CAD/JPY: Chance to Buy at a Bargain? – Stopped Out

Trade Closed: 2013-06-06 23:00

CAD/JPY Chart

Well, that didn’t last long! Thanks to a poor response to Japanese Prime Minister Shinzo Abe’s speech yesterday, we saw the yen rally as risk aversion took over the markets. While Abe said that deflation could be cured by accommodative monetary policy measures, the markets found his plans a little bit too vague and not well-defined. In response, we saw traders dump their positions in Nikkei stocks, forcing them to unload their short JPY positions as well.

Moreover, I suspect that with a ton of people in on the long USD/JPY trade, we also saw a boat load of stops triggered below 99.00 and this helped trigger an exaggerated yen rally.

In any case, this stopped out my trade, leaving me with my SIXTH consecutive loss.

Stopped out at 94.80: -149 pips / -0.50%

I do feel bad that I picked up another loss, but there’s nothing I can do about this really. I think I will now have to reevaluate my bias towards the yen, as it seems that the uptrend in JPY crosses isn’t going as smoothly as I thought it would. I guess I also feel bad because I missed a majority of the move up from earlier this year, and now I’m getting burned trying to hop on now.

The lesson here? Timing is everything, baby!

Despite the loss, I remain confident that I can bounce back. Losses are part of the process and I just have to learn from each and every trade.

Hope you fellas had a better week than I did! Catch y’all on Monday!

Trade Idea: 2013-06-05 03:32

CAD/JPY Chart

I’ll be honest, it was the technical setup on this trade that really caught my eye. First of all, that rising trend line on CAD/JPY’s 4-hour chart is about as sweet as it gets… and it also lines up with the 96.00 handle, which was a proven area of interest. With the long-term uptrend favoring a move up on CAD/JPY, I decided to look into the fundamentals of this trade.

On the Loonie side of the equation, we have the Canadian economy, which hasn’t been doing so badly as of late. As a matter of fact, economic growth has outpaced forecasts in 4 out of the last 5 months. This is probably one of the reasons why the Bank of Canada has maintained a more hawkish stance than its counterparts. While many speculate that the BOC’s next move could be a rate hike, other central banks are widely expected to ease monetary policy further in the coming months.

As for the yen, although it has seen large gains in recent days, nothing has really changed to warrant an end to its long-term slide. The Bank of Japan is still expected to pump more money into the economy, and this should limit demand for the yen down the road.

Given the divergence between the BOC and BOJ’s policy stances, I’m expecting CAD/JPY to maintain its uptrend in the long run. Here’s how I set up this trade:

Bought at market (96.29), stop loss at 94.80, profit target at 100.00.

I set my stop 150 pips away, giving this trade room to breathe in case the market wants to dip below 96.00 before climbing. And I’m hoping price will find its way back up to its previous high near 100.00.

What do y’all think? Is this a trade you would take? Share your comments and suggestions below, fellas!


  • James

    Well, since the trade is on a 4H timeframe and therefore midterm, I personally would wait for a CONFIRMED bounce off the trendline, not minding if I lost the first part of the move. Hope it will work our well for you pal.

  • Amit Desai

    Pure bad luck that the JPY spike closed your trade early 🙁 Once JPY stabilizes, you can re-enter at a better price…

    • cyclopip

      Yes tough luck on this trade. Those JPY moves are just too crazy right now. I’ll have an update on this trade up soon!

  • mohabirs

    i made 160 pips going short on CADJPY last night, YAY!