Hi, investors around the world are obviously in full panic mode.
I was asked by a member last week where I suggest someone puts any spare cash at the moment. I am NOT a licensed financial adviser in any jurisdiction but in Tuesdays live session I will explain what I have been doing and offer some suggestions for folks to consider.
Clearly, the stock markets are down significantly and even Amazon has dropped over 40% from recent highs. Bitcoin is down more than 50% and other cryptos too. Gold and silver are still not moving higher. It is clearly a crazy world we are living in & the usual economic rules do not seem to apply.
I was expecting stocks & riskier assets to drop this year but in the autumn. The war in Ukraine has accelerated the process and the ongoing battle with inflation is not helping either. The repercussions of the Ukraine situation, even if the war stopped tomorrow, will still be felt around the world for food and fuel inflation for 12 months afterwards.
To have a once in a century, 2-year global pandemic to be followed by war and then the financial implications of government actions all in such a short timeframe is truly exceptional. The concern of course is when will at all end.
The good news is that as traders we can still be profitable no matter which direction prices are going BUT you have to pick your battles carefully. I showed in the webinar on the 4th of January my analysis for this year, which would be all about $ strength & the other major currencies weaknesses, especially the €uro. I got that spot on and at the moment I don’t see that changing for the foreseeable future UNLESS something completely unexpected comes along.
There will eventually come a time when the sentiment of traders changes. At the moment nobody seems to care that the US debt mountain is growing massively every single day and will never be repaid. However there will come a point when it does. A “day of reckoning” it may not be at first, but at least an acknowledgement that it can’t go on forever.
Here is the up to the second debt clock for the USA. It has gone up by millions of dollars in the time it has taken for me to write this article!
There is a further issue that the inflation and interest raises that the USA is exporting to poorer countries, which can in extreme situations lead to hyperinflation. As a result, I do still expect Bitcoin and some of the other cryptos to be tempting for more South American countries to consider adopting it as legal tender in the future!
The Forex Week Ahead
Watch the news like a hawk! Traders need to pay attention to monetary policy statements as well as a lot of speeches as I explain in the video. The top financial dudes will be giving their opinion on what is likely to happen next- they have no more idea than anyone else when you look at their collective track records. Inflation expert (NOT)! Powell is giving a speech on the subject on Tuesday, so pay attention even if you realise that most of it is nonsense.
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MAJORS
I explain in the video, that the majority of the majors are very tricky at the moment & I feel that there are better opportunities in some of the cross pairs. Remember I am looking for “A” grade trades from daily charts that I can place and then just walk away.
If you insist on trading the majors and are not willing to hope/wait for bigger pullbacks then I recommend that you focus on smaller timeframes- explained in the video.
The Chf Franc, hit parity with the USD last week. If that pair continues to rise then the €uro will probably continue on ITS way to 1:1 as they are highly correlated. I suspect there will be at least a temporary pullback on both, but hey I could be wrong.
EUR/USD: I said a couple of weeks ago “Broke a 5 year support area. Looks like its on its way to 1.000 both technically and fundamentally. Bias is only to short,” I was hoping for a pullback to 1.1000 which did not materialise and seems unlikely at the moment
The only way I would trade this if it doesn’t do the big pullback would be to go down to 4 hour or even 1 hour charts. I show in the video how 106.30 and 10.500 are areas to watch, but no forward orders for me.
USD/CHF: I would definitely NOT long in its current position. Parity is massive psychologically. Swing traders (not me) will be looking to short at the open. 0.9550, is the “A” grade long but seems very unlikely this week. Other areas to watch are 0.9760 and 0.9670
GBP/USD: I only want to short but its miles from anywhere at the moment. The “A” grade short will still be 1.3090 which seems unlikely now. Intraday levels to watch are 1.2400 and 1.26000. Better opportunities elsewhere
AUD/USD: Only looking to short at the moment and 0.7280 is the sweet spot. Late Monday is monetary policy news. Intraday 0.6970 to 0.6980 ae areas to watch. No forward orders ahead of the news!
NZD/USD: Brokedown. The “A” grade is back up at 0.6750. 0.6450 is an intraday area to look for clues.
Aud/NZD: Looks a better option BUT it overreacts to news so be careful. 1.0820 is the area to watch for a long OR if it breaks and closes below 0.0780 on a daily then I will consider a short.
USD/JPY: Same as last few weeks. The Japanese Government and banks have given up trying to intervene. Its probably going to struggle at 1.35 (see the video) not for me. Intraday 127.00 is of interest to long, and definitely 125.00- watch on a 4 hour chart.
USD/CAD: I have warned for months how this pair always struggles when it gets near 1.3000 and even though it pierced it last week, there is now a weekly reversal pin bar suggesting down not up this week. However, it has probably got a limited upside and there are a lot of emas below it. It is messy- see the video
CROSSES
Eur/Cad: Missed my entry by 20 pips last week, then dropped 300 🙁 I idid say it One of the best setups this week. I will short at 1.3780 for multiple reasons (see the video)
NZD/CHF: worked well a number of times in recent weeks. I will watch the same area, 0.6300 to 0.6330 to short it. If it fails then I will only long after news if the emas and trendlines clearly break and close on a daily candle later in the week.
EUR/GBP: It is messy now. Last week I made a couple of pips longing it but its on a knife edge now. One to watch at the open
AUD/NZD: 1.0830 for a long.
EUR/CAD: I want to short at 1.3760 & 1.3800 – half lot size at each point
AUD/CAD: I am looking to short at 0.9200 but long way off right now
YENS: Still too far away from anything in order to trade with the trend. However, I showed last time how you could go to 4 hour charts and quite a few worked. Not for me but see the video for my thinking.
As always, remember correlation!
We are NOT a “tipping service” our aim is to teach you how to trade for yourself.
Watch the video below for more detailed explanations of this week’s analysis and trade plan (click the 4 arrows bottom right to view full-screen:
Regards
Marc
