WELCOME TO THE EURUSD “MEATGRINDER”

 

“The FX marriage metaphor!”

It looks like “Peter Pan” Kuroda did his best with traders in USDJPY today, first giving the shorts some pain, and then turning right around and contradicting himself and blistering longs… must be taking lessons from Super Mario, who as we all know, takes the center stage on Thursday. Yen traders got the Central Bank “meatgrinder” today … but make no mistake, the way things are lining up with EURUSD, in terms of a constricted range for the 7^th day in a row [about 50 PIPS from 1.22250 to 1.22750], look for Thursday to produce an FX “bloodbath” … it will matter not whether you are long or short, if you go into Super Mario’s presser with a position, you’re gonna get your stop filled … I’m looking for a total wipe out of the scumbag LP bank order books, as the “rape & pillage” of retail spec accounts goes full throttle retard.

How constrained have things been? Well, take a look at the daily candlestick below.

 

How many small “doji’s” in a row do we need before SHTF? … Tomorrow should see another one, but you never know; that’s why I never assume a “doji” day is in the works, cuz if it decides to break out cuz somebody is nervous, it could hurt you greatly … the day is still young, and you can never assume anything in this biz. And, as has been the case now for 7 continuous days of this crap, EURUSD fails at one of the “edges” of the “chopfest”, rallies back, and now the market drifts aimlessly … and every single trader now subject to the “whims & fancies” of the scumbag LP banks as they spike up, then down, and when it’s all over the M1 candlestick chart looks like spaghetti thrown up against a wall.

“Well, that escalated quickly, didn’t it”? And as I was saying earlier, you simply can’t assume very tight ranges will hold in front of big reports … not only some retail specs, but big money can panic as well, and once the “shitshow” stop hunt on the upside starts, the spikes come in droves … there’s just one problem. And that problem is, when it’s over the trapdoor opens and everybody hits the exit gate at the same time, and while not always “ugly”, it very often is … and if your long, you’re gone.

I decided very early today, right as EURUSD was opening before 08:00 server time, that if EURUSD broke to the upside, I refuse to get long … and the reason is simple. Where’s it gonna go once the buy stops get filled? Quite frankly, I don’t think it can go very far before Thursday’s ECB presser with Super Mario, and that leaves any long position extremely vulnerable to a very fast & vicious break. And what did we see today after the low was put in early? First it started with Cable & Yen, bled over to EURUSD, and once we got above 1.22800, the buy stops above 1.22950 are in play.

Newbie traders might then say, “well, if that’s the case, why not get long and sell the buy stops”? MY RESPONSE: “The last time we were up here, I did just that, and came within about 2/10ths of a second from getting my donkey handed to me … if I was literally a “blink of my eyes” later, my profit would have been a loss. It’s easy to look back in hindsight and see the high at 1.23060, and then say getting long on an upside break of 1.22900, for example, looking to take the 95 stops out, is a good trade … simply cuz you know in hindsight you got about 10 PIPS to go … in real time, there’s no reason a stop can’t get taken out, it trades at 99, and a millisecond later it’s at 85 … I’ve seen that kind of scenario many times. So, while I can’t say where the stops end, I know what happens when they do … elevator down, and I don’t want to get caught in that kind of scenario where reward/risk stinks to high heaven”.

I’m not all that surprised one of the boundaries of the last 7 days got taken out … what surprises me is the total lack of downside action via long liquidation. Today was the first day in 7, that EURUSD opened and started to go lower in sympathy with GBPUSD; however, Cable’s low came many minutes after EURUSD was at its low of around 1.22230. And while Cable put in a good candlestick M1 “hammer” off the low, the low of the day for EURUSD was decidedly nondescript … nothing special about it at all. What’s all the more amazing to me, is that since the Apple repatriation “gift” to the scumbag LP banks via the FED, there hasn’t been anything even remotely close to the 1.22000 price level … if anything, traders can comprehend some long liquidation ahead of the ECB meeting & presser due to the scope of the rally we’ve seen since New Year’s Day, but the upside? That’s why I say, taking nothing for granted.

Quite frankly, unless Super Mario & his band of clueless E.U. twits want to see EURUSD going to the 1.26 – 1.28 handles, he better give the most dovish speech & presser of his life Thursday morning starting at 8:30 A.M. EST, outlining no plans for rate hikes anytime soon, nor plans to scale back QE … if he doesn’t, and the market comes to the conclusion that all he’s doing is “jawboning” EURUSD lower, EURUSD will melt up. Anything “wishy-washy”, and he’s gonna get it shoved where the sun never shines.

Turning to today’s trading, I came in looking for EURUSD to go lower with Cable down … hopefully … into the low teens of 1.22. From that low, depending on how it bounces off the low, either hanging on with profits or letting it go if it looks and feels weak. If it breaks1.22000, I’ll be looking for the classic quick bottom … well, I got neither.

One trade today, basically a pennies profit scratch … I was up in the trade and it came back … for about 45 seconds it looked like a great decision, cuz it went about 3 – 4 PIPS lower from my original long position … and then it just took off to the upside and left no prisoners. Even then, though, I thought there was a decent chance we could still see it go lower … from the 50’s on, though, forget it, now it’s a race to the top as Cable reverses and starts to scream higher.

If not for the ECB coming up, there’s no question I would have been long and hung on for a while, cuz we got the early drop followed by a move through the 50% retracement level, and then to a new high … a classic reversal that happens very often … but until Super Mario pontificates, where’s it gonna go, cuz you know Super Mario is gonna cause a tsunami in EURUSD? As I said yesterday, and Yen traders found out today, we’re all hostages to the Central Banks … no market is immune. And now here in the NY afternoon, EURUSD is a few PIPS above that 1.2225 – 1.22750 range we’ve been in for 7 days, and is trading around 1.22800, after filling buy stops above 1.22950 to 1.23060, and then quickly falling off.

This constricted range has been frustrating, but volatility will most definitely pick up once the ECB meeting & presser are out of the way. Despite what Super Mario might say to try and tame EURUSD, the market feels like it wants to go much higher. A “mush” presser, and it will get there a whole helluva lot quicker than anybody thought a month ago. We’ll see what tomorrow brings … Onward & Upward!!

PAMM spreadsheet directly below.

 

 

Have a great day everybody!

-vegas

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