There are setups that are sometimes too good to be true and it seems like I took one this week!
A few days ago I bought USD/JPY at 102.70 because it was near a Fib retracement level, and rising trend line, Stochastic was in the oversold region, and the 100 and 200 SMAs had just crossed. I was also looking for upside surprises in the Aussie jobs data, RBNZ rate statement, and US retail sales to spur on risk appetite.
My long trade was shaping up quite well in the Asian and London sessions after Australia and New Zealand printed strong reports. USD/JPY was even consolidating at my entry area and risk appetite was slowly creeping back in the markets. I got even more excited when I saw that the US retail sales wasn’t as bad as many had feared.
I learned a lesson on unexpected catalysts when a couple of bearish reports all contributed to USD/JPY’s plunge. As Pip Diddy mentioned in his U.S. session recap escalating threats from Russia, a closer look at the US retail sales data, and an overall reaction to strong resistance levels all brought risk aversion back to the front seat. It caused a breakdown of USD/JPY’s 102.70 support and sent the pair all the way to 101.50. Boo.
A couple of things I could have done better. Simon Wong suggested in my previous post that I could have waited a bit for confirmation of a bounce. François Loneux also suggested that I could have lowered my risk. Or maybe I could have set my orders lower and my stop losses wider since I’m trading a yen pair. Last but not the least, I could have exited earlier when I saw that a 4-hour candle had closed firmly below 102.70. Just some thoughts for my next trades.
How about you? Did you place any USD/JPY trade this week?