Friend of the Trend

The best chance you have to be successful in forex is to follow the trend and when I say trend, I dont mean what the charts are telling you but rather why is the chart going down down down example the EURUSD , today one light comment from an ECB official saying low price of Euro is not completely unwelcome, so if ECB is not worried why should you be worried about a reversal when you havent heard any tangible concrete reason why the Euro should stop falling or go higher in the long run. believe me your best bet is to continue shorting until the main drivers of the market turn it around.

This journal is simple to document the journey of my friendship with the trend in the forex market, will he be a good friend or bad one to ruin my trading.

UPDATED
HOW WE TRADE

Now we have UK heading towards an election that has been described as the most unpredictable election in ages, well the pound is surely going to take some push directionally based on this FACT, remember UK election coming is a FACT not a rumor , when technically we see that GBPUSD is in a downtrend and UK has this unpredictable election oncoming, we know our friendship with the trend should be tighter at this point , why on else should we buy, we may only consider a reversal of the trend when another driver shows itself for example the BOE raises interest rates.

Do you have any thoughts on the Yen pairs?

I would stick to two yen pairs the USDJPY and EURJPY , looking at the chart I just posted I would think continuous buying of the USDJPY on dips and selling the EURJPY on rallies is the trendy way to go at least for now and in the near future.

longer outlooks are not my strong point ,but you make perfect sense as simple as it sounds .

ill follow along

Yes a longer outlook but we do not hold positions for long but rather prefer keeping any particular position not more than 5 days with a defined stop loss because you never know when the trend could reverse but only after its reversion will you identify that its time to loosen you friendship with the trend and see if you can find a new friend(trend) using the information just available to you. That is how you can survive as a retail trader.

I close and open a trade everyday simply in the direction of the fundamental trend.

The Riksbank, which in 2008 awarded Krugman the Nobel economics prize, is now in full reversal. Last month, it cut its benchmark repo rate below zero for the first time and started buying government bonds to drive down longer yields. It said it’s ready to do more if needed to bring up inflation, including currency-market interventions.

@bloombergBusiness

Now look at the 4hr chart of the USDSEK, I wouldnt trade this pair because of spread but if you had a large account what would you think the chances of you getting a profitable buy trade from the blue area would be? I would say more than 50%, the US is expected to raise rates while the riksbank has already lowered rates, rates moves currencies massively.

As per the data released by the Commodity Futures Trading Commission (CFTC), the speculators decreased their gold bullish bets last week for a sixth consecutive week.
The total non-commercial futures contracts of Gold stood at +81,892 contracts in the data reported through March 10th. The weekly fall of 33,928 contracts was due to a decline in the weekly bullish positions by -8,740 contracts combined with the gain in the weekly bearish positions by 25,188 contracts.
Meanwhile, during the reporting time-period - March 3rd to March 10th – Gold declined from USD 1204.40/Oz to USD 1160.10/Oz levels.

News Source: FX Street.

Now on Wednessday 18th March the FEDS will speak to us and try to show us direction give us some confidence to maintain our strong USD bias or look out for more information before we take huge leaps

Analysts at UOB Group remarked the relevance of this week’s FOMC meeting (Wednesday). “Essentially, the markets are expecting FOMC Chair Janet Yellen to remove the Fed’s pledge to be “patient” on raising interest rates within the statement but the crux is whether the statement is crafted well enough to allay market concerns about impending rate hikes”.

“Yellen needs to convey the message to have the flexibility to tighten when conditions are ripe in line with her efforts to shift away from calendar-based guidance, and to be data-dependent but that it is not happening in the next meeting in April.She may also address the Fed’s view on the recent US dollar strength”.
News Source: FX Street.

Basically these are the things that tend to determine the trends of currency pairs over the longer-term.

Inflation
Deflation
Debt destruction/ Deleveraging
Central Banks
Economic performance

GERMAN ZEW Economic Sentiments to be released in few minutes lets see what the release does to the triangle formed on EURUSD 1HR Chart, it may determine how tight my friendship with the current downtrend will be

I think the EURO will break that traingle based on the good Eurozone sentiment even though German ZEW didnt meet expectations, may not support buying the EURO against the USD in any case, the EURO is rallying against the pounds because of political uncertainty.


" The Euro to Pound Sterling (EUR/GBP) exchange rate strengthened to its highest level in a week on Tuesday as Investor worries over the UK general election weighed heavily on the British currency.

The Euro to Pound Sterling (EUR/GBP) exchange rate climbed to a session high of 0.7172
A survey carried out by Bloomberg showed that 48% of economists believe that political uncertainty will prove to be the biggest danger to the UK’s economic recovery. The number rose from the 43% figure recorded last month.

Who will win the election remains unclear with polls suggesting that neither the Labour nor Conservative Parties will win a majority. During the last election the global financial crisis was at its peak and caused the Tories and Lib Dems to form a coalition in just six days, this time however with the economy performing well analysts are forecasting that negotiations this time around could take weeks.

UK Independence Party (UKIP), which could hold the balance of power if the Lib Dems are wiped out, has said that it would be willing to back a minority Conservative government if it promises to hold an in/out referendum on European Union membership this year.
Interestingly Prime Minister David Cameron did not rule out the possibility of holding such a vote this year, creating speculation that the PM could be open to a deal with UKIP."


I think we have a slightly good opportunity to join again the GBPUSD downtrend pending the FED minutes on Wednesday( maybe for a 100 pips), since our friendship with the trend would not allow us to buy EURGBP just yet,

We would like to see a close below that green line

Didnt like the indecisive candles that broke the green line @ the GBPUSD Chart will hold on with that short trade till after UK high impact news tomorrow.

Entered short EURAUD, trend friendly as usual and potential 200 pips trade, trade will be invalidated and reaccessed upon upward break of blue trendline

Didnt enter the GBPUSD trade yesterday because of some indecisive candles and wanted to know if unemployment rate in UK will tick up or down in the midst of the prevailing political uncertainty, most importantly FOMC today amid the importance of the word PATIENT/PATIENCE in the statement. Its better to stay out of the market during such events because it is prone to create shocks in the market.

We can look forward to a retracement to the blue line , after the FOMC statement it will be a better time to play the short GPDUSD trade.

Crazy things do happen on FOMC days, stopped out for 100 pips on EURAUD short , cable chart is very compelling, 500 pips move? wow really though provoking if you ask me. I dont think I would keep position open during FOMC statement releases henceforth.

Looking forward to a very active week, last week was very busy with none trading activities hope to resume full trading with the trend and post calls as I enter trades this week.

Bad Luck for you, I was profiting from your loss that day . Made 150pips