Rate statement to contend with this Wednesday, never mind the price of a barrel of WTi. Support is at 1.1170 and resistance is at 1.1375.

<strong>USD/CHF: Closing Price 0.9462</strong>. I couldn’t be bothered about this pair for a while, I wrote down 0.9400 on a post-it note to remind me to get long at this level. I should have placed a limit order with the brokers but I did not. It bounced nicely off 0.9400 about three times; I had three opportunities and took none of them. This pair is now destined to rocket to parity. Just in case it pulls back, will someone remind me to enter long at the support level of 0.9400? Resistance will be good at 0.9540.

<strong>USD/JPY: Closing Price 106.87. </strong>I traded the EUR/JPY during the week twice and made $$$ twice. Those were my first JPY trades for quite sometime. Looking at the USD/JPY we have bounced very nicely off 105.00, back though 105.50 and beyond. Looking ahead I see support at 105.60 and resistance at 107.50.

<strong> </strong>
<ol start="5">
	<li><span style="font-size: 14pt;"><strong> MAJOR FOREX NEWS THIS WEEK THAT INTERESTS ME:</strong></span></li>
</ol>
SUNDAY: N/A.

MONDAY: AUD – Monetary Policy Meeting Minutes.
MONDAY: CNY – GDP and Industrial Production.

TUESDAY: AUD - CPi.

WEDNESDAY: CAD – Core Retail Sales, BOC Rate Decision, Press Conference
WEDNESDAY: AUD – Glenn Stevens speaks.
WEDNESDAY: NZD – CPi.
WEDNESDAY: CNY – HSBC Flash Manufacturing PMi.

THURSDAY: EUR – French &amp; German Flash Manufacturing PMi.
THURSDAY: GBP – Retail Sales.
THURSDAY: NZD – Trade Balance.

FRIDAY: N/A.

<strong> </strong><strong> </strong>
<ol start="6">
	<li><span style="font-size: 14pt;"><strong> FINAL THOUGHTS:</strong></span></li>
</ol>
Some very interesting news items coming this week so we will have to be on our guard. Overriding this, I am much more interested in the fall out after last weeks turmoil and volatility.

My gut feeling tells me consolidation for a while, but geopolitical news could over shadow this thought that I have.

Is the market still directional

It should be but ahead of this directional trading resuming, in my opinion, we should see consolidation.

From a trading perspective we should therefore, given the uncertainty and volatility, trade with smaller position sizes and wider stops.

Just remember; always use the RISK MANAGEMENT principles outlined in the PREMIUM SERVICE web site TRADING ESSENTIALS section to ensure that you do not over-stretch your Forex account. Longevity in the Forex market is only achieved through strong TRADING DISCIPLINES that include effective and strategic POSITION SIZING.

Good Luck.

Scott Pickering
The Pip Accumulator
Saturday October 18th 2014

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

<strong>DISCLAIMER:</strong>

FLASH, RADAR and FUNDAMENTAL trade set-ups, “Tweets” and “Trade ideas” that are posted in my blogs or on Twitter are trades and set-ups that interest me. They are provided for training and informational purposes only and should not be interpreted as an offer, solicitation or recommendation of any specific security or investment strategy. Past performance is not indicative of future results. Trading Forex carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade any such leveraged products you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading on margin, and seek advice from an independent financial adviser if you have any doubts.