Pick of the Day: USD/JPY – Cancel Open Orders

Cancel Open Orders: 2007-10-10 19:00

USD/JPY pushed higher and found resistance at 117.50 before dropping lower, then settling in the middle of today’s range. No trade was triggered, and I have decided to close open orders ahead of the Bank of Japan interest rate decision.

This risk is to the upside as it is almost a guaranteed hold on the decision, even with the bearish Dollar sentiment through out the markets.

Cancel Open Orders

Stay tuned for a new trade idea!

Trade Idea: 2007-10-10 00:01

PoD Chart

We have a possible reversal play with USD/JPY as technicals may be lining up with a bearish Dollar sentiment.

As we can see on the chart, we have a few technical indicators showing that we may see a reversal as the pair bounces off the Bollinger bands (set to two standard deviations). Also, we see a bit of divergence with prices moving up with higher lows, and stochastics trending lower with lower lows.

The risk to our trade is the return to risk as market players purchase riskier assets today, including equities and carry trades. But with short term bearish sentiment on the Dollar, we may be able to take a few quick pips on this one. Here’s my trade idea:

Short USD/JPY at 116.60, stop at 117.35, pt1 at 116.30, pt2 at 115.60

Remember to never risk more than 1% of your account on any single trade. Adjust position sizes accordingly.

Good luck and good trading!

btw – I will be hanging out in the chatrooms tomorrow morning (9am EDT – 12pm EDT), so come hang out and let’s talk some forex!

  • swordofrue

    First it was Big Pipin, now you! I am very confident in my long USD/JPY and I am sticking to it :) Up 80+ at the moment and I am prepared to stick with this one until break even. I think ill be able to hold onto it at least till this weeks end. Lets evaluate more then.\

  • swordofrue

    First it was Big Pipin, now you! I am very confident in my long USD/JPY and I am sticking to it :) Up 80+ at the moment and I am prepared to stick with this one until break even. I think ill be able to hold onto it at least till this weeks end. Lets evaluate more then.\

  • bylex

    Yep im staying long on this one. Probably heading for 117.90 at the 50% fib. level of the 124.20/111.61 swing, but I’d set the PT a little bit lower just in case. For those who have already made a decent profit, time to set the trailing.

    cheers

  • PipsiCola

    I beg to differ on this one… you are showing a divergence as a supporting claim that the price is about to reverse… BUT, the divergence is a “Hidden BULLISH Divergence”. I checked the school lessons to verify. The pattern you are describing is a continuation pattern, which goes AGAINST your short-idea. I may be wrong on this one, or you may have other factors which you think are more in play… opinions?

  • bylex

    Yep im staying long on this one. Probably heading for 117.90 at the 50% fib. level of the 124.20/111.61 swing, but I’d set the PT a little bit lower just in case. For those who have already made a decent profit, time to set the trailing.

    cheers

  • Pipcrawler

    Yes, I am also playing off of the bearish Dollar sentiment, especially after yesterday’s FOMC meeting minutes showed that inflation was less of a concern on the Fed as they felt it will continue to decline. Also, I feel that if equities sell off on profit taking after yesterday’s all time highs, then risk appetite will reduce and we will see a pull back on carry trades – again bearish on USD/JPY pair. The divergence between stochs and price action in MY view is a bearish signal. Of course, I am playing it safe as I am waiting for the pair to hit 116.60 before entering the trade. I appreciate everyone’s opposing views. Can’t wait to see what happens!

  • PipsiCola

    Oh… well… ok then. :)

  • PipsiCola

    I beg to differ on this one… you are showing a divergence as a supporting claim that the price is about to reverse… BUT, the divergence is a “Hidden BULLISH Divergence”. I checked the school lessons to verify. The pattern you are describing is a continuation pattern, which goes AGAINST your short-idea. I may be wrong on this one, or you may have other factors which you think are more in play… opinions?

  • Pipcrawler

    Yes, I am also playing off of the bearish Dollar sentiment, especially after yesterday’s FOMC meeting minutes showed that inflation was less of a concern on the Fed as they felt it will continue to decline. Also, I feel that if equities sell off on profit taking after yesterday’s all time highs, then risk appetite will reduce and we will see a pull back on carry trades – again bearish on USD/JPY pair. The divergence between stochs and price action in MY view is a bearish signal. Of course, I am playing it safe as I am waiting for the pair to hit 116.60 before entering the trade. I appreciate everyone’s opposing views. Can’t wait to see what happens!

  • PipsiCola

    Oh… well… ok then. :)