News Trade Idea: USD/JPY Fibs Ahead of NFP

Haven’t seen many great swing opportunities lately, but this setup on USD/JPY just might do with potential volatility coming from NFP right around the corner.

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 4-Hour Forex Chart

USD/JPY 4-Hour Forex Chart

We’ve got the U.S. Non-Farm payrolls report coming out soon, a potentially monster, volatile short-term event for the Greenback. My main man Forex Gump did an excellent write-up on what we may see coming up for the U.S. employment data, and I’m on board with his analysis so if you want to see the fundamental argument for this trade, I highly recommend reading his post.

As for the technical side, if we see a pop in volatility and the market is brought up higher, I’ll look to short with my short-term fundamental bias to the downside at the previous consolidation area around 109.00.  This area could draw in sellers, but if the volatility is strong, we could see 110.00 as well before enough sellers can hold the fort (all assuming we don’t get a huge surprise in NFP data). My stop is above that 110.00 major psychological level (also 1/2 of the weekly ATR), and my max profit target is the next major psychological level lower.  Here’s what I’m doing:

Short half position USD/JPY at 109.00, max stop at 110.75, max profit target at 105.00

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 because it is a news trade,  and with this structure, I have a potential reward-to-risk ratio of about 2.28:1. If this position does go my way though, I’ll likely roll down my stop or close entirely lock in profits ahead of the weekend.

Of course, anything can happen in the forex markets, 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!

Pipcrawler’s Q1 2016 Blog Trading Performance
Pipcrawler’s Favorite Trading Books

  • Pingback: Trade Adjustments: CAD/JPY & USD/JPY Shorts()

  • Pipcrawler

    I actually kept the order open as a swing trade. I’m thinking recent catalysts for the rally are speculation and not game changers, so to there’s a possibility of the downtrend resuming. We’ll see!