Greetings,
Lets continue with our discussion. Today, we will try to look at the BIG picture.
I started trading in October 2019. The main reason being that I find this to be challenging. I am trying to see if I can find a way to be profitable. Indeed the journey has been quite rough. I was struggling for 2 years trying to learn. But of course, listening to those 'Gurus' and MAIN STREAM only make things worse. As luck would have it, things started to chance in November 2021 when as luck would have it, I saw something on Youtube that makes me started to think.
I will explain on what I had learned and shared it with you. I hope you would think about it yourself and apply common sense. I find that all answers are actually quite easy and plain. We can't see/understand if only because we are constantly being influenced by MAIN STREAM.
Lets start off with EURUSD. Recently, many 'Gurus' are getting very excited. They are looking at their favorite INDICATOR DXY - RSI - 1W which is now above 80. They are PREDICTING that it is time for Dollar to fall very soon. Of course, the sheep who are following their guru is equally excited. As I have said previously, do not trade based on prediction. Trade based on facts. If you look at the chart above, inflation is way above FFR. You can see that the Fed's Dot Plot released on 17 March 2022 is very aggressive. They followed through with 50 bps hike on 5 May 2022 despite GDP registering a drop of 1.4% on 28 April 2022. Many had again been predicting that the Fed may capitulate and stop further rate hike!!! It was also said that after every financial crisis, the FRR seems to be trending lower. Back in 2019, the higher the FFR went was 2.5%. And going by 'trend', this time around, the rake hikes will not go beyond that. HAHAHAHA.......... only this time they might have forgot how high inflation is.
Lets think about this. Would the Fed capitulate? I do not think so. I think the FFR would go on higher. As per the current Dot Plot, it would be 2.80% at the end of this year. The higher the FFR, the less the LIQUIDITY or Money Supply. Only by reducing Money Supply would inflation be tamed. In doing so, GDP would take a hit. Inflation is the most pressing issue at the moment and can not be left unchecked.
How do we trade? I think we would just follow closely the next Fed Dot Plot to be released on 5 May 2022. There is no need for us to make any prediction. Just follow. If the Fed maintain the current stance or even tightened further, then expect EURUSD to fall further.
Now lets talk about GOLD and BITCOIN. I do not trade them but it would be good for discussion.
A lot of 'Gurus' out there has been making prediction that GOLD will go UP because of INFLATION. They advise their sheep to BUY BUY BUY. I guess by now all of them will be scratching their head. May are also scratching their balls. Why isn't GOLD going up? Actually the answer is very SIMPLE. To them, GOLD is not subjected to the law of Inflation. When price of GOLD goes up, they see it as growth or profit. Believe me, when price of GOLD goes up, it is also called inflation because all goods/services for sale on this earth is subjected to INFLATION. Please bear in mind that GOLD and BITCOIN is denominated in USD. Therefore its rise/fall is WHOLLY dependent on the the availability of USD. SO UNDERSTAND THIS, THE PRICE OF GOLD HAS NOTHING TO DO WITH INFLATION. ALL USD DENOMITED ASSETS ARE ONLY IMPACTED BY THE AVAILABILITY OF USD LIQUIDITY WHICH DEPENDS LARGELY ON THE FFR - CURRENT & EXPECTED. You can track the movement of gold to the M2 money supply. If money supply does not grow, where would the money come from to bid up assets price higher?
At the moment, USD money supply % growth is falling. Cash is KING. As such, asset price is also falling - Stocks, Gold, Bitcoin etc.
Bitcoin - I do not trade it and also do not follow it. But my advise to you is this, do not trade it for one sole reason - it is very very very very very volatile. Remember, we are here to make money, not to take risk. It is not worth the risk.
Also remember, never believe anyone who tells you the price of this and that will go up in the FUTURE. No one knows what will happen in the future. They are just preying on your GREED.
Focus solely on trading based on FACTS. Wait for 5 May 2022. Look at the Dot Plot. Then just follow. As for now, the Fed is telling you the FFR is projected to be 2.8% at the end of this year. They are not done with rate hikes. Just follow. Don't argue or make opposite predictions.
If you find this useful, please share it with other traders. The sole reason I am doing this is that I know a lot of you guys is currently where I was when I first started. I just hope that my experience may be helpful, especially for beginners.
Thank you.
P/S : as always, do not just believe what I say. Use your common sense.
Lets continue with our discussion. Today, we will try to look at the BIG picture.
I started trading in October 2019. The main reason being that I find this to be challenging. I am trying to see if I can find a way to be profitable. Indeed the journey has been quite rough. I was struggling for 2 years trying to learn. But of course, listening to those 'Gurus' and MAIN STREAM only make things worse. As luck would have it, things started to chance in November 2021 when as luck would have it, I saw something on Youtube that makes me started to think.
I will explain on what I had learned and shared it with you. I hope you would think about it yourself and apply common sense. I find that all answers are actually quite easy and plain. We can't see/understand if only because we are constantly being influenced by MAIN STREAM.
Lets start off with EURUSD. Recently, many 'Gurus' are getting very excited. They are looking at their favorite INDICATOR DXY - RSI - 1W which is now above 80. They are PREDICTING that it is time for Dollar to fall very soon. Of course, the sheep who are following their guru is equally excited. As I have said previously, do not trade based on prediction. Trade based on facts. If you look at the chart above, inflation is way above FFR. You can see that the Fed's Dot Plot released on 17 March 2022 is very aggressive. They followed through with 50 bps hike on 5 May 2022 despite GDP registering a drop of 1.4% on 28 April 2022. Many had again been predicting that the Fed may capitulate and stop further rate hike!!! It was also said that after every financial crisis, the FRR seems to be trending lower. Back in 2019, the higher the FFR went was 2.5%. And going by 'trend', this time around, the rake hikes will not go beyond that. HAHAHAHA.......... only this time they might have forgot how high inflation is.
Lets think about this. Would the Fed capitulate? I do not think so. I think the FFR would go on higher. As per the current Dot Plot, it would be 2.80% at the end of this year. The higher the FFR, the less the LIQUIDITY or Money Supply. Only by reducing Money Supply would inflation be tamed. In doing so, GDP would take a hit. Inflation is the most pressing issue at the moment and can not be left unchecked.
How do we trade? I think we would just follow closely the next Fed Dot Plot to be released on 5 May 2022. There is no need for us to make any prediction. Just follow. If the Fed maintain the current stance or even tightened further, then expect EURUSD to fall further.
Now lets talk about GOLD and BITCOIN. I do not trade them but it would be good for discussion.
A lot of 'Gurus' out there has been making prediction that GOLD will go UP because of INFLATION. They advise their sheep to BUY BUY BUY. I guess by now all of them will be scratching their head. May are also scratching their balls. Why isn't GOLD going up? Actually the answer is very SIMPLE. To them, GOLD is not subjected to the law of Inflation. When price of GOLD goes up, they see it as growth or profit. Believe me, when price of GOLD goes up, it is also called inflation because all goods/services for sale on this earth is subjected to INFLATION. Please bear in mind that GOLD and BITCOIN is denominated in USD. Therefore its rise/fall is WHOLLY dependent on the the availability of USD. SO UNDERSTAND THIS, THE PRICE OF GOLD HAS NOTHING TO DO WITH INFLATION. ALL USD DENOMITED ASSETS ARE ONLY IMPACTED BY THE AVAILABILITY OF USD LIQUIDITY WHICH DEPENDS LARGELY ON THE FFR - CURRENT & EXPECTED. You can track the movement of gold to the M2 money supply. If money supply does not grow, where would the money come from to bid up assets price higher?
At the moment, USD money supply % growth is falling. Cash is KING. As such, asset price is also falling - Stocks, Gold, Bitcoin etc.
Bitcoin - I do not trade it and also do not follow it. But my advise to you is this, do not trade it for one sole reason - it is very very very very very volatile. Remember, we are here to make money, not to take risk. It is not worth the risk.
Also remember, never believe anyone who tells you the price of this and that will go up in the FUTURE. No one knows what will happen in the future. They are just preying on your GREED.
Focus solely on trading based on FACTS. Wait for 5 May 2022. Look at the Dot Plot. Then just follow. As for now, the Fed is telling you the FFR is projected to be 2.8% at the end of this year. They are not done with rate hikes. Just follow. Don't argue or make opposite predictions.
If you find this useful, please share it with other traders. The sole reason I am doing this is that I know a lot of you guys is currently where I was when I first started. I just hope that my experience may be helpful, especially for beginners.
Thank you.
P/S : as always, do not just believe what I say. Use your common sense.
Note
Bitcoin is now dropping with no end in sight. Surely a lot of people are losing a lot of money. Gold is also under performing. Those who believe in GURUS that sell the story that INFLATION will be the reason you should hold Bitcoin/Gold. Hahaha.
If you want to know the REAL reason why inflation is of no consequence.... PM me :)
Note
Looking back at what I wrote more than half a year ago. I think with hindsight, it all makes sense.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.