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<strong>1. INTRODUCTION:</strong>

From a personal trading week, it was a really good one. Somehow though I am still not feeling bouncy, bouncy, bouncy with the joys of Spring and the Forex Markets.

Trading psychology is on of the most important aspects to consider in trading. FEAR and GREED dominate everything and at the moment, using self-diagnosis, I believe that I am in FEAR MOMENT with regards to my trading. I am so used to false breakouts and false breakdowns, that I simply do not want to give hard earned $$$$ back to the brokers. I am probably not allowing profitable trades to develop to their full potential. Given the “Chop Fest” that we are dealing with at the moment and if it’s not a chop fest, it’s very tight ranges almost stagnation, am I wrong to trade the way that I am?

I am banking $$$, so I should not complain, but am I maximizing the profit? I am beating myself up at times and perhaps I should just take a step back and take a macro view of what is going on, and, maybe it’s not so bad.

Looking at the worldwide currency trading market for a moment, from a very macro level: -
<ul>
	<li>There are according to reports from brokers less live accounts being used right now by individual traders like you and me.</li>
</ul>
<ul>
	<li>The banking Forex operations are either losing money or not turning the huge profits that they were before (Royal Bank of Scotland and Credit Suisse).</li>
</ul>
<ul>
	<li>Most of the major Forex institutions are scaling back, there are staff being fired, suspended or on gardening leave.</li>
</ul>
<ul>
	<li>The top 5 banks in currency dealing worldwide now control over 60% of the market, which now trades a mere $5.3tn per day.</li>
</ul>
<ul>
	<li>The overall market operation worldwide in currency trading is being squeezed as the changes happen.</li>
</ul>
<ul>
	<li>High Frequency trading (HFT) is never far from the headlines in any marketplace at the moment.</li>
</ul>
<ul>
	<li>Things have changed and are changing all the time as the market evolves</li>
</ul>
My point is, at my micro level, if the smaller banking operations involved in Forex trading are suffering, and, if I am making my few dollars each day, I should be a happy camper! I suppose I will have to put it down to self imposed pressure to always do a little bit better.

During the week, the Eurozone debate, and as well predicted last week, what measures are open to the ECB in June has captivated journalists all over Europe. The one agreement is that, Draghi has backed himself into a corner so he has to act and do something. If he fails to act he will lose a huge amount of credibility.

My mate “Wheeler the Dealer” Governor of the RBNZ failed to talk down the Kiwi on two occasions during the past week and so it remains above key support at 0.8600, but it has been trading heavy and every now and then getting little bounces to keep it elevated. As long as equities remain in an uptrend the NZD will always be supported.

Carney BOE Governor, didn't talk about interest rate increases in the UK and that stopped the cable dead in it’s tracks to 1.7000 for me to activate my short.

Looking forward I think we are going to find that USD/JPY is going to dominate Forex matters. The support level of 101.20 is crucial. We are flirting with it hovering 20-30 pips above and trading in a very tight range. Yesterday (Friday) it was in a 31 pips trading range...hold your breath the JPY could be the one currency that is going to push and pull the Forex market in the coming sessions.

We have a couple of weeks before the “Draghi Roadshow” hits the markets so the filler will not be the EUR/USD but the USD/JPY and it’s cross-rates.

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<strong>2. THE VIEW FROM MY TRADERS DESK:</strong><strong> </strong>
<p style="text-align: center;"><strong>MOVE OVER EUR…IT’S GOING TO BE ABOUT THE JPY FIRST</strong><strong> </strong></p>
I eluded to it earlier in the blog and, despite closing out all my short JPY positions yesterday for over a big +200 pips with having two great bites of profit on these trades in two days, I am looking to re-enter short early next week.

If you recall a few months ago the JPY had a day or two where it controlled all things Forex. The USD was handed it’s butt to itself on a plate then kicked to the left and then to the right. As the USD/JPY collapsed, the EUR/USD, GBP/USD, AUD/USD and NZD/USD squeezed high.

I want the same to happen again, enabling the following: -

Short EUR/USD at 1.3800
Short GBP/USD at 1.7000
Short AUD/USD at 0.9500
Short NZD/USD at 0.8750

The writing is on the wall. There is a lack of consistent correlation in the USD/JPY with the S&amp;P. The S&amp;P and Dow Jones are touching all-time highs and the JPY is falling. U.S. Bonds are ripping higher both 10 and 30 year, this is keeping the USD/JPY pressured. The USD/JPY is skirting key support at 101.20 and the cross-rates are on the precipice of huge falls.

I have charts of my favourite three JPY trades. The USD/JPY, CHF/JPY and EUR/JPY.

One of the great things in trading the JPY pairs is that round numbers seem to hold some sort of fascination for JPY traders. Once a round number is broken to me it feels like a directional / momentum confirmation has been verified.

<a href="https://weeklyfxdrivethru.com/wp-content/uploads/2014/05/USDJPY-DAILY-17052014.png"><img class="aligncenter size-large wp-image-3688" src="https://weeklyfxdrivethru.com/wp-content/uploads/2014/05/USDJPY-DAILY-17052014-1024x514.png" alt="USDJPY DAILY 17052014" width="1024" height="514" /></a>

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From the chart above you can see how important 101.20 is as support. We have broken trend line support already. I think that rather than Fibonacci levels the horizontal supports will offer better support levels if it moves lower.

I do think that this pair could hit 98.00 (I will have this Monthly chart for PREMIUM SERVICE subscribers in Monday’s DAILY FX POST, if we break down)

<a href="https://weeklyfxdrivethru.com/wp-content/uploads/2014/05/EURJPY-DAILY-17052014.png"><img class="aligncenter size-large wp-image-3689" src="https://weeklyfxdrivethru.com/wp-content/uploads/2014/05/EURJPY-DAILY-17052014-1024x514.png" alt="EURJPY DAILY 17052014" width="1024" height="514" /></a>

Looking at the EUR/JPY chart above, you can see that we are well below trend line support. I think we are going to re-trace all the way to 136.25 with this pair, maybe even further, if Draghi extracts the digit. 138.50 is the next support level.

<a href="https://weeklyfxdrivethru.com/wp-content/uploads/2014/05/CHFJPY-DAILY-17052014.png"><img class="aligncenter size-large wp-image-3690" src="https://weeklyfxdrivethru.com/wp-content/uploads/2014/05/CHFJPY-DAILY-17052014-1024x514.png" alt="CHFJPY DAILY 17052014" width="1024" height="514" /></a>

The trend line support is also broken with this pair and it looks like a sub 112.00 is possible. The only caveat with this pair is the CHF reaction if the ECB really reacts. The other major point to keep in your mind is what happens if the SNB gets the nod from the ECB that they are going to act to “ease” in the markets with a host of measures. Will the SNB raise the floor with the EUR/CHF from 1.2000 to say 1.2500…there could be great fireworks?

So with the divergences in play at the moment, keeping your eyes glued to the JPY pairs could be a profitable move to make. Obviously, I think that USD/JPY should lead but do NOT rule of the EUR/JPY driving matters. The Eurozone is a massive trading partner with Japan and, if there are moves in the EUR driven by political sound-bytes of “numpty” European politicians sticking their noses in the debate, and, subsequently the ECB officials having to fiercely defend their alleged independence against what was said, then the usual mixed messages out of the Eurozone will rule the day causing volatility and confusion. So be careful of this happening, you know the history of the Eurozone; never a dull moment and a potential for major F**K ups.

I do believe however that we have a great $$$ opportunity with these JPY pairs. My trade set-ups are later for PREMIUM SERVICE subscribers.

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

<strong>EUR/USD: Closing Price 1.3693.</strong> A nice drop to 1.3650, then we had a squeeze back to 1.3725. The momentum is to the downside, but I really would like a move higher back to 1.3800 to short again. Not sure that we will get this. Therefore the immediate range to keep ones eyes on is 1.3650 to 1.3775.

<strong>GBP/USD: Closing Price 1.601</strong>. To close the week we are parked at resistance at 1.6820. Please can we try 1.7000 again so I can short again? Not sure how this pair is going to move, I think Carney really spooked both the cable bulls and bears last week. The range is 1.6730 to 1.6920.

<strong>AUD/USD: Closing Price 0.9359</strong>. Practically a zero overall move in the last seven days, that must please the RBA. We are locked in a very tight range and have been most of the past week: Support is at 0.915 and resistance is at 0.9410.

<strong>NZD/USD: Closing Price 0.8626</strong>. Like the Aussie the NZD/USD has been trapped in a tight range. 0.800 to 0.8695, unless we break free it will be boring. This pair will always threaten to do something but of late it has been the equivalent of the “Boy who cried wolf”.

<strong>USD/CAD: Closing Price 1.0860.</strong> The recent CAD strength has surprised me a little and as a result I am not 100% confident in this pair anymore, for the time being anyhow. A few weeks ago I was thinking 1.1600 here we come, but that looks like a bit of a dream at the moment, and far fetched at that! I am concentrating on 1.0800 to 1.0910 for now.

<strong>USD/CHF: Closing Price 0.8926</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. Earlier last week I finally exited my 6 week trade of this pair long, I made good $$$. If we break 0.8960 to the long side I think that there is a chance of a squeeze and I may have to chase, which is something I do not normally do. I have a set-up in the “TRADES ON MY RADAR SECTION”, lets hope that that entry triggers instead. I see support pretty good at 0.8860 / 0.8900 and resistance is 0.8960.

<strong>USD/JPY: Closing Price 101.49. </strong>I think we are on the fringes of a huge break to the down side. Support is at 101.20 and resistance at 102.10.

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

SUNDAY: AUD – RBA Monetary Policy Meeting Minutes.

MONDAY: N/A.

TUESDAY: JPY – Monetary Policy Statement and BOJ Press Conference.

WEDNESDAY: USD – Janet Yellen Speaks and FOMC Meeting Minutes.
WEDNESDAY: CNY – HSBC Flash Manufacturing PMi.

THURSDAY: EUR – Flash PMI’s (Germany and France).

FRIDAY: EUR – German IFO Business Climate.

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

This coming week has the potential for sparks to fly. Of course, that does not mean that it will happen, but the potential is there.

Our trading guards have to be up (like shields in Star Trek). I am very conscious that false breakouts and false breakdowns will still rule the day as the markets are twitchy. No one wants to be the one to pull the trigger first and this choppy market style will remain until a catalyst is found to do the damage required. I think that it may be the JPY, but that is just what is on mind right now.

Keep your eyes and ears on the Eurozone as well. 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.

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Scott Pickering
The Pip Accumulator
Saturday May 17th 2014

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

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