Break-and-Retest on USD/JPY – Closed

Trade Closed: 2013-11-18 21:30 ET

USD/JPY pulled back at the start of this week’s trading, which was enough to trigger my trailed stop at 99.95.

Before you move on, for those who are not familiar with my framework, signals, setups, or acronyms, please visit my discretionary trading framework blog.

USD/JPY forex trade review

USD/JPY forex trade review

It looks like traders did take the broken resistance as a buying opportunity, and after the market pull back as low as 99.10, the pair rallied higher to break the major psychological handle of 100.00 and then some.  The pair topped out around 100.44 on Friday, at which time I trailed my stop to 99.95  to lock in further profits into the weekend.

Unfortunately for USD/JPY bulls, there was give back as soon as trading opened up this week, enough to take me out of my trade at my 99.95 stop.

Total: +38 pips/ +0.21% gain

It was a textbook trade through out, but there is one or two things I would do differently if put in a similar situation in the future: trail the stop tighter or take profit on Monday.  It was almost obvious that the momentum higher wasn’t there in Europe and Asia, and since we’re going to get a monetary policy statement from Japan on Wednesday, it was prudent to take off those Yen shorts–that’s probably why we saw broad Yen buying this week.  Also, I gave back over half of my profit, which is not good trading practice I think; still got a lot of work to do on my stop placement and trade management.

So, it’s a new week in the markets with lots of volatility expected thanks to all of the tier 1 events on the calendar this week.  Stay tuned by following me on Twitter and Facebook!

Trade Idea: 2013-11-13 02:20 ET

Good morning!  I decided to go long USD/JPY again on a simple forex technical setup for a swing play.  Will we see 100.00 and beyond by the end of the week?

USD/JPY 1hr forex chart

USD/JPY 1hr forex chart

This is mainly a technical trade setup, but I still have the same long-term fundamental buy bias on the pair on a possible Taper from the FOMC in 2014 (dollar bullish) and the Bank of Japan holding on to quantitative easing measures for the foreseeable future (yen bearish). This week we do have economic data points from the US, but they’re mainly tier 2 events in my opinion and shouldn’t have a huge effect on the broad sentiment (unless we see an outsized surprise). We do have Prelim GDP from Japan coming up this week, but this data point has been trending mostly weaker-than-expected for the majority of this year’s releases; the probability is that it may help push the pair higher.

So at the moment, I think the upcoming data is likely to make an argument for a further move higher, which is why I’m anticipating by buying on the break-and-retest now. My stop is below this week’s lows around 98.90 and my target to adjust is first the 100.00 handle and then the September highs around 100.60 as it may be the next major resistance area. Here’s what I am doing:

Long half position USD/JPY at market (99.57), stop at 98.70, soft profit target at 100.60

Remember to never risk more than 1% of a trading account on any single trade. Adjust position sizes accordingly. Create your own ideas and don’t follow what I do. Risk Disclosure.

I’m only risking 0.50% of my account on this one, and with this trade structure, I have a potential reward-to-risk ratio of about 1.18:1, but I may add/trail stop & hold if we see a strong break of the 100.00 handle or if the story remains the same if the market reaches my target.

Of course, I can be totally wrong or anything can happen in the currency markets (like the outcome of this week’s testimony from Janet Yellen), so if the story changes I’ll be sure to reassess and adjust quickly if necessary. Stay tuned by following me on Twitter and Facebook!

  • BIJOY

    I just entered on my short trade at 99.75. considering a symmetrical triangle in the daily chart. Target 98.25 Stop at 100.75. All the Best. Either me or you will get some pips !!!

    • Pipcrawler

      Looks like you’re doing well in your trade Bijoy… as long as one of us grabs a few pips from USD/JPY then I’m happy. Good luck!

      • BIJOY

        Moved SL to BE. Don’t want to extend risk for a long time. Right now trade is up by 55 pips.

        • rad

          Its a fools game shorting this pair homie.

  • SamuraiFXTrader

    Based on the above chart, I prefer to remain neutral today and waiting to take our target at 100.005. Why i am holding my USD/JPY trader because i did not see any reversal selling signal on 60 minutes and daily chart. I believe it’s not already reach on it’s momentum destination.

    Cheers!

    • Pipcrawler

      Thanks for your thoughts Samurai! I hope your right and we both can profit from this one. Good luck!

  • James

    Long @ 99.19, SL @ 99.1 and target 100.

    • rad

      Great risk/reward james… thats what trading is all about.

    • Pipcrawler

      Looks like you hit your target James…Congratulations!

  • liliku

    let’s Hope usd Stronger than Jpy, God bleess all of us

    • James

      There’s no room for “hope” in trading bud. Just the right formulas.

      • Pipcrawler

        I think there’s a little room for hope James… but only after solid planning and preparation has been done. 🙂

  • SamuraiFXTrader

    My expectations are active and remain valid by buying long and holding on USD/JPY pair. Just like what I’ve said, i do believe it’s not reach on its momentum destination.

    Cheers!

    • Pipcrawler

      Good call bud! Glad to see everyone grabbin’ some pips!

      • SamuraiFXTrader

        Hello Pipcrawler!

        As of this time.. I move up my target to 101.381 after it fails to break at the support area at 99.793 on 60 minutes chart. When looking at the weekly chart, it looks like we are still on the right trade. So, i decided to move up my target because i have a feelin that it could reach to the highest resistance level by the end of this week. But i always put my stop-loss.

        Thanks Pipcrawler! Cheers!

  • FxSniper

    Does seem to me a retracement back down to 98.40 is possible on usdjpy, which was why I exited my earlier long trade and am still waiting to re-enter at or around said price for better swing move as high as we can reach by year end. What worries me is that you may be tripped out in the wake of Yellen induced news event but goodluck all the same.

    • Pipcrawler

      Yeah, the Yellen event hasn’t had a negative effect just yet on the pair, so I’ll continue to keep rolling with the momentum. Thanks for you thoughts and good luck to you too FxSniper!

  • Pipcrawler

    Thanks for the comments everyone. I moved my stop to 99.75 to lock in a little bit of profit and will trail it by 50 pips from here!

    • Pipcrawler

      I moved my stop to 99.95 and adjusted my target to 101.00 to lock in profits ahead of the weekend, but give more room to make more pips!

  • FxSniper

    Your account must be looking fat on the back of your usdjpy long! I will take the weekend to look for a pullback. The journey to 104-110 seems just starting!

    • Pipcrawler

      haha my account is far from “fat” but it’s a nice small gain to go into the weekend 🙂 Have a great weekend!

  • SamuraiFXTrader

    Hello Everyone!

    Just to update today i already manually closed my USD/JPY trade after seeing a neckline breakout on 60 minutes chart. I am not sure but it’s looks to me a head & should on hourly chart and a breakout on a trend line. So I decided to close and take enough profit. Because I suspect there is a small possibility to go down in few days because of the doji on a daily chart. So, good luck for everyone on hanging around.

    So after that, I am looking for Silver at this time and waiting for the good signal to take action.

    Cheers!

  • liliku

    Come on, let’s finding new Trade , we got profit whatever happen to this pair

    • Pipcrawler

      Yep… I’m out and already looking around for new opportunities. I’ll post again when I find one… congrats on your profit liliku!

  • ruben

    i saw usdjpi and eurjpi both on 4 hour chart were looking goo for short and im still on them and the profits are not bad at all, and we are going lower at least until 10 or midnoon,
    pipcrawler you will catch the next one

    • Pipcrawler

      Nice job catching yen’s gains this week ruben! Are you still holding onto your trades or did you close out as originally planned?

  • FxSniper

    I am still waiting for my next long on usdjpy at 98.(46)50 that should carry me into 101.50. 98.80 won’t be bad but I will try and wait for 98.50

  • Pipcrawler

    98.50 is quite far away, at least for this week… do you think the BOJ meeting will give yen traders to push USD/JPY down 130 pips?

  • FxSniper

    130 pips isn’t particularly far in forex. It can be reached quite easily.
    Though relatively strong, USD is showing some few weakness and could pressure this pair that much lower. Don’t forget that that area is just about the apex of the broken Sym triangle and do you rule out a retest even if it means falling another 200 pips? As I said, I will consider 98.80 too but I will have to look at price action as we move closer

    • Pipcrawler

      130 pips is all relative, and what I use to measure “far” or “near” is the average volatility of the pair. 180 pips is around the average weekly volatility for USD/JPY, but with the right catalyst 130 pips wouldn’t be far…maybe the BOJ monetary policy statement? For me though, there’s a low probability that the BOJ will come out with any rhetoric that would suggest a reduction in stimulus this week, so I don’t see 98.80 as very likely to touch this week.

      • FxSniper

        Well said. I will continue to monitor it.98.46-98.80. I have other trades to amply cover for usdjpy as I wait. Flip any yen pair and you have a solid long atm. For USDJPY, I will wait and see what happens with it… Indeed, there is a good argument for longing at current price level after today’s close but I won’t. AUDJPY and co would be far better option for me at this time. Plus, I am solidly long GBPUSD! Good luck

  • ruben

    i close out my positions at 10:00 am this morning didn’t want to wait for the euro reports and usd press conferences, not bad at all and i entered another one selling cfhjpi lets hope i dont get blown away,

    • Pipcrawler

      Nice Ruben. I hope you got a good return on your risk here. Good luck in you CHF/JPY trade!