USD/JPY and NZD/CAD Trade Reviews

Forex Trade Reviews

I decided to close out my forex trades on Friday to avoid weekend risk, and this weekend there’s a lot of risk due to the rising tensions in the Ukraine.

USD/JPY Review

The possibility of war tends to spark risk aversion behavior in the markets, prompting traders to take money out of “riskier” assets to get back into safe havens, or to buy back the assets used to fund higher-yielding trades. In my case, that means I think we’ll see a short-term bullishness in the Japanese yen, so I decided to close out my long USD/JPY trade.

USD/JPY 4 hour Forex Chart

USD/JPY 4 hour Forex Chart

Also technically, this pair has been consolidation over the last few weeks, finding resistance at 102.60 as well as support along a rising trendline.  We finally saw a break, but to the downside, which I took as a signal an up move is not going to happen soon with the possibility of military action happening in the Ukraine.  I decided to close manually, at 101.91, as the pair moved lower.

Total: -59 pips/ -0.17% loss

I still believe USD/JPY will move higher over the long-term, but for now, risk sentiment will be the driver, which may hinge on geopolitical risk for now.

NZD/CAD Review

NZD/CAD 1 Hour Forex Chart

NZD/CAD 1 Hour Forex Chart

I just opened my NZD/CAD long trade this week, and it immediately went higher after the resistance break around .9250, the technical reason why I went long this trade.  As I expected, Canadian GDP came in weaker-than-expected, which gave it an immediate boost higher after the event, but sold off within the hour.  This could have been a “buy the rumor, sell the news” type play as the pair did run up higher ahead of the event, or it could have been on the fears of conflict in Ukraine sparking traders to take profits–or maybe both.  Either way, I decided that it was a good idea to take profits, closed manually at .9334, and it looks like it was a good call as the pair closed the week just a few pips above my entry.

Total: +64 pips/ +0.29% gain

I still like this trade as well, but as I mentioned earlier, I think trading on fundies are out the window, at least right now.

Combined, it was a small win on what was mostly a quiet month of trading.  Again, I still see both pairs moving to the upside on fundamentals, but in the short-term it may be downside moves from here.  I actually don’t mind that because that just means I can hopefully get into my long-term biases at a better price.

That’s it and thanks for checking out my blog.  Have a great weekend!

 

  • John

    Thanks for the insight. I never would have guessed the Ukraine could play such a big role in all of this.

    • Pipcrawler

      Hey John, in situations like Ukraine, no one usually sees it coming. That’s why we’re risk managers first, to protect ourselves from the unforeseen events that can pop up at any time.

  • ForExchange

    Thanks for the follow up of your article. It helps a lot to learn the market movement.

    I have though one question: I understand why you closed the first trade. However in the second trade there is no safe haven currency. Don’t you think that the pair can go on your way as well?

    Have a nice Sunday

    • Pipcrawler

      In every currency pair you trade, there is always a funding currency. Safe haven moves don’t only mean a flight to more stable capital markets, but a rush back into funding assets as traders get out of the assets bought with that credit. In the case of NZD/CAD, the loonie was the funding asset.

  • John

    You were absolutely right! Both USD/JPY and NZD/CAD plummeted!

    • Pipcrawler

      I get lucky every once in a blue moon John…the next blue moon will probably come around some time in 2015 or beyond 😀

  • ForExchange

    Do you think Pipcrawler that in short term it worth to invest in the USD?

    • Pipcrawler

      In the short-term, we’re looking at the Fed Tapering more and geopolitical risk pushing traders to take out bets in places like emerging markets, and into the U.S. for safety. If or when those stories change is when you’ll probably see less demand for U.S. assets and the Greenback. I’d keep my ear to the ground for now.