Trade Setup & Review: USD/JPY Range Support

Well, that was quick! I tried to scalp some pips off the U.S. elections outcome but it turns out Trump’s win wasn’t exactly Doomsday for the dollar. Here’s how it all turned out.

USD/JPY Trade Setup

I had a nasty feeling that the election results would turn out to be a surprise for many so I stayed up late to watch the numbers trickle in from the different states. When it became apparent that the Donald would run off with a victory against Clinton, the Greenback started tanking so I saw an opportunity to catch a quick short trade until the next inflection points.

I settled on shorting USD/JPY since I figured that anti-USD and risk-off vibes would greatly benefit the Japanese yen. Besides, the pair already broke below the mid-channel area of interest around 103.50 on the longer-term range I was watching so I sold at market and set my sights on the range support at 100.00 for my initial target.

USD/JPY 4-hour Forex Chart

USD/JPY 4-hour Forex Chart

But, as you can see from the chart above, price barely made it to the 101.00 mark before a sharp turnaround took place later in the day. Even though U.S. futures pointed to a lower open, equity indices actually chalked up YUUUGE gains for the day, especially after Trump was cool and composed during his victory speech. Investors found some assurance in his campaign promises of cutting corporate taxes and increasing infrastructure spending as well.

As a result, USD/JPY zoomed right back up to the top of its range so I decided to close early. Price seems to have enough bullish momentum for an upside breakout so it made sense to jump ship and cut my losses. Fortunately, I only risked 0.25% of my account on this scalp setup so the dent on my account wasn’t too bad.

P/L: -450 pips / -0.23%

In hindsight, I probably should’ve trailed my stop right away since I was hoping to catch the strong bearish momentum. Either that or I should’ve refrained from taking any post-election trades at all, but I guess FOMO (Is that what the kids are saying these days?) got the better of me with this one.

As always, 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 simply follow what I do.

Risk Disclosure
Pipcrawler’s Q3 2016 Blog Trading Performance