Weekly review.

I found the week starting Monday 22 January another difficult week in terms of desiphering the fundemental cause of the moves in the Forex market.

On Monday it was a case of waiting for Tuesday's BOJ meeting. The meeting didn't surprise with no change in policy... But the door was left open for a hike in the near future. This created yen strength, which was subsequently followed by a reversal. But the lingering possibility of a BOJ rate hike ensured the JPY had underlying strength throughout the week. For the time being, my base case on a fundamental basis is still for yen short trades based on interest rate differential.

Regarding the USD part of the equation, US GDP was reported better than expected. But the USD reaction wasn't as strong as you would expect, and in fact, the dollar initially weakened. I later found out due to a lower inflation component within the GDP figure. And that's what's making it difficult at the moment: generally, the headline number is the number that moves the market. But these days, every single aspect of a release is scrutinised. Which makes forming an opinion very complicated. This may mean will have a continuation of the choppy environment, probably until we get a clear date from the FED when rate cuts are coming. Then as that date gets nearer. The other currencies will form their relative strength or weakness around that.

On a personal level, it was a disappointing week with two trades. An AUD CAD which was closed manually for a small loss and a EUR USD which stopped out. Both trades were based on the theory that cutting rates later will cause too much of a slowdown in their respected economies.

It is always much better to place trades based on an oversized piece of news. Meaning an extreme positive or an extreme negative. Although I still think Both of this week's trades were a valid idea, they were not based on an extreme cause. And if you are new to this system, my suggestion is to stay patient and wait for the outsized moments you can hang your hat on.

Next week, we have the FED interest rate decision. And although I think the march decision will be more critical in terms of the dollars future direction. If this months message is still for later cuts, we could see a resumption of the USD JPY uptrend. But time will tell.

Thank you for the emails I've received, let me know if you have any thoughts on a particular currency, or if there is anything you're struggling with in particular.

johnelfedforexblog@gmail.com

Results for week:

Trade 1: AUD CAD -0.3

Trade 2: EUR USD -1

Total: -1.3%

Total since start of blog = + 23.7%(risking 1% per trade)