Updates

Weekly outlook for week commencing Monday 11th January 2016

After the disasters of the last few days very few people are probably going to read this, however in being true to myself I have to persist and go on with the journey. After all, I would lose all respect for myself if I did not try again just because of one (all be it massive) failure.

I do not expect risk aversion to be as dominant this week as the previous week due to the PBOC ceasing to weaken the yuan. While they did this four days in a row last week, the fifth day they strengthened it and are unlikely to reverse that action given the prior disaster they released on the markets. In addition, I strongly suspect that the suspension of their circuit breaker gives them the chance to intervene in their markets should things crash. They have done this before, and I do not think it to be highly unlikely that they should not do so again by using some of the $3 trillion they hold in reserve. While there still exists risk to the downside until and possibly beyond their GDP release on the 19th, I feel that the possibility of an upside outweighs this.

There has been one significant central bank development over the weekend: SNB chairman spoke about the CHF being overvalued and the central banks willingness to intervene should the need arise. In addition he made a comment that it is not possible to determine how long the deposit rate will remain negative. These are quite bearish comments for the CHF. Unless there is another bout of overwhelming risk aversion next week, the CHF should lose ground against the other majors. One possible trade idea would be to buy USDCHF since:

USD to be supported by:

  • Phenomenal Employment data.
  • Market expectations from FED.
  • Lacker, Bullard  (both hawks) speaking.
  • FOMC becoming more hawkish (changing voting members, which the market will take into consideration)

CHF to be hindered by:

  • Weakening Euro due to expected increase in stimulus and expected contraction in industrial production, later this week.
  • Expectations of divergent monetary policy, after comments by Jordan from SNB on willingness to intervene.

Technically, the pair is near its 30 day moving average and I cannot see it dropping much lower. I would take the strategy of going long on this pair with a target of 1.03, SL of 0.9748 and Move SL into green when given the chance to avoid recoils in case oil or equities crash to even further lows.

A second opportunity I see is the AUDUSD, and the opportunity to go short on it. Because:

USD supported:

  • Same reasons as above

AUD weighted by:

  • Commodity prices falling.
  • Expected further cutting from RBA.
  • Unemployment expected to increase

Please not though, the last 3 estimates by the market on the employment data have been GREATLY wrong and the best way to play this one will either be a trade with an iron tight SL, or simply taking a PUT option out on the pair.

I believe that it is very possible that the USDJPY has a limited downside at this point as it has already gained a lot of ground and the strong Yen hurts the Japanese Economy (which is already underperfoming as explained several times over the last few days). It is very likely that this pair begins to recover this week as the markets stop panicking and begin to process the data that supports the FED being able to raise rates several times this year. It is also likely that this strong JPY will make the BOJ do more to lossen monetary policy and they NEED it to be weaker so that they can export more. It is vital to their recovery.

With regards to the GBP, we have more bad news here im afraid. After Prime Minister Cameron came out today and said that he will not resign even if they lose the EU referendum. Effectively he has confessed to the markets that the British people voting for a BREXIT is a strong possibility and this will instill panic in the markets tomorrow. I think we have not seen the bottom of the GBPUSD and this does not bode well for our positions of GBPJPY and GBPCHF. In addition, the BOE minutes this week are likely to highlight risks to the UK economy from China and the continued collapse in equities.

Therefore this week, we will try to profit from out USDJPY and USDCHF buys and try to target new trades while we wait for the UK economy to show signs of life. This is how I feel the best way to handle things at the moment is,

Regards and Good luck to anyone still reading,

Mohammed

35 Comments

  1. Hi Mo,

    Some of us are still here and reading your valuable insights, the volatile markets have affected a lot of traders. Keep updating and doing your thing. We might not get rich next week but valuable lessons are being learnt.

  2. Hey Mo,

    Firstly, best wishes from Italy!
    Unfortunately, my time on Etoro has been nothing but negative in terms of money loss and trolls…until I copied you!! Although I only copied in late November which means I’m also deep in the red after investing a lot into you, you are by far the best trader I have seen!! Your honesty and integrity is first class. In the last couple of months I have learnt more from you than in the last 2 years.
    Our situation isn’t great but I invested more knowing you are doing everything you can to reverse this period that nobody could foresee.

    I’m very grateful for the 2 month(and still counting!) e-relationship!

    The only thing that could make me respect you more is if you dropped Liverpool for MUFC!

    Looking for a good week!
    All the best to our community!

  3. Hi Mohammed,
    At first I was absolutely livid with you after my account got blown out and I lost 94% of my investment by following you, so I left it a few days and now I have to thank you for teaching me a painfull lesson, 1 Dont put all of your eggs in one basket.
    2 Dont take one persons interpretation of fundamentals (escpecialy if they are consistently wrong).
    3 How and where I invest money is MY decision so I have to take full responsability for it.
    I will stay a member of your forum and look forward to your thoughts, but I will however be comparing them with other sources as well as trying to develope my own, in the mean time I have $60 left in my account so I am going to use my practice account until I am more certain of my own abilities.
    Because of my short length of trading I know I cannot comment expertly on your recent performance but my gut instinct is telling me that because of the crazy influences from things like oil and the far east, fundamentals that worked well in previous times may have to be re-thought in current months until some degree if ever is restored, I may be talking out of my arse but after losing a few thousand with you I am sure you wouldnt mind me having an opinion.
    Get your head back in gear and get back in the green because at the end of the day you sound like a decent bloke and if I have lost a small amount your loss must be far greater.
    Regards
    Steven

  4. Hi Mohammed,
    Still here, still reading.
    Thank you as always for your update.
    Have a nice day and wish you a good week.

  5. Hi Mo,

    I Just want say good luck, but my account blowed up. Thanks for share your experience with us.
    I will still reading your post and following you.
    I wish you all the best.

    Marcos

  6. Thanks, Mo!

    Also still here, hanging in there at eToro and reading your updates with great interest.

    Best of luck to you, and wish everybody a nice week!

  7. Hi Mo,
    Back un business after some days off, still with you. Hope GBP will positively surprise us… Just add 35% on the account to protect it. That block me to go on hotforex but I prefer to be safe with the Etoro account!
    Best of Luck 😀
    Julien

  8. Hi Mo! Still here and reading with great interest! I Hope, this week is going to give us some positiv aspects!!!
    As we (a lot of your copiers) are some kind of locked in eToro, I would be glad, if You could postpone the trading start or the closing Date on HF. Mabe we could have the necessary liquid funds by the End of February – if You carry on doing a good Job 😉
    Thomas

  9. Hello Mo,

    Thanls for your thoughts again. Do you still think its enough with 30% increased equity from initial or should i add more to safe the two worst trades in? Thanks again,not going anywherd 🙂

  10. Mohammed, we’re still here, we’ll always be, and we’ll always read your updates, insights and thoughts. We believe in you and we appreciate being part of this community.
    I will be joining you at HotForex, just few issues with card verification and payment authorization but it should be good, soon. Thanks Mohammed for always staying true to yourself and to us; your loyal followers.

    Life is ups and downs and we should always accept both as important parts of life and essential stages of development.

    Best regards,
    Mohamed

  11. Thanks for update. Still here, listening and learning. Best of luck for our community. Hard times for us but you keep calm and cold mind. These thoughts and your honesty are like gold this days. Keep going!

  12. Thanks again for the update, im going to stay for the 2 years. Way to much knowledge from you to be learnt.
    Really appreciate your attitude by not walking in times of trouble.

  13. Mohammed, I’m still with you and I’ve put in a bit more cash. He who dares, wins.

    Cameron pledged an in/out vote on the EU membership if the Conservatives achieved a majority. I believe it was promised at the time as Cameron was expecting another hung parliament, so it was a part of his manifesto that he never expected to have to deliver.

    Cameron is now desperately trying reform some minor points in order to spin staying in the EU as a good thing for Britain. I think it’s a losing battle – the voting public see only negatives with the current membership.

    Given that against expectation he won the election with a majority I think he now regrets the promise as the man in the street, who will be voting, sees and experiences nothing but negative policies from an EU that is out of touch.

    It would not surprise me to see a landslide vote to get the UK out of the EU and a lot more people voting than voted in the General Election.

  14. Hey Mo,

    It makes me sad to have you think we have walked away and don’t read this any more. You have a lot more fans then you are probably aware of. I read this thread and there is a lot of support for you, but there are probably a lot of people who have read your blog but haven’t felt the need to tell you they appreciate you and what you do for us, this is probably because they feel you might find it a little tiresome to wade through hundreds of replies to your threads instead of the more manageable 20 odd; Or that you sound like a really busy guy and don’t want to pester you. I’m sorry about the trolls and the death threats, it’s such a crap world we live in at times. On the bright side, you probably get far less stick then Carrie Fisher did on the latest Star Wars film. She got so much abuse on how she hadn’t aged well…… what were people expecting!? She’s in her late 50’s and a gold bikini scene wasn’t really realistic.

    Anyway, I digress. I’m very glad to hear you have great confidence in your USD trades. Sadly I have to agree with you on The GBP ones, that I can see a market panic over a Brexit. I live in the UK and as someone living here I can see Cameron isn’t going to get what he wants from Merkel in his renegotiation (although in theory he could get it from a change in English laws which he doesn’t want to make.). The British people are very divided on Europe and this referendum could go either way and I think it will be close. However, on the side of optimism, in British referendums that are tight people usually stick with the status quo and I’m sure George Osbourne will scaremonger the British people into believing the economy will be screwed if we leave. I do have one question for you. I predict the same 8-1 vote against raising interest rates in the UK on Tuesday. If that occurs, do you feel this will keep up the current trend of a bearish pound?

    Hope that wan’t too much a read. Anyway, thank you very much for your blog and what you do for us. Hopefully this will all turn around for us in time 🙂

  15. Please God, a better week! As someone said above, some good points to learn from this. I think rather than compounding everything, I might – if we ever see green again – take out a proportion of the gains as we go to protect myself from
    anything similar. Hoping the dollar shows us some love this week. Night all.

  16. Good morning Mo,

    As I feared the 95% CSL would be met whilst I was sleeping and unfortunately didn’t have the brain power to redistribute funds at 2am this morning thus I woke to find all positions closed, even after adding more funds last week as a buffer to the torrent of unrealised losses, but alas I’ve recopied you copying all open trade positions and what a wonderful sight it is seeing things in the green again.

    Let’s hope this week is much more rewarding than those of the previous three/four!

    Keep up the good work.

    Rich

  17. pff finished entering and stand etoro copy, I lost everything, and I’m up in the red, to $ -196.55.

    I’ll open a new account (if you can), and Monday 18th’ll put my last $ 100 to become a copy.

    I hope everything goes well and you can at least recover the money lost within a year.

    greetings from Spain

  18. hi Mo,

    Eventhough my stoploss got triggered, I am still reading all your thoughts and updates. It is a very interesting lesson, much can be learned from you, my friend! Keep up the good work! (I will recopy you once I have more funds and the gbpjpy downfall is over).

  19. Obviously, I’m still here too. I’ll also take out a small percentage of the gains in the future. On etoro it might serve as an emergency fund if I have to add in case you change your mind and decide to stay under a protected profile and on hf it will just make whatever blow might come in the future a bit easier (wish I had more control over things on hf but I guess it comes down to how much I trust your trading, which I still do looking at your analysis). So let’s all get up and move forward from this.

  20. Hi Mo,

    Yes, I still writing while my account has already been blow up. I will still keep reading your article. Just wish you all the best.

    Jerry

  21. Well chucks got stopped out of my copy… Anyway that’s part of the risk. Will recopy with some funds but as always enjoy reading your thoughts. With this crazy start to the year it’s not unsurprising stuff gets a bit volatile and unpredictable.
    Have a good day Mo

  22. I am still here and I am not going anywhere. It takes a great man to admit ones mistakes and try to become better. It is easy to ignore ones mistake or drop everything and run. You are not leaving anyone behind and keep your own honesty and integrety. We all make mistakes , that is part of life. It shows what kind of person you are what one does with his or her mistake.

    Last but not least we are all grown ups and chose to copy you. As long you treat our money as good as you can I really can not think of a reason to blaim anyone than oneself.

    Good luck recovering for the ones still sticking on to you Mo!

  23. Still here too – due to closing some trades manually in December while they were still in light green – and I’m too appreciating the ongoing lessons which are your analyses. However, like Julien and Thomas I’m kind of blocked. So unfortunately no chance to put money into PAMM atm …

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