Watching The JPY & AUD Crosses
We start 2014 with one of the worst trading weeks imaginable; oh, too be sure it will happen again, action just this side of wanting to watch “The Brady Bunch” reruns instead of your computer screen.
At our last weekly staff meeting I said, “You just wait, sometime in January we’ll get a week or two that will be crap action wise; where the range will be small and put in during the wee hours of Asia or the U.S. late afternoon, and the market [pick one, it doesn’t matter] will diddle around the +30 to -30 Pips from the weekly open, and I’ll get emails from people wondering if I have died because I haven’t done anything.”
Cousin It pipes in, “Nah, that won’t happen”. “Wanna bet?”, I said.
Needless to say, this weekend I get a free snow cone down at the beach courtesy of the entire staff who is chipping in to cover this mighty expense. I just hope my watermelon snow cone doesn’t have the whiff of almonds when they hand it to me.
I have so far been concentrating on GBPJPY because the spread over all the sessions is right around 1 pip [give or take a few tenths]; GBPAUD on the other hand only has that 1 pip spread for about 5 or 6 hours when both Europe and the U.S. overlap and are trading, and the rest of the day the spread is between 2 – 4 ½ pips.
Even though during this time both GBP and AUD versus the U.S. Dollar has spreads less than 1 pip respectively. So, how come a 4 pip spread 5 hours into the Asian session? Simple; the banks don’t want you picking them off from scalping a volatile pair, and are simply protecting themselves from nasty customer scalp operations via multiple computer EA’s [Expert Advisors] and Eastern European types who got nothing better to do than trade 7 round turns in 40 seconds, each time taking less than a pip from 5 Million stuff.
The other pairs [GBPJPY and EURAUD] are much deeper in liquidity, therefore no need to widen the spread unnecessarily when action is dull. So, my first priority starting the week will be in GBPJPY and then, if necessary, I’ll take a look at EURAUD. We basically are looking at 1 pip markets in each.
True to its nature and most important function, the Long Term algorithm has done a beautiful job of keeping us all out of trouble in GBPJPY the first 3 days of this week. I have made no trades simply because the algorithm really hasn’t called for any [remember the rules everyone]. Granted, late Tuesday morning in the European session, you could have gotten long on a breakout of 1.7246 on the upside. I didn’t take the trade because I didn’t think the market had anyplace to substantially go pre-NFP Friday and the unemployment numbers the BLS will make up.
As things turned out, I was right about this. Other than that, the sharp decline to the lows happened Sunday afternoon and very early in Asia on Monday. From there it has been a slow and haphazard rise up back to the weekly open. Three days in, and right now, we are only about 50 pips from the weekly open; not exactly the stuff legendary moves are made.
Oh, not to worry, as I am sure on Friday both new lows and highs for the week can be expected within half an hour as retail accounts become acquainted again with the casino environment of an NFP Friday.
For everyone that wrote me wondering if I had died and praying for some market action, I can assure you the boredom from watching GBPJPY, early Monday to the present, hasn’t quite turned me to room temperature. However, I do have some advice;
Take Two If Necessary
Last time I checked, I can’t deposit trades into the bank; for that we need real money. Not too worry tradeaholics, everything is fine and well.
Have a good day everyone.
Another email blast has got me about 2-3 days behind in answering emails. I’ll get to ‘em, so if you’re waiting to hear from me, rest assured an answer is coming very soon. Thanks.