Hi, as you will have seen, things are getting worse around the world with the coronavirus and the markets are still in meltdown, which is mirrored in the forex markets.
I do have a few pairs that might be tradeable for the week ahead, but I give you a much bigger list for those you should avoid at all costs.
For those of us, myself included, who were originally led to believe that this was just a bad case of flu and only affected the old and infirm, that has clearly turned out to not be the case.
I read a heartbreaking article in the Uk press this morning, written by a Dr in the National Health Service, this could equally have been written by a medical specialist in the USA and many other countries around the world.
Despite all the BS, bluster and promises of the politicians, there is not enough protective equipment for health workers. Many are exhausted. They are not being tested. The big issue for patients apart from the lack of testing kits, hospital beds and especially respirators means that people are dying a slow death in agony.
Here is a link to the article. It is painful to read but if you are under any illusions as to the severity of the crisis I suggest you read it> Frontline Dr reveals How Coronavirus has unleashed terror in hospitals
Despite all this, countries like the UK and USA are still relying on people to self-isolate. In the UK the big step of closing pubs and restaurants only started on Friday night, but folks are still being “asked” to stay at home. In the USA it’s a similar situation in most states and I read that “Spring Break” has still gone ahead in Florida. The young obviously feel they are immune to this but are ignorant it can have on their own family members and communities as well as some of their own age group. Similarly in Australia, police had to close Bondi beach as people generally ignored the “advice.”
There is talk that today “Scotty from marketing” – the Aussie Prime Minister, is hosting a meeting to discuss closing down major cities. This is another clown of a world leader who was saying on Friday that he was still going to watch a rugby match after announcing all such events would be prohibited from Monday.
Boris Johnson feels this his “Winston Churchill moment” he is not, nor ever will be and Trump was telling people to go work if they felt ill a month ago as it was just a case of the flu. God help us all!
Here in Spain, the whole country was locked down a week ago. We are not allowed to leave the house other than to visit a local supermarket or chemist or take the dog for a short walk.
Its now day 7 and its seriously boring and frustrating, especially not being allowed to go for a walk in the fresh air, BUT at the moment it seems like the only way of giving a chance to slow or stop the spread. Spain and Italy were too slow to react, especially in the major cities of Madrid and Barcelona where the infection is at its highest, but here in the Canary Islands we only have a handful of cases thus far.
New York and London, on the other hand, are major “hot spots” and as of the time of writing, have not been locked down.
I cautioned the other week about not being in a rush to try “buy the dips” in the stock markets. Most folks will have been burned with that strategy and again, after an apparent rally on Friday, all the major bourses dropped once again.
Please register for this week’s Forex Mentor Pro Live Training on
Tuesday’ 24th March at 11:00 AM GMT (London Time)
Click on the following link to register now:
I have been asked by a new member, James, to explain Fibonacci and trend lines in more detail. If you have any other topics you would like us to discuss let me know in the comments box or help desk.
During the session, we show in real-time what we are looking to trade and are happy to analyse any setups you may have found.
A live training session with Pierre du Plessis & myself this week. We will assess fundamentals, M2 Earth & Sky & fundamentals for potential trades. Followed by a Q & A session.
After registering, you will receive a confirmation email containing information about joining the webinar.
If you miss it, you will find a recording here on the blog, later the same day.
The Forex Week Ahead
Despite the fact that trillions of $’s have been, or will be injected into economies around the world, the stock & forex market rout continues.
Prior to February, we had seen a pattern where the price was going to sleep for days on end and then overreacting to red flag news. That is no longer the case. As the data that is released is by definition historical ( a month is a long time at the moment) markets are generally ignoring it.
The worrying thing for those trying to trade forex is the general jitteriness and crazy spikes which will take out stops in a heartbeat. In recent days the Gbp/Aud & Gbp/Nzd again spiked 1100 pips in a day. The Aud spiked 220 down and 200 up on Thursday alone, taking out all the stops long and short along the way. The Aud Yen spiked a similar amount.
My Advice is to completely avoid the following pairs for similar reasons:
ALL Aud pairs and cross pairs. All Nzd pairs.
The Gbp/$, the low after the 2008 crash was 1.3486, it is currently at 1.1600 and looks like it might be heading to the 1985 low of 1.042.
There is an explanation here as to why it got so low AND how the USA, UK, France, Germany & Japan took steps to depreciate the value of the dollar.
It fell over 40% in the following 2 years: https://www.scotsman.com/news/politics/brexit/what-happened-1985-when-pound-was-last-so-low-1408647
As the article explains; The strength of the dollar meant overseas buyers reduced imported goods from the US as they were too expensive. American manufacturers were therefore hard-hit by the exchange rate, which was harming its ability to export.
Eventually, the US got together with France, West Germany, Japan and the UK and signed the Plaza Accord, which agreed to depreciate the value of the dollar. Central bankers sold more dollars in exchange for other currencies, bringing its value down 40% in just two years. The Euro/$ unless (seems highly unlikely) it gets back up near 1.1000 later in the week. Prior to all this Trump was berating the Fed as he doesn’t want a strong dollar, so there is a possibility a similar intervention could take place, so be careful!
One attractive option in the past might have been to hedge positions BUT the liquidity providers charged huge interest swaps on open positions last week (this depends on the model your broker uses). if its a direct ECN feed into the market the spreads are lower. If they are not running a B book (trading against their own clients), there will be a daily interest fee. Global Primes were horrendous last week. On the Gbp/aud for example on a long they were charging 3 times as much as normal. Therefore if your broker charges interest overnight, It’s important if you are hanging on to trades beyond the New York close that you are aware of the cost. Check your own broker every day, here are Global Primes current swaps: https://www.globalprime.com.au/trading/swaps-financing
Possible trades. My best advice is to not trade real money in current markets, the volatility and spikes means its like trading against a casino with a crooked dealer! Now, more than ever, if you are confined to your home and can’t work or are receiving a fraction of your salary, then its an ideal time to study forex and be prepared when things calm down. Being able to make extra money working from home is obviously more attractive as each day goes by.
Use this extra time to study. If you feel you must trade do it on a demo account but following your rules. If you ignore my advice then only trade small lot sizes and use bigger stops.
If you must trade then consider the following (explained in detail in the video)
Chf & $/Yen on a smallish pullback.
Later in the week if the Cad pulls back a long way its worth considering, similarly with gold, either trading it or buy the physical metal. I have previously used this site,where you can buy a tiny amount up to a bar or more:
In the USA here is another site. You will find a lot of education and Youtube videos by its owner, Mike Maloney who is Robert Kiyosaki’s “gold guy.”: https://goldsilver.com/
As ever, study before buying. There are costs of storage, insurance and transport and be especially careful buying gold coins. Some are marked up 20/30% because of their aesthetic value.
On Tuesday in the live session, I have been asked to explain Fibonacci and trend lines in more detail. If you have any other topics you would like us to discuss let me know in the comments box or help desk
New members, please note: If I am looking to take a trade long, for example, 1.5000, I place my order 10 pips above & 10 pips below for a short. This is because price often does not quite reach a major line and you need to allow for spreads.
We are NOT a “tipping service” our aim is to teach you how to trade for yourself.
For more up to the minute, updates do not forget to drop by the forum in Pierre’s corner.
Watch the video for more detailed explanations of this week’s detailed analysis and trade plan.
Click on the square button bottom right to watch in full-screen mode