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GreenForexTrading.com
ForeX forX-tra Gr€€n
Hi everyone,
In this e-mail I am going to give you my view on the market for the month of September and the week ahead. The Live Trading Room is still closed for the time being as the upgrades with live charting has not panned out as expected so far and so swing trades will be emphasized for the time being. Given current market conditions as explained below this is probable best. I have watched the markets somewhat during the summer to see if any trades could be put on and have found that only some narrow band/trading range trades have worked with a fair amount of blown stops in a heavy news driven environment coupled with thin vacation volume and several doses of market intervention thrown in to even blow out hard stops. Not an easy summer if you traded it at all and sometimes it best not to trade. Hopefully, with holidays just about over in western currencies some defined moves can now begin.
SEPTEMBER 2011 FORECAST: THE US DOLLAR LOOKS VULNERABLE ...BUT THEN AGAIN SO DOES THE EURO.
USDX - The US Dollar appears vulnerable from two fronts. Since mid-2010, the US Dollar has been under siege due to the heavy debt monetization/US Dollar “printing” (if you can call it that with Trillions being created out of thin air electronically) of US Treasury and Mortgage Bonds, during a hyper monetary inflation exercise of grand debasement. The latest threat to the US dollar is a decline from another US recession that will likely result in another round of misguided money printing stimulus initiatives that will be ineffective. On September 20-21 we have the next FOMC meeting, which will likely announce more policies that will debase the dollar. Regardless of the next US move, or no move, the US Dollar is extremely vulnerable. The only factor keeping it up is the ongoing ruin in Europe which looks like will give the US Dollar some life support for the time being. The simple Moving Average is set for a crossover, an event noticed by thousands of commodity and FOREX traders here at http://www.stockcharts.com/charts/gallery.html?$USD. All attempted solutions to save the banks, perpetuate their propped insolvent structure, waste new money, debase the currency further, and require 0% rates to continue look to create the perfect currency crises. The deep distortions continue to rip apart the nation. None of the current steps taken are sincere legitimate attempts to remedy the system. The countless captains of state have no vested interest in remedy. It is as simple as that. Just recently the Standard & Poors head was replaced by a Citigroup vice president. What a farce as deck seats on the USS Titanic are merely rearranged. Let’s face it...this suckers going down, just not yet. Looks like the Euro will sink first in the first half of this month. Note the trades below.
EURO - Bank funding costs are rising, liquidity is being choked off, and interbank lending has stalled. A full-blown crisis can still be averted, but leaders will have to knuckle down and resolve the political issues fast...so I guess a crisis will not be averted after all. So I expect the 17-member monetary union will fracture and the euro will be kaput. We are not at the panic-phase yet, but we should be as the situation is steadily deteriorating. As the run on the money markets continues, more banks have to go "cup in hand" to the ECB seeking loans to stay afloat. At the same time, ECB chief Jean-Claude Trichet will have to step up his sovereign debt purchasing program to prop up plunging bond prices to help not only the insolvent Greece (which be all intents and purposes has defaulted as no one can honestly expect them to continually roll over their short term 2-year maturity debt that stands in excess of 40% per annum) Italy, Spain, Portugal, Ireland and any other sovereign debtor to stay upright. This is a loan shark interest rate, but it is not the Mafia that is acting as the lender of last resort, it is the ECB backed by Germany and France who are also weakening under the stress. Someone's going to go belly-up and take down a good portion of the EU financial system along with them. In the near-term all eyes are going to be focused on the September 7th decision by the German constitutional court. That’s the day they are supposed to give their opinion on the legality of the bailouts. Regardless of what the German court decides, everyone should remain focused on the key issue, namely the ECB has been politicized and the Euro as a consequence has been debased by all of the poor quality sovereign debt the ECB has been forced to purchase. I do not see anything positive coming from Germany that would alter the start of the collapse of the Euro as soon as the mid September German parliamentary elections are through. The German people are angry with bailouts and Merkel’s position is tenuous at best with 76% of Germans recently polled wanting out of the Eurozone. These events taken together should send the EUR/USD significantly lower as we move towards the end of the September. This move looks to have already started from the long tedious trading band described and suffered through this summer as seen here at http://www.stockcharts.com/charts/gallery.html?$XEU.
In summary, while the U.S. Dollar is no longer perceived as a safe haven and those that piled in looking for safety that will find themselves flat-footed and scrambling for the “door” to unwind those positions when a key level of 73.0 gives way for good. But first I look for and expect a minor USDX uptrend to about the 77-78 area that should reverse after the US FOMC meeting on September 21st and then the USDX downtrend should continue if not accelerate into the month of October. Remember, longer term, the US Dollar needs to complete a decisive breakdown from a symmetrical pennant below 73.5 and with the USDX now at 74.8 and an eventual pattern projected TARGET of 67 (coincides with a PFF SELL target of 64).
The position trade for September is to SELL the EUR/USD in the 1.440 area looking for targets of 1.380 and 1.350 to exit with small position sizes with very loose hard stops around 1.457 and exit this trade prior to the FOMC meeting (Sept. 21) regardless if the target has been hit or if not stopped out.
WEEK AHEAD: The Dollar near 74.8 on the USDX with an expected move to the 200-day moving average now possible with through-over just above the 200-DMA at 78 to shake newer longs before reversing. The USDX is on fresh new daily and weekly PPO BUY signals after a long summer consolidation. Enter to go short weak U.S. Dollar denominated pairs (like the EUR and GBP), as seen in the USD daily and weekly chart here http://www.stockcharts.com/charts/gallery.html?$USD.
EUR is the inverse of the USDX and with the backdrop of a PPO that now near triggering a daily and weekly SELL signals. Now look for resistance levels to enter and go short EUR/USD with support at 1.42 and 1.40 and resistance at 1.455 as seen in the chart here, http://www.stockcharts.com/charts/gallery.html?$XEU. Place your trades accordingly. All charts courtesy of www.stockcharts.com.
GBP - Could be bought here at 162 for a retrace to 165 with a stop just under 161.3 at the 200DMA. Cable is a neutral play longer term, as seen here, http://www.stockcharts.com/charts/gallery.html?$XBP.
JPY - Looks to consolidate here but the next move is unclear longer term and shorter term could sell off some giving the USD/JPY pair a short term upside back to 80.0 as seen on the chart given here http://www.stockcharts.com/charts/gallery.html?$XJY.
AUD - Recommendation is to buy here in the 1.05-1.06 area longer term to possible to 1.13 - 1.15 on a safe-haven bid as the uptrend looks to continue as seen on the chart given here http://www.stockcharts.com/charts/gallery.html?$XAD.
CHF - The swissie, a new addition due to increased volatility is in a solid uptrend and could be bought on any pullback to the 122.5 to 125 area with loose stops below 121 as in the case of the yen and more failed interventions is to be looked out for as seen here http://stockcharts.com/freecharts/gallery.html?$XSF.
GOLD & SILVER - Finally, a note on the ultimate currencies as I have been often asked if and how to trade these. While I believe in these trying times that a physical store of value should be maintained should the unthinkable happen as insurance the paper gold and silver markets are so heavily malipulated that I generally stay clear of them but should you feel the need to trade them as the moves can be very dramatic, I recommend this site at http://www.tfmetalsreport.com as I have seen no one else be as prescient in his calls as the Turd.
This week is rate policy and report heavy spread throughout the week. They are:
1. Mon. Sept. 5, 2011 - (4:30am EST) GBP UK Services PMI and US Labor Day Bank Holiday
2. Tues. Sept. 6, 2011 - (12:30am EST) AUD Cash Rate Decision and RBA Rate Statement; (10:00am EST) US ISM Non-Manufacturing PMI and (9:30pm EST) AUD GDP.
3. Wed. Sept. 7, 2011 - (4:30am EST) GBP UK Manufacturing Production; and (9:00am EST) CAD Overnight Rate and BOC Rate Statement; (10:00am EST) CAD Ivey PMI and German Court Decision anytime.
4. Thurs. Sept. 8, 2011 - (7:00am EST) GBP UK Official Bank Rate and MPC Rate Statement; (7:45 to 8:30am EST) EUR Minimum Bid Rate and ECB Press Conference; (8:30am EST) US Unemployment Claims; and (10:00pm EST) CNY CPI.
5. Fri. Sept. 9, 2011 - (4:30am) GBP UK PPI; and (7:00am EST) CAD Employment Change and Unemployment Rate.
Banks facilitate the majority of foreign exchange volume. When they are closed the market is less liquid and this can lead to both abnormally low and abnormally high volatility and chop...so...There is no swing trade for today’s Asian-London-U.S. session due to US Bank Holiday. Have a well deserved Labor Day Holiday and rest.
That's it for this week. Any changes to outlook for the month or next week will be covered in the next weekly letter. I typically trade in the Live Forex Trading Room between 1am-6am Eastern Time and hope to do so shortly hosting my regular 3-4 hour session and assessing and exploiting PIP opportunities as they arise shortly when the Live Trading Room is completed.
Enjoy trading and good luck everyone!
Mr. Green
Risk Warning! Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. Past performance is not indicative of future results. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts. All information posted on this website is of our opinion and the opinion of our visitors, and may not reflect current situations and occurrences. Please, use your own good judgment and seek advice from a qualified consultant, before believing and accepting and acting upon any information posted here or on this website.
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