Forex Weekly Report 07-12-2019

Hello, my friends! If this is your first time here, welcome! If you don’t follow me on twitter yet, do it now, this way you will get updates on my trades and positions. You have no idea how I like to write to you! So let’s stops with the bla bla bla and let’s go to the business.

BIG MOVERS

This table shows financial instruments that had a 15% change in its non-commercial net position from one week to another, so things that are gaining momentum and should give us opportunities to trade with a direction in mind.

 

GBPUSD – LAST WEEK’S CALL Invalidation – BulliSH BIAS NOW

The bearish view on GBPUSD is no longer valid. Specs move to cut aggressively again their short positions. I have no clear COT signal GBPUSD now, but we must face reality and see that non-commercials still cutting shorts and betting on more UPSIDE to cable. My plan now is to buying pounds as it goes to breaking supply zones.

  • “Well, if you have a bullish bias why don’t you buy it right now? Why buy at 1.32 is better than at 1.31?”

The answer to these questions is pretty simple when you wait for a demand/supply zone to breakout you have better points to place your stop-loss, or in other words, it’s cheaper to know that you are wrong and with this, you can place big lots. I always risk 0.5% per trade, so if my stop-loss is 5 pips only I can place a bet 10x the size if my stop-loss was 50 pips, right? Patience pays!

So I have a plan for GBPUSD in the following weeks( if COT Data are still supportive).

Price Charts – 12 Hours

You must wait for the breakouts and the pullback of the price, this zig-zag is how markets works, you break and clean stop-loss orders above, move a little bit higher and stop shorts that entered betting the price will drop, then you go down again( this is when we enter), the shorts that were just stopped enter in a revenge trade and we have all elements to a move higher: fear and greed!

 

 

BIG SPECULATORS NET POSITIONS

Here we can see clearly the reason I changed my mind about bearish bias here. Big Speculators made the move just like I explained above, added shorts one week ago, just to make an even bigger bet to the long size, the trend becomes bullish again.

Also, you will realize in the second chart that the RSI sell signal is no longer valid, crossed bellow the trigger, putting pressure on shorts. I marked on the chart too where was the first bullish signal we had by cot data.

So, my friends, keep it simple. You don’t need fancy indicators or thousands of lines, just check for previous turning points and trade there! Wait it breaks and enters on the pullback!

  • “But Leo, the price broke the zone and I was not able to get in, because there was no pullback”

Patience, wait for another opportunity.

 

NZDUSD | NZDJPY – BULLISH BIAS

Some weeks ago I made a bullish call on NZDUSD, this is working pretty well and this week markets gave more incentive to keep with the positive outlook on NZDUSD. Do you remember this bearish call on EURNZD?  Here I discussed how a single dairy company is responsible for some 25% of New Zealand’s exports? It’s owned cooperatively by 10,000 farmers. With that in mind, we must track for some kind of commodity price index measure for NZ, fortunately, we have that already compiled and with monthly releases. It’s the ANZ Commodity Price Index.

The ANZ Commodity Price Index measures the change in the selling price of exported commodities. Commodities exports comprise a major part of New Zealand’s economy. The data also has an effect on the country’s trade balance. The report is released monthly by ANZ, one of New Zealand’s leading banking and financial services firms.

A higher than expected reading should be taken as positive/bullish for the NZD, while a lower than expected reading should be taken as negative/bearish for the NZD.

ANZ Commodity Price Index Chart

Non-Commercials Net positions

Big speculators are back cutting their shorts and this week they made it aggressively, so this put us back in NZD Long side. You all will see in the second chart how stochastic on top of big specs net positions entered in an overbought zone and you will also see how the indicator can remain in this zone for months, another strong indication that the bullish trend is here to stay and we must join it!

Price Charts – 12 Hours

NZDUSD has no obstacles, the path is completely open to 0.68, where we have the next supply zone, and it’s going exactly to what we planned weeks ago, but don’t worry it’s possible to enter the trade and made a good profit from it as long data still supportive, so you must buy dips and breakouts and also pay attention to 0.64500 level, this breaks market structure and will force us to stop our positions.

So with that in mind, you must try to:

  1. buy the 0.653-0.6550 zone on Monday;
  2. if it does not work, open a market position on Tuesday and place your stop below 0.645;
  3. once price breaks 0.66, wait for the pullback and move stops to Monday low

This is one trade that you must have, ok!?

On the second chart, we have NZDJPY that is a little bit far from the entry point, but this is the one that I will take, also the carry(swaps) in this case is positive, so we gain both sides, NZD appreciation, and interests.

 

NZDUSD

NZDJPY

 

USDJPY – BULLISH BIAS

This is a similar case of NZDUSD, is almost a follow-up of a previous call we made from USDJPY Bullish, with some improvements to it, I will list it for you.

  1. Big Speculators still adding JPY shorts(USDJPY Longs)
  2. Nonfarm payrolls increased by 266k in November, clearly overperforming consensus(USD Positive)
  3. Japan manufacturers turn pessimistic for the first time since 2013
  4. Japan faces a wall of debt that can only be addressed by printing more money and debasing its currency.

So, friends, it’s clear the case that we must see to short JPY and doing it against USD is pretty good because JPY has a negative interest while USD has a positive, this way we get super positive swaps while holding a USDJPY Long.

Big speculators net positions

 

Price charts – 12 hours

With USDJPY I will be more permissive regarding stop-loss, the reason is these positions are small and the purpose of these positions is to profit with swaps.

I already have a position and I have more orders to buy at:

  1. 108.257
  2. 108.009

But I also have a plan to enter with a bigger position at the break of the 110 zone, with this we can be sure that markets are really looking for higher USDJPY and we also will have a cheaper stop-loss, giving us the opportunity to trade with bigger lots. The next target is 112.500 Region, where we can add and trail stops.

 

That’s it my friends! I hope this can add value to you in some way. If you have any kind of doubts or questions please comment here, I am looking forward to replying to you.

“Hey Leo wait, I want to see your analysis for more pairs”

Very well my friend, join me in my chatroom.

Have a great weekend you all!

My best regards,

Leo Hermoso

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