MR. MARKET: “PROVE ME WRONG”!

“Meet Mrs. GBPJPY: You’re just gonna love her!”

“Oy, on steroids: I think I hear the recruiter for the circus calling, although last time, they told me my trading background disqualified me for any position that required dealing with the public”. Can the trading action this week be any more 1) choppy, 2) treacherous, 3) temperamental & “bitchy”, or 4) all of the above? No doubt, I’m voting for #4; while not quite another “Flying Wedge of Death” [FWD], today is no “winner winner, chicken dinner” either.

Today, we can thank none other than one of the political hacks in Brit “quasi-government” [that would be the BOE], who in a speech to college students to no doubt extol them on the virtues of government service, basically “lectured” the financial community for not taking future rate hikes more seriously. Wait … what? I find it highly ironic that a BOE voting board member thinks “analysts” don’t take rate hikes seriously, when for the last 10 years the entire FX analyst community has been wildly bullish on rate hikes each and every month, all the while being wrong every month since the BOE, up until a couple of Thursday’s ago, hadn’t raised rates since 2007! But seriously, don’t let kids growing up read any of this garbage, cuz it could stunt their brain development.

Well, a market very much in “need” of some kind of catalyst for screwing with stops [as is always the case with the crosses], it immediately finds one in the Brit Pie Hole’s comments, and so in 38 minutes, from 9:29 to 10:07, GBPJPY rallied smartly up about 50 PIPS. And guess what? Yup, you guessed it, the rally can’t hold, and we start the slow, tortuous descent from the day’s high to where we are now, which is hovering just below the day’s 50% retracement range level … “Oh joy, what the hell am I supposed to do with this? Another 30+ PIP move that can’t be sustained, just like all the rest of ‘em the entire week. No, it’s not a FWD [yet], but very much another small range day that has no impetus to go anywhere for longer than 5 minutes without wanting to reverse smartly and head back the other way”.

For one of the few times this week, we did get a good algorithm buy signal off the first move down after the rally. Directly below the trade.

What guided me in this trade was the following: “prove to me Mr. Market, that you can move somewhere, and not just chop around randomly … go somewhere with authority”! And the market just yawned and said, “I don’t think so”. When the market broke down below 149.20, I had the same feeling I have gotten all week on these retracements; “Oy, that’s all folks”! And here we sit hours later sub-149 again; all the while the SP500 has recovered 20+ handles from overnight lows, so don’t anybody tell USDJPY, which isn’t playing along today and has gone below 113 [again], and sits at 112.90 as I write.

In the macro picture, take a gander at the weekly GBPJPY directly below for some perspective. The chart sums things up nicely.

It isn’t often you get 3 weekly “Doji’s” in a row, especially where no Holiday period is in sight, and I might add, after the first rate-hike in 10 years.

As I wrote yesterday, it’s very easy to fall into the trap of thinking GBPJPY has died for the day, so I’ll just buy the dips and sell the rips and make some easy money; that works until it doesn’t, and when the “doesn’t” shows up, that trade you’re in is gonna cost you 50+ PIPS [if you’re lucky] … the other 9 that you made 5 – 6 PIPS in, is now down the drain, and you’re breakeven. “Guess what? I can get break even by just sitting here and avoiding the mess with zero risk”.

Tomorrow sees no data release for Japan or the U.K., and very little in the U.S., so I don’t know what drives this stuff that could possibly break the “Doji swamp” we find ourselves currently in via the weekly charts. But, it is what it is, and we deal with it.

I’m outta here … until tomorrow. Onward & Upward!! PAMM spreadsheet directly below.

Have a great day everybody!

-vegas

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