Risk aversion took over this week, which typically means broad gains for the Japanese yen. This was enough to push USD/JPY down to my long orders, but it also created an environment where it didn’t make sense to be long at the moment. Closed my trade down manually…here’s a quick review.
Original Forex Trade Idea: Putting Orders in for USD/JPY Long
As I mentioned above, risk sentiment is shifting big time back towards risk-off mode. This is partly due to the weak manufacturing PMI numbers signaling a global slowdown, but also geopolitical fears and Ebola fears in the U.S. Equity markets are starting to fall, commodity markets having already been getting killed all September, and we’re starting to see the Japanese yen turn higher.
On USD/JPY, after sellers held the major psych level of 110.00, sellers began unwinding positions on risk aversion sentiment, pushing USD/JPY below the moving averages and the minor support at 108.50. With the momentum still strong today, and with U.S. NFP coming up tomorrow, I decided to close manually at 108.07 to limit my total loss.
Total: -93 pips/ -0.71% loss
In hindsight, I probably should have waited for bullish reversal candles as it would have had me waiting long enough to see how bad global PMI data would be. The Ebola news was kinda out of the blue, so there was no way to see that in advance. Overall, the shift from fundamental drivers to sentiment drivers was quick and I should have adjusted quicker. On the positive side, it was a good choice to keep the trade small and to close it today, although I probably could have closed it a little sooner to save a few pips.
With NFP going on tomorrow, that’ll be it for me this week, which is good because it’s time to do my quarterly review to see how I did and find out what I can improve on for the remainder of the year. Look out for that post to see if my mistakes can help you improve; until then…good luck and good trading!