Riding the Uptrend on AUD/JPY – Profit Targets Hit!

Trade Closed: 07-06-2012 23:00

AUD/JPY Chart

Boy, am I glad I pulled the trigger on this one once I spotted the setup! I caught a nearly perfect entry, as the 61.8% Fib held as solid support.

AUD/JPY then pushed higher to hit my first profit target at 79.20. At that point, I decided to move the stop of my remaining position to my entry to create a risk-free trade. I also set my profit target at 79.50, as I noticed that this was a major area of interest in the past.

This turned out to be a great decision because 79.50 was just below the high for the day! Since then, the pair has dropped over 100 pips and is testing yesterday’s lows!

I will admit that I’m feeling pretty good after this win. I mean, who wouldn’t – it worked out nearly perfectly!

That said, I also understand that I caught a bit of luck.

How so? Well, the People’s Bank of China decided that enough was enough and went ahead with a surprise rate cut! This boosted risk sentiment, and allowed higher-yielding currencies (like the Aussie!) to push higher versus the yen. What a stroke of luck eh?

First position: +50 pips / + 0.31%

Second position: +80 pips / +0.50%

Total: +130 pips / +0.81%

Great win to end the week! This just goes to show that no matter how choppy the markets are, you just have to keep digging in and focus and make sure to take advantage of great setups when they materialize!

Congratulations to those of you who made some pips this week! See you on the other side of the weekend!

Trade Idea: 07-06-2012 03:45

AUD/JPY Chart

As far as technicals are concerned, we’ve got a trifecta on this trade:

  • Rising trend line? Check!
  • Fib levels? Check?
  • Former area of interest? Chickity-check!

With all these levels lining up at around 78.70, it didn’t take long for me to say, “It’s go time, baby!”

But this trade makes a lot of sense fundamentally as well. The Aussie has been rising solidly over the past three days in light of the RBA rate statement and a couple of major economic reports that came in much better than expected (GDP and employment change).

Meanwhile, the yen has been getting the short end of the stick as Japanese officials have been hinting at an intervention. Word on the street is that they’ve even approached the G7 for backup! I think this should keep the yen grounded for a few days.

That being said, it makes perfect sense to me to buy the Aussie and sell the yen! Here’s how I set up my trade:

Buy AUD/JPY at 78.70, stop loss at 78.30, 1st profit target at 79.20, 2nd profit target to be determined.

I set my stop at 78.30 because the only way price will reach it is if the market breaks the rising trend line (which would invalidate my trade idea). Meanwhile, I’m looking to close half of my position at the previous high (79.20) and letting the rest ride.

Take note, I’m only risking 0.50% of my account on this as it’s been a while since I last traded the 15-minute chart.

So what do y’all think of this setup? Hit me up with some comments below and let me know what’s on your mind!

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  • robertok

    Looks like you nailed it right nicely. Good job!!!.

    • cyclopip

      Thanks, mate! A bit of luck was involved. ;)

  • robertok

    With a loaded calendar like todays, I think the pair will drop to the 78.00 figure if there is a rush to buy the yen if US data is weak. I would wait for the Jobless claims data then re-evaluate the entry.

    • cyclopip

      I agree that there’s a lot of event risk involved today, which is why I don’t plan to hold this trade open for too long. But you gotta strike while the iron is hot! ;) Thankfully, the markets are still selling off the yen.

      Thanks for the insight, robertok! Much appreciated!

  • Mike Wagner

    After a ~400pip move in days, extended on longer time frames, in longer term downtrend – using the 15min chart & a 1:1 R/R limit/SL is not my idea of a good setup. My opinion though.

    • cyclopip

      Hi Mike!

      My idea was to ride the pair’s bullish momentum up the charts. I don’t usually trade the 15min chart, but this trend line looked very clean and the trade made a lot of sense to me fundamentally. Luckily, it’s working out. But you’re right, a better RR would be ideal.

      Thanks for dropping by, bud! Hope you’re having a good trading week!

      • Mike Wagner

         Well, looks like you were right and I was wrong on this one.

        • cyclopip

          Well, a bit of luck was involved.:P

  • antiguilty

    Thank you so much for the tips… looking forward for next week :)

    • cyclopip

      Anytime, buddy! Hope this week treated you well!

  • robertok

    Decided to re jump in at the retracement after the news and speech at  78.96. Lets see if the line will hold.

  • Jack

    Thanks for the tips, keep up the good work :)

    • cyclopip

      Thanks for following, Jack! Really appreciate it. :)