Long USD/JPY at Rising Trendline – Closed

Trade Closed: 2013-11-08 8:15 ET

Good morning! Here’s a quick review of my USD/JPY long position after my stop adjustment yesterday.

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 1 hour forex chart

USD/JPY 1 hour forex chart

Yesterday during the morning Asia session, I decided to adjust my stop to just above breakeven (which I shared on my Twitter and Facebook pages) as I thought 98.70 was looking pretty strong so I wanted to reduce my risk. Plus, I was about to go on travel and be away from charts for a while, so it’s always prudent to reduce risk ask much as possible.

What happened while away was shocking in that we got a surprise better-than-expected read from the advanced US GDP data, summarized by my friend Forex Gump in one of his most recent Piponomic blog posts. Basically, the greenback found quick strength that was quickly reversed on doubts of the US’s ability for positive surprises to growth.

As we can see from the chart above, it was a quick pop higher, followed by a reversal that took USD/JPY back down to my adjusted stop at 98.35. Closed at stop orders.

Total: +4 pips/ +0.025% gain

Given the traveling situation I was in, the only thing I would have done differently was to change my order to a trailing stop. If I had using my stop, at the very least I would have gotten a 1:1 R:R.

I’m still on travel, so that’s it for me, for now. Stay tuned for new observations and ideas next week by following me at my social media pages mentioned above. Thanks and have a great weekend!

Trade Idea: 2013-11-05 7:01 ET

Good morning forex friends!  I took a simple technical setup on USD/JPY as the currency pair makes higher lows and the pullback stalls at a rising trendline.

USD/JPY 1 hr chart

USD/JPY 1 hr chart

As I mentioned in my USD/CHF trade review, I became long USD biased after the FOMC meeting last week. We saw a broad rally in the greenback to confirm that traders are speculating and positioning ahead of a Fed Taper sometime in the first half of 2014 (possibly even this December). And with the Bank of Japan still in massive stimulus mode with no change to policy in sight, I like a long play on USD/JPY for a simple, common sense trade.

I’ve already entered with a half position at market since the pullback seems to have stalled at the rising trendline marked on the chart, and I’m using a very wide stop for USD/JPY (below the last swing low) because of the data heavy week I’ve got ahead. Also, I’ll be quick to close the trade if it does break and hold below the rising trendline to limit my loss if it happens. My initial target is the major psychological level of 100.00, but it’s a soft one as I’ll get a feel for the environment first before deciding whether to close there or not. Here’s what I’m doing:

Long half position USD/JPY at market (98.31), stop at 97.60, profit target at 100.00

Remember to never risk more than 1% of a trading account on any single trade. Adjust position sizes accordingly. Risk Disclosure.

With this framework, my potential return-on-risk is over 2:1, and I will strongly consider adding to my position on a break and retest of previous resistance around 98.80 to maximize my profit potential.

Of course, anything can happen in the forex market, so if the story changes for the US Dollar, the Japanese Yen, or risk sentiment in general, I’ll be sure to adjust accordingly. Stay tuned by following me on Twitter and Facebook!

  • BIJOY

    It’s a good idea. I too is in this wave. But afraid about the resistance at the 99.00 area. So definitely I will move SL to BE at 99.00.Not able to post chart to show my analysis. Why is your technical guys afraid to allow posting charts in comments by the well wishers of this site ???? (‘=’)

    • Pipcrawler

      Hey Bijoy… thanks for your thoughts on USD/JPY. As for posting charts in comments, we just did some technical upgrades and holding off on new features right now, like comment images, until after we do some optimizing.

      • BIJOY

        I stopped out at BE

  • caddencadden

    I was toying with the idea of going long today on a similar trade and i did enter @ 98.31 too! i have already moved my stop to break even now after the non-m PMI USA came out better than expected….. we were quite lucky today with the usa non-m PMI which has now given me a risk free trade. the good thing about going long on this trade is that JPY prefer a weaker yen for trade purposes so the 100 level seems like the “normal” level these days, so the S/T you are using is highly unlikely to get hit and the 100 level now that the USA is back on better terms is highly likely.

    • Pipcrawler

      Thanks for your thoughts cadden. It’s always comforting to know there are others with the same thought process as me. I’m just sitting back now and waiting to see what the market will do. Good luck to the both of us!

  • Magic

    I think we will bounce off 99 downwards to finish the E move( ABCDE triangle with propably is going to D now??) what do You think about that?

    • Pipcrawler

      I’m not a wave analyst so I wouldn’t have anything constructive to say on your analysis Magic. Good luck to ya if you are trading USD/JPY and I hope you do well!

  • FxSniper

    Great trade. I longed too and am holding out for 100.60 at least for the first swing target. This move has the potential to be a mighty one going forward seeing that it would mean the the pair has now broken out of its multi month triangle formation. That would be significant!

    • Pipcrawler

      It looked like it broke the triangle to the upside. Are you still in this trade FxSniper?

      • FxSniper

        I just closed mine for 124 pips. I am re-setting a buy limit at 98.84 level and hoping that I could get a mini pull back! I’m a bit scared I may miss out though but I will be ok!

  • FxSniper

    Great trade. I longed too and am holding out for 100.60 at least for the first swing target. This move has the potential to be a mighty one going forward seeing that it would mean the the pair has now broken out of its multi month triangle formation. That would be significant!

    Read more: http://www.babypips.com/blogs/pick-of-the-day/forex-usdjpy-rising.html#ixzz2jreJfg45

  • James

    Man, all the longs just got Robb Riggle’D lol..

    • Pipcrawler

      LOL … I don’t know what “Robb Riggle’D” and it doesn’t sound good…. but it’s funny!

  • caddencadden

    I Closed up as soon as the rate cut from ECB hit.

    • Pipcrawler

      Nice… how did you do on your trade cadden?

  • Saverio

    but your position goes into STOP LOSS 97.60
    so we had a loss

    • Pipcrawler

      As with part of my normal practice, I like to move my stop to reduce my risk with various situations. This time it was because of the strong resistance and ahead of big news events. Something to consider adding to your trading techniques in the future.

  • FxSniper

    yes, I am still in. First Target is 100.60 but obviously calls for proper management at current levels

    • Pipcrawler

      Congrats on weathering the crazy volatility last week. Good luck on your risk free trade!

  • FxSniper

    I just decided on closing shop! But I re-set a limit other at 98.84 to try to recapture the swing if we get a mini pull back during the upcoming NY session. Not sure if I can get that bonus though but I am waiting

  • FxSniper

    103.00 Resistance level is the least I believe USDJPY can achieve come end of this year. 110.60 level is still not lost on me. Crazy but still looking very possible!