The week started off on a sour note for the markets, as everyone was focused on what was happening in Europe. This time, it was Italy to take the spotlight. Contagion fears took over the market and we saw a major sell off on higher-yielding assets.
This of course, benefited the Japanese yen, which is normally used as a funding source by hedge fund managers and traders. With traders wanting to take off their risky positions, they also had to cover their short yen bets. This, in turn, led to a nice rally in the yen, which is now approaching pre-G7 intervention levels.
If I had recognized that sentiment was still down, I could have went with a simple short on the break of the PWL at around 128.70. Using a 50/1/1 stop-trail-add strategy, I would have caught the full move down before eventually getting stopped out at entry point of my SEVENTH position at 125.70. For those of you who don’t wanna do that math, that’s equivalent to a RIDONCULOUS 20:1 reward-to-risk ratio! Boo yeah baby!
This goes to show that sometimes, it’s all about sentiment. If you can recognize what’s truly dominating the market and what people are focused on, you can get in early and ride that baby all the way!
Were some of you able to catch that move? If so, lemme know what you did in the comments below!