“Psst!
The Dukes know somethin’ … let’s get in on this!”
George:
“I told her I was fat, bald, had no job, car,
or money, and lived with my parents”. Jerry: “What did she say”? George: “Ohhh,
how exciting”!
That’s
all you really need to know in today’s trading environment, cuz the “Bizarro”
world rules; PMI’s & BOE FPC minutes, not worth a bucket of warm spit to
move Cable or EURUSD this morning … especially EURUSD, which can’t move more
than 5 PIPS one way or the other without tripping over itself in self-doubt …
Cable? Well now, do you know where your “Brexit” rumor is right now?
Que
it up LP’s, cuz that’s what is happening to a trade that gets suckered into
either buying or selling Cable coming out of the gate in Europe … only to be “gob-smacked”
around Noon time, when after breakfast and a round of golf, it’s time to float
some more “to the moon Alice” Cable bullshit. Oh wait!! EURUSD has now broken
to a new low right before U.S. data comes out … “oh goody, now we got a 30 something PIP range … big whoop”. Meanwhile
Cable is on a steroid roller-coaster that is driving the GBP crosses to
untradeable status … “why trade a cross
if the only damn thing in it that moves is Cable? Just trade Cable for cryin’
out loud”!
Nowhere
is this stupidity more apparent than in EURGBP, where the new normal “spike-a-rama”
is 110% Cable derived, with zero input from the Euro … looking at this early
mornings trade, there’s been no less than a dozen spikes … all Cable induced,
where somebody juices Cable up/down 10+ PIPS in a millisecond to get the
desired stop cleaned out, and the collateral damage in EURGBP is evident by
simply looking at the chart and wondering, “WTF
was that”? It seems to be my favorite day-time trading phrase these last
few weeks, cuz there is only the spike, that gets faded immediately by the
dealer community, with no follow through. And who do you think is responsible
for this? Well, I know, and it ain’t customers … “get ‘em leaning one way and then BAM! … rinse, repeat as often as it
won’t get you indicted”. And in a trade where nothing matters anymore but
rumors, Cable is “front & center” in the rumor mill with “Brexit” … “my, my, what a convenient excuse for
ramping price up/down gobs of PIPS and then blaming it on others … rumors no
doubt the same damn LP bank started in the first place … Scumbags top to bottom”.
I
get to my screen this morning, and it’s “event risk” all over the place; BOE
minutes, E.U. PMI’s, and of course the rumor mill in full swing RE “Brexit”
talks … quite frankly, I’m sick of hearing this shit for the umpteenth million
time … STFU already and do the damn thing or don’t, it’s been a frickin’ year
and a half already! … and so, while the EURO is paralyzed in its tracks, it’s
the “Cable show”, where phantom “mystery tick” moves come and go like farts in
the wind … all the while sending EURGBP on the GBP roller coaster, blowing out
stops and forcing people to liquidate positions cuz of the large spike(s) … and
I see this and I’m asking myself, “how the
hell do you trade something that makes zero sense one minute to the next, when
it’s all CABLE and ZERO EURUSD … if I want to trade Cable I will, but this is
supposed to be a “give & take” cross … WTF is happening here in “bizarro”
world? I feel like I’m attempting to trade a Feb/August Pork Belly spread …
where are Mortimer & Randolph when you need them?”.
Late
morning sees EURUSD finally move some, but it’s “the widow maker” that scares the hell out of me. Since GBP is in
the denominator, it is the more powerful of the 2 pairs when it comes to the
cross, and the way the market is pricing “panic” right now, you don’t want to
be on the wrong side of Cable when it moves … cuz it’s moving 30 – 50 PIPS
without breaking a sweat, just like in the old days … haven’t seen this kind of
gap pricing in a very long time. And the problem for the cross right now is
that GBPUSD can easily go back under 1.30 and/or go over 1.36 on pretty much “vapors”
… a lot depends on these “Brexit” negotiations going on this week, cuz as
people have noticed, this is the “make or break” week for this event risk. If
it fails, May’s Gubermint is “buh bye”
and Cable is in a “Thelma & Louise” lower … if successful, it boosts her
coalition and consolidates her power; something she badly needs. And more than
likely, it causes GBP to rally smartly to above 1.36 somewhere … and the dirty
little secret is, it won’t take long to get to either end once the news is out,
and nobody is gonna email me first to let me know.
And
right now, that’s the big problem in EURGBP; it doesn’t do you much good to be
in a winning position, and then get blown out on a large spike in under a
second… something that is happening frequently these last few days. I don’t see
this continuing past the current “Brexit” negotiations “tail risk” facing the
market; it’s more a function of the level of nervousness among traders than
anything else. People are afraid of getting stuck on a “runaway freight train
down the mountain”, and at the slightest hint of a turnaround, will create
their own panic conditions; it’s basically a self-fulfilling prophecy.
I’d
have to give the nod, right now, to negotiations succeeding with “Brexit”; come
“hell or high water” May will give the DUP in Northern Ireland whatever they
want. I don’t think failure for her is an option. On the other hand, who really
knows?… Pols are Pols and backstabbing pieces of “bat guano”, and if she can’t
pull the “rabbit out of the hat”, she just might bring the whole house of cards
down and say, “here, you do it, I’m outta
here … screw this crap”. And as a result of all of this, traders are very
nervous right now … I know I sure am. And really, the key here for the cross
isn’t the Euro; it’s GBP and how fast and ugly it gets to either 1.36000+, or
sub 1.30000, over the course of the next few days to maybe a week. The way
Cable is trading and acting, it sure feels like 1.36+ is the course of least
resistance … all that means of course, is that LP dealers are short, and given
the chance if this stunt fails, they will punish the living hell out of GBP on
the way down.
What
we’ve seen yesterday and today in EURGBP is not at all typical of the crosses
typical M.O. trading style; sure, spikes to some extent will always be here,
but these 20 – 40 PIPS+ fireworks in 2 seconds are highly unusual. For the last
3 months, EURGBP has been in a sideways flag formation; 0.90 to 0.875 has been
the range … I would expect that to hold until news is out RE “Brexit”
negotiations, but again, who knows? … when either side eventually gives way,
there’s gonna be some fireworks via stop hunts, so if Cable rallies here, be
very careful about being long EURGBP below 0.87700 with a stop below … you may
find that stop getting filled a lot lower than you thought possible.
Yesterday
and today, the market has been on edge due to, what I would call, extreme event
risk; the higher ranges on spikes give testament to this, especially early in
the day. Tomorrow sees more data risk in the E.U., with early economic reports
from Germany, and in the U.K. there is nothing on the docket to be reported;
that should result in a more normal day tomorrow, but it all really depends on
the action in Cable; as I stated earlier, I think the risk is on the upside,
which means EURGBP heads lower if the Euro doesn’t compensate.
Today
saw some wicked action early, into the U.S. session, all the result of Cable
gyrations … first a “Thelma & Louise” off the cliff, and from the bottom,
straight up … it made for some very erratic price moves in EURGBP; moves that I
didn’t want any part of cuz the risk was way, way too high for the reward. Overall,
today & yesterday I’ve been extremely cautious … and while my volumes are higher
and will go higher still, sidestepping “risk events” has been a top priority;
it doesn’t do us any good to get “whacked” with a spike, and then have to
scratch back to break even. Tomorrow should be a better trading day.
Only
one trade today, simply cuz most of the moves occurred too close to economic reports
that came out, along with BOE minutes … I’m not interested in playing “report roulette”; overall, got excellent
fills … right on the bid/offer in entry and liquidation. We were a little
unlucky, in that after a short entry, the market came back and forced me out, before
moving slightly lower, and it left us with a small profit. Looking forward,
only Friday’s data dump is left along with “Brexit” news, if it comes. Again
today, once 16:00 comes around, the market dies … the U.S. afternoon isn’t
moving anything.
This
was the second day trading EURGBP, and notwithstanding the extraordinary spikes
seen [especially early on Cable nuttiness], that have expanded the daily ranges
some, I like this pair a lot. Tight spreads, and so far, [knock on wood] fills
right on the bid/offer, make this wonderfully attractive in an FX world filled
with vermin LP’s looking to rip off anybody clicking the buy/sell button. So far,
EURGBP feels like home. Onward & Upward!!
PAMM
spreadsheet directly below, and I’m outta here …
Have
a great day everybody!
-vegas
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