Looking to Go Long on the USDJPY! – Trade Closed

Trade Closed: 2010-0506 20:54

PoD Chart

What in the world happened yesterday! Even though price was chilling below the 94.00 price level, I didn’t think it would drop so low to stop my remaining position at 92.20!

I took a look at other charts yesterday, and it looks like the yen really rallied! The USDJPY dropped all the way to the 2010 low at 88.20 before bouncing back up!

Apparently, a couple of traders at a big time firm made a mistake, adding a couple of zeroes to the end of one of their short orders. This triggered a sharp drop in the stock markets, with the Dow Jones down as much as 1,000 points at one point! It’s a good thing that I don’t trade any stocks or I might have been wiped out!

I’m a little disappointed in this trade, as I didn’t make as much as I could have. First, I took out profits at 93.92, which actually gave me a decent profit of 172 pips on first position. Still, had I held out a bit longer, my original take profit point of 94.75 would have gotten hit! I ended up with just a 0.41% gain on that position.Then of course, my 2nd position got stopped at breakeven yesterday, leaving me with nothing on that position.

Total gain: 172 pips / +86 pips (avg.) / 0.41%

Considering how wild everything was yesterday, I’m just glad that I had already locked in profits. It would hurt had I been up over 200 pips and to lose it all in one crazy move!

Trade Update 2010-05-2 22:54

PoD Chart

Oh my! It looks like the yen is rallying across the board on the news that China raised its reserve requirements for banks… With the USDJPY daily chart showing overbought conditions and pointing downwards, I think it’s time for me to make some adjustments.

The first thing I’m going to do is close half my position to lock in a 0.41% gain. After that, I’m going to move my stop loss on my remaining position to my entry point while still aiming for 97.75. This essentially creates a risk-free trade. Ahh, how I love playing with the bank’s money!

Trade Update 2010-04-18 22:46

Finally, after days of waiting, my long USDJPY order got triggered! It seems that risk aversion was the name of the game last Friday as the yen gained versus all other majors.

I’ve been reading up and I think that this shift in risk sentiment was caused by news regarding the Goldman Sachs fraud issue. As risk aversion pushed equities lower and caused an unwinding of carry trades, the yen took this as an opportunity to gain strength. Still, I believe that the yen is fundamentally weak and traders will see this as an opportunity to buy the dollar at a cheaper price versus the yen.

Trade Idea 2010-04-12 22:24

PoD Chart

If you look at the chart that I posted, you would see that I’m watching the 38.2% Fibonacci retracement closely, as it coincides nicely with the previous resistance level. As we all know, whenever price passes through resistance, that price level turns into support. By that time, I suspect stochastics would be at or nearing oversold territory, which gives me the confirmation I need to go long.

Still, I know that I can’t catch tops and bottoms all the time so I’ll be setting my stop roughly equivalent to the pair’s weekly average true range of 210 pips. This places my stop beyond the 61.8% Fibonacci retracment, giving my trade enough room to breathe. As for my targets, I’ll be aiming for the recent significant highs.

On the economic front, minutes from the latest BOJ monetary policy meeting showed that a couple of BOJ officials were strongly opposed to expanding the central bank’s lending program to commercial banks, claiming that there wasn’t enough economic basis for such move. Still, they were out-voted as the rest of the policymakers believed that additional easing was necessary to ward off deflation in Japan.

And it looks like they have a point… The recent corporate goods price index posted a worse than expected 1.3% drop in March, confirming that deflationary pressures are still present. BOJ Governor Shirakawa is set to testify tomorrow and if he hints at another expansion of their lending program, the yen could weaken further against the greenback.

Meanwhile, the US is set to release its trade balance data later today. It could show that their deficit widened again in February and trigger risk aversion in the markets.

Tomorrow, US retail sales and inflation data are due and these could spur some extra volatility for my trade to get triggered. Although traders seem to be back to their risk-hungry selves, risk aversion could come back to haunt the markets and push the safe-haven greenback higher if there are more setbacks in the Greek bailout plan.

Again, here’s my plan:

Long USDJPY at 92.20, pt1 at 94.75, pt2 at 97.75, stop at 90.10

For those who are fans of Justin Timberlake, guess what? He and his long time girlfriend Jessica Biel have recently broken up! Great news for me! I got dibs on him! Heeheehee…

Anyway, thanks for checking out my blog! By the way, you can also view my trades and updates on MeetPips.com!

  • G7Pro

    Always enjoy your posts. Good luck with the trade and with Justin.

  • G7Pro

    Always enjoy your posts. Good luck with the trade and with Justin.

  • Huck

    Why thank you!

  • Huck

    Why thank you!

  • BonA

    Hi Huck, i’ve been following your blog for awhile. And I’m sorry that you missed some good opportunity earlier. I did some research on your HLHB system. And I found out that, many times (I believe it’s more than 90%) the EMAs crossing happens on overbought/sold area on the stochastic. This is why you missed so many trades. I believe there should be some adjustment on the stochastic setting, frankly I’m not really sure how or what since I don’t use stochastic the way you do, but I believe that’s the problem. Well, that’s just my opinion though, good luck to you.

  • BonA

    Hi Huck, i’ve been following your blog for awhile. And I’m sorry that you missed some good opportunity earlier. I did some research on your HLHB system. And I found out that, many times (I believe it’s more than 90%) the EMAs crossing happens on overbought/sold area on the stochastic. This is why you missed so many trades. I believe there should be some adjustment on the stochastic setting, frankly I’m not really sure how or what since I don’t use stochastic the way you do, but I believe that’s the problem. Well, that’s just my opinion though, good luck to you.

  • dailyearner

    yes
    i think buying usd/jpy is correct
    but i think should be patient.
    buying postion is not so good at that time.

  • dailyearner

    yes
    i think buying usd/jpy is correct
    but i think should be patient.
    buying postion is not so good at that time.

  • BeerMonster

    Well done, Huck. Looks like you could be on a winner here, I tried (a bit too early) but got shock out over Friday.

  • BeerMonster

    Well done, Huck. Looks like you could be on a winner here, I tried (a bit too early) but got shock out over Friday.