&nbsp;

<strong>1. INTRODUCTION:</strong>

The “Chop Fest” continues, with a difference. Now we have chop for a few minutes and then I have to keep checking my iCal because it feels like summer trading conditions. Once I have verified that we are actually in May, I then have to check my internet connections because there is no movement on my screens. My overview on these slow one-sided markets later.

Looking back at last week, there wasn’t really much to shout home about. My focus was on Draghi and the ECB council, but that whole “will he / won’t he” spill the beans on what he’s actually going to do this week on Thursday never materialized. Apart from Wolfgang Schauble (German Finance Minister), all of the Eurozone politicians and the rest of the ECB governing council pretty much kept their respective “gobs” shut for once. I love knocking the ECB and the Eurozone, having lived previously in three European countries; I have an “in” on the mentalities and the cultures. I just love the way that Germany through the Bundesbank and Angela Merkel just could not give a “rat’s ass” about the other members of the Eurozone, in their minds they are merely treated as if they were an additional 18 states of Germany.

The ECB Press Conference is four days away, plenty of time for the tight lipped approach, which is against the usual ECB / Eurozone, to be broken. History is on my side that the action to be taken by the ECB this Thursday will be leaked. There will be increased volatility in the EUR related currencies, as we get closer to the ECB Press Conference.

Be “a savvy trader”, keep positions small if you feel you have to trade EUR related currency pairs and in particular, with the EUR/USD and EUR/GBP keep stops wider than usual. The more conservative approach would be to ignore the EUR completely, or trade a cross-rate that will not be too directly affected. The EUR/NZD is a good example. The NZD is struggling and as a result the EUR/NZD is at a breakout point of 1.6100. Trading this pair will give you some protection as long as the NZD continues to weaken.

Last week, I thought that the CHF would break out and to some extend dominate proceedings for the week. I still think that being short CHF is a good trade as I believe that there is a very strong possibility that the SNB (Swiss National Bank) will have to protect itself ahead of the ECB Press Conference and front-run the meeting with it’s own strategy, that may or may not include raising the EUR/CHF floor limit from 1.2000 to maybe 1.2500, or higher. In any event, I still think the CHF is worth watching very closely as we get closer to Draghi’s moment in the limelight once again.

On Friday (30<sup>th</sup> May), we had the usual end of month sell the USD as market makers / hedge funds / investment managers positioned themselves for the end of the month. All of my trades took the hit, and, I am hoping that on Sunday/Monday they will re-align lower once more as typically the USD strengthens a little just after a month end. My trades are small and in line with my TRADE PLAN criteria, I just hate seeing RED on my accounts!!

The PREMIUM SERVICE is still making money, and so am I, therefore I am happy. The Forex market is challenging, so to make $$$ in these difficult conditions makes me a very happy puppy.

The only negative I am having with the PREMIUM SERVICE is that the 4-week low-cost option has introduced me to gamblers. Gamblers are signing up and are complaining that I am not doing enough trades.

Right now, I have 11 live trades and 4 limit orders placed with my brokers. How many trades should I be live with? Only those where the charts and my FUNDAMENTALS meet and that the set-ups / target entries / exits (stops) and profit targets meet with my TRADING PLAN.

It can be 1 trade or 15 trades. There is no fixed number. It is solely based on what the market is giving and what my TRADE PLAN guidelines say in line with my RISK TOLERANCE and RISK MANAGEMENT…that’s it.

Having asked some of “the gamblers” what they expected, the response was they wanted 10 to 15 trades per day in and out huge position sizes.

Forex trading is NOT gambling, I see myself as a RISK ASSESSOR and RISK MANAGEMENT in Forex trading is paramount.

So, if there are new readers, who think that by signing up (subscribing) to the PREMIUM SERVICE is a “get rich quick” programme, it is not. For that you need to go to your email spam folder and look for the make it quick at Forex programmes that drop into your inbox. Try one of those once in a lifetime special offers, and see how far it gets you.

I am only human, and I try to keep the PREMIUM SERVICE as real life as possible. I try to trade with the disciplines that I write about and place articles on in the TRADING ESSENTIALS section of the website. I make losses, a lot less than I used to, but I still make losses and sometimes I make poor decisions even though I have green lights everywhere. But I also make profits…. good profits and I am better reading the charts and analyzing than I used to be to obtain my entry and exit strategy.

However, bear in mind, I am not a gambler…. I am a RISK ASSESSOR.

<strong> </strong>

<strong> </strong>

<strong>2. THE VIEW FROM MY TRADING DESK:</strong><strong> </strong>
<p style="text-align: center;"><strong>A ONE SIDED MARKET IS JUST GREAT…ISN’T IT?</strong></p>
I am of course being sarcastic with my title this week.

I want to write only a short piece this week about MARKET VOLATILITY.

Basically, as far as I am concerned, volatility has pretty much disappeared. This does not mean that it will not come back, remember the market is cyclical and we will have volatility again, but right now, there is little or no volatility to speak of.

I am most of the time in what I call “survival mode”. I trade with smaller position sizes and wider stops and I am using multiple micro lot trades more than I have done before to give me enhanced flexibility. My standard lot trades are in the main non-existent, I am really trading just mini and micro lots.

The stock markets are basically just providing a slow grind up day after day; very low volatility and the moves are smaller but directional. Nobody wants to get short and there are no sellers at all, therefore the market is just one sided. The best way to explain this is to say that if 50% off the traders that would normally be shorting are not active there is no two-way action, only a one-sided market and market volatility has basically dried up.

The markets are dysfunctional and for some time good news sends the stock markets higher, but also bad news sends the markets higher. Why does the market anxiously await news if the end result is the same? I wrote a few weeks ago about the “New Normal”. It sure is difficult and at the same time weird being a fundamental trader first. This week we saw U.S. GDP at -1.0% for the last quarter, the worst figure for years and German retail sales in April were -0.9% month on month. Hardly data to set the markets alight with optimism, but the stock markets were not affected and they rallied on what I would say is poor data

However, it was it is and as trader’s we have to modify, learn, adapt and grow into being a survival trader in this environment.

In last week’s blog I wrote about the main banks in the Forex market and the way that they are seeing and adapting to the changes in volatility and their profitability based upon reduced market activity. Citigroup this week actually released an article to clients saying that Forex volatility is much lower now and that their margins from trading are challenged; very interesting times.

If the banks are challenged, we as traders need to place ourselves just as much under the microscope to ensure that we are maximizing our opportunities.

For me, no volatility means that entries and exits are even more important than ever. A one sided market in equities does not guarantee that the Forex market will only move in one direction. False breakouts and false breakdowns are not an every day occurrence, but, they are more frequent as no-one in any market wants get heavy into a trade, and, we are for most of the time just drifting from pivot to pivot or Fibonacci level to Fibonacci level…. very slowly.

So, the one-sided market is a pain in the ass, it will change but my fear is that it may be September before we see normality again. We are so close now to the holiday / vacation season we could be dealing with thin markets, little liquidity and false moves becoming the new normal.

<strong> </strong>

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

<strong>EUR/USD: Closing Price 1.3633.</strong> I think on Friday (30<sup>th</sup> May) we suffered from the usual month end sell the USD scenario. We bounced about 30 pips and consolidated the position. I am expecting the ECB governing council or Eurozone politicians to break ranks prior to the press conference on Thursday and leak some if not all the ideas that have been formulated to ease on deflation and toreduce the strength of the single currency. I will be amazed if ranks are NOT broken given the fact that the Eurozone diverse cultures make it extremely hard to maintain solidarity in approach.
Looking at the levels to watch, I am of the opinion that 1.3585 is now crucial support and 1.3780 a good resistance level.

<strong>GBP/USD: Closing Price 1.6753</strong>. I am hoping for my limit order target of 1.6800 to be achieved although, I fear that Friday’s highs of around 1.6770 may be as high as the cable rises before resuming it’s downward trend once again. Support is big at 1.6670 and resistance at 1.6820

<strong>AUD/USD: Closing Price 0.9306</strong>. The Aussie received a boost from Capital Expenditure data that was released last week and has remained elevated ever since. I think a lot of this has had to do with the AUD/NZD cross-rate which was looking very oversold and it has bounced strongly off its lows to keep the AUD supported and the NZD heavy. Key resistance is at 0.9330 and support is very strong at 0.9210.

<strong>NZD/USD: Closing Price 0.8498</strong>. Key support lies at 0.8420, with resistance at 0.8515. If the support gives way I am targeting 0.8000 as my short level objective.

<strong>USD/CAD: Closing Price 1.0844.</strong> Not much of a change in the “Loonie” for the second week running. I am not really too sure what to do with this pair, but I do have a limit order to buy just above 1.0800.

<strong>USD/CHF: Closing Price 0.8949</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 0.8980.<strong> </strong>

<strong>USD/JPY: Closing Price 101.74. </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: AUD – Building Approvals.
SUNDAY: CNY – HSBC Final Manufacturing PMi.

MONDAY: GBP – Manufacturing PMi.
MONDAY: USD – ISM Manufacturing PMi.
MONDAY: AUD – Retail Sales.

TUESDAY: AUD – RBA Interest Rate Statement.
TUESDAY: GBP – Construction PMi.
TUESDAY: EUR – Flash CPi estimate.
TUESDAY: AUD – GDP.

WEDNESDAY: GBP – Services PMI.
WEDNESDAY: USD – ADP Non Farm Employment Change and Trade Balance.
WEDNESDAY: CAD – Trade balance and BOC Interest Rate Statement.
WEDNESDAY: USD – ISM Non Manufacturing PMI.

THURSDAY: GBP – BOE Interest Rates and Asset Purchase Facility.
THURSDAY: EUR – Interest Rate and ECB Press Conference.
THURSDAY: CAD – Building Permits and IVEY PMi.

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

<strong> </strong><strong> </strong>

<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>
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. I also show you the year-to-date performance by trade style.

There is a lot to data to absorb, if you have queries just email me.

<a href="https://weeklyfxdrivethru.com/wp-content/uploads/2014/05/PREM-SERV-PROFITS1-31052014.png"><img class="aligncenter size-full wp-image-3763" src="https://weeklyfxdrivethru.com/wp-content/uploads/2014/05/PREM-SERV-PROFITS1-31052014.png" alt="PREM SERV PROFITS1 31052014" width="449" height="418" /></a>

<a href="https://weeklyfxdrivethru.com/wp-content/uploads/2014/05/PREM-SERV-PROFITS2-31052014.png"><img class="aligncenter size-full wp-image-3764" src="https://weeklyfxdrivethru.com/wp-content/uploads/2014/05/PREM-SERV-PROFITS2-31052014.png" alt="PREM SERV PROFITS2 31052014" width="461" height="423" /></a><a href="https://weeklyfxdrivethru.com/wp-content/uploads/2014/05/FLASH-YTD-MAY-2014.png"><img class="aligncenter size-full wp-image-3783" src="https://weeklyfxdrivethru.com/wp-content/uploads/2014/05/FLASH-YTD-MAY-2014.png" alt="FLASH YTD MAY 2014" width="337" height="360" /></a><a href="https://weeklyfxdrivethru.com/wp-content/uploads/2014/05/RADAR-YTD-MAY-2014.png"><img class="aligncenter size-full wp-image-3782" src="https://weeklyfxdrivethru.com/wp-content/uploads/2014/05/RADAR-YTD-MAY-2014.png" alt="RADAR YTD MAY 2014" width="341" height="364" /></a><a href="https://weeklyfxdrivethru.com/wp-content/uploads/2014/05/FUNDAMENTAL-YTD-MAY-2014.png"><img class="aligncenter size-full wp-image-3784" src="https://weeklyfxdrivethru.com/wp-content/uploads/2014/05/FUNDAMENTAL-YTD-MAY-2014.png" alt="FUNDAMENTAL YTD MAY 2014" width="335" height="358" /></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.

<strong> </strong>

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

This week we have four Central Banks reviewing their interest rate policies and updating us with their medium and longer-term views. The pick of the crop being the ECB on Thursday, if you have been trading Forex from another planet over the past four weeks, this ECB Press Conference is the most eagerly awaiting in months, if not, years. ECB president Mario Draghi, announced last month that the ECB governing body was united to act this month if the current economic data on growth and deflation persisted and in addition the single currency strength across the Forex market continued.

Guess what?

Nothing much has changed so we await with baited breath to see what tricks Draghi has up his sleeve, or rather what tricks are up the sleeve of Angela Merkel’s blouse as she holds the strings that make Draghi move. (ECB independence my ass!)

In addition to the Central banks there is a plethora of PMi data and unemployment data ending the week on Friday with both the Canadian Jobs data and the biggest event of the month on the Forex calendar the U.S. Non-Farm Payroll numbers.

In addition, please watch out for the SNB front running the ECB Press Conference, my gut says that they will do something to protect the CHF.

So, keep your eyes and ears on the Eurozone, because there will be leaks, it would not be the Eurozone without some politician or ECB official, leaking the news. 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 very active this week and allow for huge market moves and high degrees of volatility.

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

Scott Pickering
The Pip Accumulator
Saturday May 31st 2014

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

&nbsp;

&nbsp;

&nbsp;

<strong> </strong>

<strong> </strong>

<strong> </strong>

&nbsp;