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<strong>1. INTRODUCTION:</strong>

The market jitters continued over the part 7 days. Some of the swings from lows to highs were just incredible. It would have been a wild ride if you were caught in the crossfire, hopefully if you were unfortunate to be there it wasn’t too costly. However, I strongly suspect that many traders were caught and many thousands of $$$ were lost this past week. If you were to combine losses from previous weeks and believe me there would have been losses, I would say many trading organizations as well as individual traders struggled.

As I have repeatedly stated over and over again the only way to survive this volatility is to trade smaller position sizes, with wider stops or NOT to trade at all.

My broker account balances are growing but at a reduced rate. Just keeping your head above water is a success right now. I had a conference call yesterday (Friday) with two other traders, well known in the social network sphere and very well connected. Without prompting they both claimed it to be the hardest trading environment they have seen for years and because we are at so many inflection points across currencies, equities and worldwide indices, the volatility with the two-way price action at the inflection points is excessive. I called that the under- statement of 2014 so far.

However, it is what it is and we have to move on but accept the increased risks associated with trading.

My favourite subject the EUROZONE features as my main topic of conversation this week. So in this section I will avoid all EUROZONE references.

Away from the EUROZONE, for me, it was not a major news event week, with the exception of the Chinese Data. I do not want to upset my Chinese subscribers but there comes a point when the data released and the subsequent market reaction becomes laughable. All I want to say is that, the miss and it was a miss when look behind the annualized numbers will plague the AUD and NZD currencies going forward.

I also want to reach out to the new PREMIUM SERVICE subscribers. Please be aware there are now over 80 subscribers in total, which, is fantastic and ahead of Marketing Plan. The vast majority of my PREMIUM SERVICE subscribers are happy just to receive the DAILY FX POST and this weekly blog and are not interested in Twitter. I have absolutely no problem with this approach at all, but please bear in mind there are only 24 hours in a day, I need sleep from time to time so I cannot answer emails or SKYPE messages immediately, nor do I look for Twitter conversations.

I have to research, publish set-ups, trade myself, manage trades, tweet, blog and write additional articles for the PREMIUM SERVICE version of this blog, plus develop Broker relationships for the future as the PREMIUM SERVICE develops. If it takes me an hour or so to respond to questions I apologize. I promise you I am busy but I will get back to you.

I am looking at the option of hosting a weekly webinar in conjunction with one of my selected brokers to answer any trading questions and maybe look at some live trading. I want to be fair to all subscribers as you are spread worldwide in every time zone so the timings would vary each time to cover all time zones around 7-8pm at night local times. If this is something that you would like me to pursue please drop me an email at premiumservice@weeklyfxdrivethru.com

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<strong>2. THE VIEW FROM MY TRADING DESK:</strong>
<p style="text-align: center;"><strong>IT’S ABOUT TIME THE ECB AND DRAGHI ACTED ON DEFLATION
- THE EUROZONE STATISTICS ARE DREADFUL</strong></p>
<strong> <a href="https://weeklyfxdrivethru.com/wp-content/uploads/2014/04/EZ-INSERT-PSBLOG-19042014.png"><img class="aligncenter size-full wp-image-3499" src="https://weeklyfxdrivethru.com/wp-content/uploads/2014/04/EZ-INSERT-PSBLOG-19042014.png" alt="EZ INSERT PSBLOG 19042014" width="426" height="515" /></a></strong>

The above chart is self-explanatory.

It highlights the task that the ECB and the various governments in the Eurozone have in front of them if they are to tackle the basics of improving the economic performance of their country. I have for the purpose of this blog taken a sample of countries in the Eurozone focusing on the bailout countries, plus a couple of other high profile members and the two majors of France and Germany.

Quite frankly 5 years after the financial crisis to see these statistics shows what a poor job has been done by the ECB in tackling fundamental problems. In saying that I know that individual countries have had a part to play but under the banner of one central bank the ECB is responsible to act in the best interests of all members of the single currency union. I do not in my opinion believe that this has been the case.

I admit work has been done, very substantial work has been carried out in ensuring stability in the banking industry across the Eurozone. Yet, with all this work we on the verge of yet another banking stress test in the Eurozone, one has to ask why so many? One can only assume because they have not been stressful enough in the past and that the ECB is concerned. Additionally the appointment of a “Banking Tzar” to manage and monitor banking performance drags on and on and on…another can is being constantly kicked down the never ending road out of Brussels towards Frankfurt and Berlin.

When talking or writing about the Eurozone you always have to bear in mind it is the land of compromise. It is virtually impossible with everything that goes on in Brussels to get agreement from all member states on something no matter what the subject may be. Even the Cheese and Wine debate for Country-head meetings has its protestors. The phrase “Kicking the can down the road” emanates from the Eurozone and quite right too. It is collection of 18 member states that all use the same chequebook, who all have their own culture and separate identities and their own domestic problem issues.

How on earth can 18 into 1 go? The simple fact is it does not fit. Hence all the outstanding issues, all the compromises and all the cans being kicked down the road. This also adds to the poor communications, there are 18 people at least on every subject trying to claim sound-byte time in the media to get their individual view across.

The biggest hurdle in the Eurozone however is Germany, the leader, the powerhouse and the country with all the money and the financial strength. As long as Germany is in good shape F**K the rest seems to be approach. The Eurozone is said to be based upon equal voices, equal voices my a**e.

We have a situation in the Eurozone that is just getting worse and worse. For over 12 months bugger all has been done to fight unemployment. The number of under 25 year olds jobless, in particular, is a bloody disgrace and those in power should be ashamed of their performance in tackling this. But, Germany’s jobless rate is considerably below the Eurozone average so NO attention or focus has been directed to this area in the past year. The call for stimulus has been made - but ignored.

Germany’s GDP and Inflation rates are above average but not in line with Eurozone targets and recent PPi prints show that producer prices in Germany are now negative showing that DEFLATION is becoming a German issue as well as a major issue for other member countries who have had to live with DEFLATION for years. The inflation rate target for the Eurozone is 2%; presently we see 0.50% and nothing tells me that this number is increasing, quite the opposite in fact.

The Bundesbank and Angela Merkel are the primary culprits for this. Their policy of trying to make the other 17 countries of the Eurozone areas of Germany has failed miserably, and the belief that not tackling the issue head on hoping that it will somehow get better is quite pathetic.

I also blame poor Mario Draghi, his only approach without permission from Germany to act is verbal intervention. For too long now we have listened to we will do “Whatever it takes”, “ We are not concerned about dis-inflation”, “Projections are in line”, “Extended period of stability ahead” etc. etc. etc….it is all bulls**t. Even France now wants to arrange a meeting of Eurozone members to discuss the high EUR/USD exchange rate.

The cost export goods from the Eurozone is very high, due to the strength of the single currency. Stimulus is required to lower the exchange rate, gets sales moving, and, get some of the unemployed off claiming welfare cheques and back into the workforce generating tax income, instead of being a tax burden to countries. Unemployment rates over 10% are a disgrace this is 2014 NOT 1920. It is so simple employed people contribute to a countrie’s wealth, therefore you would think focus on this to be paramount.

The Eurozone is so depressed prices are not rising because no one is buying anything other than essentials. The politicians have failed their voters miserably over the past few years. Country heads blame the fact that they cannot manipulate their currency to stimulate their domestic economies and rely on austerity measures to cut back to ensure they meet the German membership guidelines.

It has been a vicious circle for sometime, but I now think that there is a light at the end of the tunnel. Recent comments from the ECB board and Draghi himself have been consistent about looking at special measures to remove the risks of DEFLATION that are definitely starting to worry Germany as well.

To launch a stimulus programme in the Eurozone now will be much more costly and difficult to keep on track given that the U.S. and UK are way ahead in terms of progression away from what at the time a looming crisis. The U.S. tackled the financial crisis full on with Quantitative Easing under Ben Bernanke the then FED chairman, and the economy is now showing shoots of economic optimism. An improving employment situation and GDP of around 3%. The UK is without doubt the surprise package when it came to an economic recovery, this was helped without doubt by hosting the 2012 Olympic games. The Eurozone have done f**k all in 5 years to tackle what the U.S. and the UK took on immediately at the financial crash. The Eurozone because it dithers in everything it does is playing catch-up.

The options to stimulate open to the ECB / Draghi include, Quantitative Easing (QE), further Long Term Refinancing Options (LTRO) and Negative Deposit Rates for Central Banks with the ECB.

We must trade cautiously when trading the EUR, as news about any special measures may not just be reserved for ECB Press Conferences it could come at anytime. The mere fact that more and more talking is taking place leads me to believe that something is about to break. Germany must be concerned with it’s recent economic data, it confirms that they are also struggling and although the German approach is usually to do an ostrich impression and bury it’s head in the sand, I think that they have run out of cans to kick and timing is now right to act. The longer it is left with improving data emanating from the U.S. and close trading partner the UK the worse and longer the Eurozone recovery will be.

So…I asked on twitter a few days ago what is next for the EUR/USD 1.3450 or 1.3950?

I ask it again and I wish I knew the answer because it would be one hell of trade if you knew!!

My gut feeling, moving forward is helped based upon the fact that the French Government is now openly struggling economically, and, they want to gather periphery support within the Eurozone. They want to move the ECB position on stimulus and the single currency strength but also pressurize the Germans into agreeing that ECB can change monetary policy - this will be telling and crucial news to the future of the Eurozone should it happen.

I therefore think that if the Germans and the ECB are serious about tackling Eurozone DEFLATION, the Euro currency strength and unemployment, we should be looking at a target of sub 1.3000, closer to 1.2600 or even less, it depends on the message that they collectively want to send. A 10% correction would be a complete waste of time and laughed at. It has be substantial for the markets to sit up and take notice.

On the other side, if no action is taken soon I see the markets attempting a squeeze on the EUR/USD and we could see the ECB being forced to act in reactionary / emergency mode rather than taking control now and being pro-active with the markets. A powerful squeeze could see 1.5000 pretty fast at this level Draghi would be having kittens.

The ECB are great talkers so - DO NOT take anything for granted. Logic says that the pressure is to the downside but we may have to go long before going short.

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<strong>3. THE PREMIUM SERVICE:</strong>

I make several references to the PREMIUM SERVICE during this blog. The reason for that is that the PREMIUM SERVICE blog is more detailed and contains more information that the free WEEKLY FX DRIVE THRU version.

The PREMIUM SERVICE is a subscriber only service that provides my subscribers with the following: -

<strong>THE DAILY FX POST</strong> – this is a daily blog that goes directly to the secure subscriber area of the my website. This daily blog contains a brief overview of my thoughts each day on major FX news and reviews of key economic data. It also has trade set-ups for trades that are on my radar. I provide set ups for trades based upon three styles of trade, FLASH, RADAR or FUNDAMENTAL. This goal of this daily blog is to set traders up with a thought process for the day.

<strong>TWITTER</strong> – an exclusive protected twitter feed. This adds to the DAILY FX POST throughout the following day and night with trade set-ups, updates and my thoughts on the market as it moves. If trades come into play I tweet them as my chart analysis is completed.

<strong>THE PREMIUM SERVICE BLOG</strong> – This is a more comprehensive review of the week just gone and the week ahead. It includes training sections and RADAR trades plus on going performance reviews of existing trades and my thoughts moving forward.

<strong>THE PREMIUM SERVICE SUBSCRIBERS ONLY WEBSITE</strong> – This holds details of all trades, whether FLASH, RADAR or FUNDAMENTAL. Excel spreadsheets analyse the profit / loss performances all current trades and I also measure the year to date performances. The website also includes several sections containing training materials that are being added to weekly to provide traders with a comprehensive library of information. In the future, webinars will be added and I am looking into a TRADER’s CHATROOM option, which would take the PREMIUM SERVICE on-line capabilities to the next level.

If this is something that interests you. If you go to the main website at <a href="http://www.weeklyfxdrivethru.com">www.weeklyfxdrivethru.com</a> on the welcome page on the top left you will see headings such as PREMIUM SERVICE, SPECIAL OFFERS and SIGN-UP all of these contain further information about the PREMIUM SERVICE and how to subscribe.

There is now a low cost trial option of $20.00 for 4 weeks membership.

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<strong>4. LOOKING FORWARD…THE KEY SUPPORT &amp; RESISTANCE LEVELS WITH THE USD MAJORS:</strong>

<strong>EUR/USD: Closing Price 1.3804.</strong> The rollercoaster ride continues. This pair would try the patience of a saint. I have been short against the 1.3946 highs for what seems like weeks. Ultimately, my fundamental view is that we are heading lower and I believe the next two weeks will be crucial for this pair. Draghi has his nuts getting squeezed in the vice as he is being forced to act on DEFLATION, the problem is the electrodes attached to his testicles from Berlin. The time of verbal intervention is over, if he does f**k all this time it really will be the “Central Banker that cried wolf”. The key levels are support at 1.3700 and resistance at 1.3950.

<strong>GBP/USD: Closing Price 1.6770. </strong>Is that a triple top at 1.6830-40? If it is, look out below, I think we could be in for a major breakdown back towards 1.6250. The problem is the fact that it is “The Cable”; the king of false breakouts and also false breakdowns. I hate this currency to trade. My average length of a GBP/USD trade must be measured in seconds rather than minutes…never hours or days. Support is at 1.6750 below here and I think that the bulls are in control Resistance is at 1.6840.

<strong>AUD/USD: Closing Price 0.9326</strong>.  This pair I think has soooooooo many people long trying to play out the inverted head and shoulders measured move to 0.9500. There are so many longs it is so well supported. We saw a little chink in the armour towards the end of last week but it has to fall to at least 0.9210 in my opinion for the bears to be back in control; once again. Resistance is at 0.9500.

<strong>NZD/USD: Closing Price 0.8569</strong>. I am now short once again…I am a glutton for punishment. Did I get short too early? I am short against the recent highs at 0.8750. Support where I think this pair really turns bearish is at 0.8500.

<strong>USD/CAD: Closing Price 1.0005.</strong> Hurrah…at long last the loonie does a Lazarus and rises from the dead of the 1.08’s. Near term resistance is at 1.1040 and with a break above here 1.1100 comes into play. Support should be good now around 1.0970.

<strong>USD/CHF: Closing Price 0.8833</strong>. We are once again above 0.8800. Key resistance is at 0.8850 and then 0.8900. My patience being long this pair is finally paying off. Support should be very good back at 0.8800 and then below that figure 0.8750.

<strong>USD/JPY: Closing Price 102.36. </strong>102.40 is the key upside resistance for this pair and look where we ended the week. 103.00 is next and 101.80 should offer some support should we head lower once again before we hit 101.40.

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<strong>5. MAJOR FOREX NEWS THIS WEEK THAT INTERESTS ME:</strong>

SUNDAY: N/A.

MONDAY: N/A.

TUESDAY: AUD – CPi.
TUESDAY: CNY – HSBC Flash Manufacturing PMI.

WEDNESDAY: EUR – German and French Flash Manufacturing PMi.
WEDNESDAY: NZD – RBNZ Rate Statement and Cash Rate.

THURSDAY: EUR – German IFO Business Confidence and Draghi speaks.

FRIDAY: N/A.

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

A little light on major economic data releases this week, which means that we will be at the mercy of the stock markets.

We are at major inflection points across all markets so I would recommend that smaller position trade sizes are traded and if you feel like a week off this would not be a bad time to take time out in my opinion. The markets look broken to me but they are holding up very well.

Do not be complacent in any aspect of your trading at this time. You should only trade within your TRADING PLAN guidelines as per the examples I have written about and posted to the PREMIUM SERVICE trading essentials section of the website. You should at this time, trade smaller position sizes with stops in place that are within the guidelines of your TRADING PLAN. If my stops are too wide for you, reduce your position sizes to stay within your TRADING PLAN guidelines.

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

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Scott Pickering
The Pip Accumulator
Saturday April 19th 2014

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

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