The mother of all data points!!!!!!!

Trading the US CPI data

Once again we have a data point being built up into the biggest thing ever since the last biggest thing ever. Is it important? Of course but is it a game changer? I doubt it.

What we’re trading regarding the Fed right now is when and how many cuts there will be. The market is pretty much at 2 cuts, some Fed heads are at 2 cuts and many are saying there’s no rush to cut, so we’re leaning to the less dovish side. That means a hotter, or on the money inflation print today will see the timeline pushed out for cuts, and maybe a reduction (in bps terms) for total cuts this year.

FFR futures are pointing to 60bps of cuts this year, so 10bps over 2 cuts. A hotter number might see that coming down to 50bbps. A more hawkish move would be sub 50bps. I think the risk from this point (on a hotter number) is that we again start to get some of the market talking about hikes again. IIRC there were some small bets being made a couple of months ago so we may see a pick up in that. We know the market likes to go from one extreme to the other. The question will be whether it does that today or not. If it does, then we should expect USD to maybe shift to small dip buying until the next big Fed speaker like Williams (tomorrow), or Uncle Powell, next sits down to tell us what’s what.

I don’t think much changes if the number misses exps but stays above 3%. For me, 3% is the pivot line for the Fed. Another 3% or + print today will make it 10 months of not going below 3%, and that’s a problem IMO. So, while the initial reaction to a softer print might be to sell USD, I don’t think that will last if it keeps a 3 handle. Oh, and don’t get sucked into the “PCE is more important” line of thinking. They watch this just as closely.

Overall, I don’t think we’re going to be seeing USD breaking any new ground today in most pairs. Yes, we might stretch some legs in pairs like AUDUSD but perhaps only to wider range edges like 0.6800 on a softer number, though maybe not in a straight line. Going into today, we know USD has been on the weaker side of things so note that’s the way we’re leaning, and know what it might take to change or keep that pattern.

One pair that’s still in its own world is USDJPY, so as we’re playing the 152 game still, I wouldn’t trust trading that one on the data. There’s plenty of other USD pairs that don’t have such high risk around it.

I’d suggest not getting sucked into the all the ‘showbiz’ around this release. Don’t think we’re going to get an instant 200-300 pip move when we haven’t managed that over all the other inflation prints, PCE prints, NFP prints, FOMCs etc etc. Keep your expectations realistic. Trade your levels, not your hopes and do your homework going into the data on where you would be happy to trade. If you catch the right move, think about taking partials just in case moves fade and reverse (See USDCAD recently as an example). That way you can put money in the bank if you’re right, while managing the rest, and protecting the profit made if it turns against you.

Trade safe everyone.

usdmxn

Strong breakdown on USDMXN; More to Come After Rally

USDMXN is in a strong breakdown for the last few months if not years, with recent extensions down to 16.30 after a nice breakdown through the trendline support.

Kick off your trading in Q2 with a free prize

The Forex Analytix US Non-farm payrolls competition is up and running

We’re a quarter of the way through 2024 already and time seems to be flying by. We’re ready to hand out 3 free 1 month passes to the Forex Analytix platform and chatroom, a veritable hive of excellent traders. All you have to do is pick a number for Friday’s NFP and 3 lucky winners closest to the number will win a free month.

The rules:

  • You pick a number as your guess for the Friday NFP number – 1 guess per person
  • First person who picks a number gets it (you can pick another number if your 1st guess is taken)
  • Closest to the number wins. In the case of a draw or split, the person who entered first by time gets it
  • Place your guesses in the replies on the tweet of this post only (@Forexanalytix)
  • Entries in by 12.29:59 GMT Friday

Want to know what fantastic services await on our platform??

  • Chatroom with news, research (inc Spanish speaking chatroom), and live trading room, where over 100+ intraday traders chat each trading session.
  • Quick analysis on 30 instruments.
  • Breaking market news and insight.
  • Super-fast live data releases
  • Daily key interbank FX order levels and updates
  • Full daily Forex option expiries and barrier report
  • Commentary and recent charts, formations and setups.
  • PIP (Pattern In Play). Where technical patterns identify potential moves.
  • Live market squawk integration
  • Top financial research
  • Web based platform with desktop notifications
  • App for mobile devices and tablets which offer push notifications when new analysis is posted or when key levels are broken.
  • Live (private) webinars exclusively for Forex Analytix members throughout the trading day.
  • Live charting
  • Money Management tool

Remember, even if you don’t win, you can still benefit from access to the platform via an exclusive ForexFlow 20% discount using code: FFL20 here. This discount is for the life of your subscription, not just for a couple of months.

If you miss out on the prize, you can also get free access to the Forex Analytix Platform via our Traders Funding Program. You can check out the details here.

 

We wish you all the luck.

silver

Silver Pulls Back, Support at $24

Silver has been trading sideways since 2021, indicating a corrective move due to its choppy and overlapping price action.

The Forex Analytix Easter Trading Guide

Know the dos and do not dos of Easter trading

We’ve all been talking at various moments about what can happen at this time of year so I thought I’d compile it all together into a rough guide.

In my many years, the majority of these periods are quiet in FX but there have been some outlier moments so it’s good to know what to look for and how to react.

  1. Usually things will be quiet and nothing will happen due to a lack of liquidity.
  2. That lower liquidity can move markets more sharply if there’s a big headline or data point surprise (We have PCE and Powell this year).
  3. If you see any sort of funky, outside of normal ranges type moves you can look to do one of a few things. Ignore it if you don’t understand it. Counter trade it if it’s moved the price to a big range edge, or level that hasn’t traded for a long while.
  4. If you are in a trade and see a sudden big move go your way, think about taking a ton of profit. Don’t look a gift horse in the mouth. Conversely, if you are unfortunate to be on the wrong side of such a move, that’s just trader’s luck. Don’t get angry and don’t compound the problem by then revenge trading. If you want to get back in, fine but think and plan it properly.
  5. On occasion I’ve not seen sharp moves but I have seen grinding moves that have also taken a price quite far. They’re a bit more difficult to assess and trade because they might carve through level after level and leave you wondering what’s going on.
  6. If you see a big move, whatever it’s sharp or grinding, judge it based on what we know about the fundamentals and central bank’s current positions. A 2 pip move in PCE should not see EURUSD trading at 1.10 or 1.05. Powell should not move the needle that much, so the same applies. Judge the move to the news as to whether the market reaction is too much, too little, or just right.
  7. Don’t get sucked into a move thinking it’s something when it might just revert when markets are back fully. Don’t chase a trade that you could get stuck in it for hours in a market going nowhere.
  8. Don’t place as much faith in your tech levels. The main reason tech levels work is purely through weight of numbers watching and trading them. The less people are doing that, the less money is being traded on them, and that’s a big part of the lower liquidity picture.
  9. You don’t have to trade. We’re a quarter of 2024 down, and plenty more trading to be done. Take a break, have a little rest, get refreshed. Being right in mind and body is more important than trying to squeeze out a few extra pips here and there.
  10. I have nothing else to add but didn’t want to finish on an odd number. So, happy holidays and don’t eat too much chocolate 😉

 

The risks and rewards of trading 152 in USDJPY

Big level. Big moment. Big reactions. Know your trading risk.

Given the price action and market expectations in the last few days leading up to the BOJ, it’s no surprise to see us up at 152 again. As we were saying at Forex Analytix a few weeks before, this was heading towards a ‘buy rumour, sell fact trade’, and probably the most obvious one we’ll get this year.

The weekly chart of USDJPY

USDJPY Weekly chart

So, what do we do now we are again at 152?

  1. It should be noted that we’ve never traded 152 in any of the attempts, so the first thing that sticks out is that there’s likely barriers there.
  2. The MOF/BOJ have twice intervened and jawboned in and around the last two moves there. Doing so once is fine. Twice raises an eyebrow. A third time would ring bells. If the FOMC causes a break that forces Japan to intervene, that would be a clear indication that they do actually have a pain level for USDJPY, despite saying they don’t focus on any particular level.
  3. Whether 152 is a level for them, or not, doesn’t change the fact that the risk of intervention following the BOJ meeting is now very high.
  4. Three big tests over a large period of time means there’s going to be some very chunky stops sitting just above, so a break will likely be volatile. That will likely mean we go to 153 in a flash, and further after. But, that again increases the risk of intervention.
  5. It’s not all about USDJPY (for intervention purposes). The BOJ looks at JPY as a whole and they look at the JPY NEER, which despite us being at 152 again in UJ, is higher at 80.25 (as of yesterday), than it was (low-sub 79.00’s) when we’ve been here before. That maybe suggests JPY isn’t as weak as before, and thus USDJPY might be allowed to go above 152.
  6. The Fed. Two sides to a pair remember so what the Fed does will affect USD above all else. In that sense, USDJPY moving through or holding 152 will have to be monitored in context with other JPY pairs. USDJPY going up while others like EURJPY, GBPJPY, AUDJPY stay steady or head lower, reduces the intervention risk because it won’t therefore be a yen move. That would be a green light for a break. Conversely, a non-hawkish Fed might mark 152 as yet another top as part of a broad USD sell off.
  7. Whatever happens over the Fed, we will then switch to the JPY side into the Asia session and they’ve not been shy in smashing JPY. The risk is for dip buyers to pile into USDJPY again to push for a 152 break, or come in to support a break.

    As you can see, there’s plenty of reasons why 152 might break or hold and as traders we need to know that there is now much higher risk with trading it than perhaps even before the BOJ meeting. We could be looking at a 200-300 pip move either way just over the next few hours. By comparison, we might be lucky to get a 100 pip range in something like EURUSD, so you need to be more of a risk manager if you want to trade JPY right now.

No Fools Please – It’s time for the US NFP competition

Get your thinking caps on and enter the Forex Analytix US jobs report competition

Time to get a wriggle on and put all your well formed analysis towards something more productive than guessing which way the next 5 pip move in EURUSD is going to go over the next 8 hours 😂

It’s competition time again where three of you lucky souls will win a free month on the Forex Analytix platform. You’ll be able to join the best trading community in the universe and see how some of our experts try and guess the next 5 pip move in EURUSD over the next 8 hours 😂

But in all seriousness, even when there’s low volatility and markets seem to be snoozing, there’s always many in our room seeing a trade.

Anyway, you should know the rules by now but if not, here’s a refresher.

The rules:

  • You pick a number as your guess for the Friday NFP number – 1 guess per person
  • First person who picks a number gets it (you can pick another number if your 1st guess is taken)
  • Closest to the number wins. In the case of a draw or split, the person who entered first by time gets it
  • Place your guesses in the replies on the tweet of this post only (@Forexanalytix)
  • Entries in by 12.29:59 GMT Friday

Want to know what fantastic services await on our platform??

  • Chatroom with news, research (inc Spanish speaking chatroom), and live trading room, where over 100+ intraday traders chat each trading session.
  • Quick analysis on 30 instruments.
  • Breaking market news and insight.
  • Super-fast live data releases
  • Daily key interbank FX order levels and updates
  • Full daily Forex option expiries and barrier report
  • Commentary and recent charts, formations and setups.
  • PIP (Pattern In Play). Where technical patterns identify potential moves.
  • Live market squawk integration
  • Top financial research
  • Web based platform with desktop notifications
  • App for mobile devices and tablets which offer push notifications when new analysis is posted or when key levels are broken.
  • Live (private) webinars exclusively for Forex Analytix members throughout the trading day.
  • Live charting
  • Money Management tool

Remember, even if you don’t win, you can still benefit from access to the platform via an exclusive ForexFlow 20% discount using code: FFL20 here. This discount is for the life of your subscription, not just for a couple of months.

If you miss out on the prize, you can also get free access to the Forex Analytix Platform via our Traders Funding Program. You can check out the details here.

 

We wish you all the luck.