FEAST OR FAMINE

 

“When words fail to capture the essence of modern day trading.”

Well, it’s “déjà vu” all over again baby! No, you’re not dreaming, but today it’s the ECB that “shocks”, while yesterday it was the dubious, and denied by the ChiComs [“thanks Bloomberg, frickin’ tools”.], “we ain’t buyin’ no more of your stinkin’ paper.” Well, somebody please tell me how traders all over the world aren’t “smarting” yet again, from a price explosion that sees “feast or famine” and literally nothing in between.

Meanwhile, U.S. PPI disappoints heavily … I doubt we see the price declines of yesterday afternoon on the China denial, but it all leaves me wondering if anybody has a stomach left to trade … the order books have gotten wiped clean on both sides of the ledger, two days in a row now … what’s left? And with today’s “to the moon Alice” 90 PIP blast upward, how much more can shorts take? As I’ve said many times, what is peculiar to FX versus other markets, is there ability to make you think on day A, the market can never go higher again, and that the world’s largest bear market is set to begin … immediately thereafter, on day B, it’s the opposite, where we will never again see a down-tick, much less a move lower, and it’s off to the races as “trees grow to the sky”. And guess what? It’s always been like this.

What bothers me more than anything, and has me somewhat annoyed, is that these last weeks have been so disjointed in terms of price action … without a blow off in one direction or the other on news, EURUSD can’t seem to move anywhere on its own volition … and once again, I'm forced to severely shorten my time horizon on long trades, simply cuz we already have a 100 PIP range … go ahead, scroll back and take a look at how many trading days have a 110 -130+ PIP range, and then tell me the probability of extending the range is high … well, no it’s not. That doesn’t mean don’t take a signal, it simply means hanging on looking for a 150+ PIP range is a probability loser. “Cuz if you buy that 110 PIP price level, and it starts backing off … where do you go from here … how bad does the correction have to be to “spook you out”? … and once “spooked out”, explain how you get the money back, when the entire trade is looking at the same thing and saying, “whoa, looks like a top” … now, you got a big problem … one that I want no part of now or in the future”.

Overall, I’m very happy with the algorithm and EURUSD … all we need now is to get away from the “news hysteria” as the driver of trading action from day-to-day. Generally speaking, the two best markets for signals are EURUSD & USDCAD, simply cuz they usually don’t come on spikes … well, knock me over with a feather, cuz that’s all we’ve seen this new year in EURUSD. But, as I said yesterday, this too shall pass. So far this new year, we haven’t seen the most usual case for nice moves; which is a breakdown of a small range out of Asia, and then a slow at first reversal, picking up steam as it passes the 50% retracement level and then makes a nice move … so far, nada!

The ECB minutes released today, that are entirely responsible for EURUSD exploding higher, were much more “hawkish” than anyone expected; it really caught the market off guard once again … that should bode well for EURUSD going forward, and tomorrow sees a flurry of stats being released in the U.S. … I’m not sure the stats are going to diminish the bulls in EURUSD, though, as it looks very much to me like 1.21 is under threat tomorrow … if that’s the case, going into the weekend trapping shorts could lead to more fireworks on the upside … anything over 1.20800 and you’re likely to see real panic from anybody positioning short from 1.20300 down to 1.19500, and that could be a real impetus to a much higher EURUSD tomorrow. Remember, it’s not the news that matters, it’s the “setup”!

Of course, FX has a way of getting ahead of itself; just ask GBPUSD traders from the Fall of 2017, when the BOE said “tightening” was on the horizon, and GBPUSD raced from 1.29 up to 1.36 … how’d that work out? Well, not very well, as the Twits at the BOE had to “walk back” some of the “hawkishness” to tame Cable … you think the clueless ECB assclowns are any smarter? So, you need to take each day as it comes, realizing that, yes there will be support for EURUSD going forward if it can stay above 1.19 … if for some reason it can’t, all bet are off the table, cuz right now the ball is squarely in the court of the bulls to get EURUSD over 1.21; especially with today’s price explosion … first hurdle is 1.20600, and then 1.20800 … if those levels can be surmounted and more importantly held for a while, look out above. If not, there’s gonna be more blood in the street on the way down. Never forget, for all the moves EURUSD makes, the scumbag LP’s have got to make money, simply cuz they are on the other side of the prevailing trade psychology; all the usual bullshit stop-hunts, mystery ticks, and spikes out of nowhere are in play … cuz that’s how they get out. So, no need to buy rallies or sell breaks, or be at the end of an extreme price move over 100+ PIPS, cuz they will find a way to hurt you.

Case in point, @ 13:30 server time, on the big miss PPI report, EURUSD exploded up to the 1.20350 area … it’s 19:00 server time as I write this, and EUURSD is at “1.2036-ish” … oh boy, big whoop, 5 ½  hours of kill more shorts, and then turn it around and kill some longs … it’s what scumbag LP’s do, in conjunction with the very large hedge funds and central banks who got their back … make no mistake, the ECB isn’t gonna let EURUSD run up like a runaway freight train, and more importantly, they aren’t going to make it easy to stay long, and if you position this stuff, wherever your stop is, it’s in play.

Only one trade today, a long scalp for profit … as I said before, not much I can do when my first buy signal comes with a range of 100+ PIPS. But, money is money, and adding incremental return while EURUSD continues to play at the outer edges of the probability distribution bell curve, is simply just something we have to live with … otherwise, risk exponentially increases.

It will be interesting to see if this rally can continue tomorrow, and overcome the stiff resistance between 1.20600 – 1.21000; any attempt to rally this stuff on a Friday, is likely to cause some level of panic from shorts… if they can get there, what happens after the 1.21000 stops are taken out is anybody’s guess. I’m hoping the Asian session sees some level of long liquidation [a/k/a “profit taking”, thank you Bob Pisani, CNBC] … I’ll be up early tonight extending my trading hours for this Friday, cuz I think any breaks in Asia can be bought … we’ll see. I for one, am up for a good day. Onward & Upward!!

PAMM spreadsheet directly below.

Have a great day everybody!

-vegas

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