Pick of the Day: USD/JPY

Close Trades: 2007-03-28 10:08

With Durable Goods Orders coming out weaker than expected, the momentum to the downside looks very strong in USD/JPY. We were triggered on both long orders already, so I will close all open positions to avoid the risk of further selling. The current market price is 116.75, so we are taking a small hit of -30 pips.

1st half: -25 pips
2nd half: -05 pips
Total: -30 pips

Trade Idea: 2007-03-28 00:10

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We just saw a broad based gain in the Yen in early morning Asian session on reports that investors in Japan are repatriating earnings before the end of the Japanese fiscal year on March 31. Basically, this means that Japanese institutions are booking profits from overseas assets, which were purchased using funds from selling the Yen. Now they’re buying it back. I see this as a temporary sell off on a news event, and we should see a return to Yen selling on carry trades.

On the chart, we can see the pair approaching 117.00. This is a psychologically supportive level which intersects with the rising uptrend line drawn. Will it hold? I think it will, but just to be safe we will scale into a long position starting from 117.00.

Long half position USD/JPY at 117.00, stop at 116.60, pt 117.50

Long half position USD/JPY at 116.80, stop at 116.60, pt 117.20

Please remember to never risk more that 1% of your account on any single trade, so please adjust your position sizes accordingly.

Good luck and good trading!