Pick of the Day: USD/JPY – Trade Closed

Trade Closed: 2007-12-11 14:26

The FOMC decided to cut rates by 25 basis points today and it looks like the “buy the rumor, sell the news” scenario played out as riskier plays sold off right after the report.

Our trade closed as USD/JPY dropped lower, actually ahead of the decision, to 111.50 – our adjusted stop.

1st half: +32 pips
2nd half: +25 pips
Total: +57 pips/ .57% gain

Markets will now process the new information from now and probably through the Asia and Euro trading sessions as those markets are closed now. Stay tuned for a new trade idea tonight!

Trade Adjustment: 2007-12-11 08:55

It’s finally here…FOMC interest rate decision! We have that event coming out later today at 2:15 pm EST and I have a feeling we have been in a “buy the rumor, sell the news” scenario. We may see equities and carry trades sell off of the news as traders take profits as markets ran up over the past few days.

Ahead of the event, I’d like to adjust our stop in case we do see USD/JPY sell off after the news.

Adjust stop on remaining position from breakeven to 111.50 to lock in another +25 pips.

For those with larger positions, you may even want to scale down positions ahead of the event and add back on later if the trade goes your way.

Stay tuned for updates…good luck!

Trade Adjustment: 2007-12-07 08:33

US Non-Farm Payroll shows that 94K new jobs were added and average hourly earnings up 0.5%. There were downward revisions to the Sept. and Oct. numbers for a net decline of -45K.

We’ve been seeing a trend of downward revisions which I think the Fed will factor in to their rate decision and a stronger case for a 50 basis point cut. Riskier traders would love that and pile into equities and carry trades.

So, as markets price in the data at the moment, we will continue to hold and target 112.75, adjusting our stops along the way. Good luck!

Trade Adjustment: 2007-12-07 08:10

We have Non-Farm Payrolls coming up in a few minutes, so let’s reduce our risk ahead of this report.

Close half position at market (currently 111.57). Move stop on remaining position to breakeven.

Good luck and stay tuned for possible updates after the report.

Trade Update: 2007-12-06 14:30

Just a quick update as our trade was triggered at 111.25 and we are now long USD/JPY. As expected, risk appetites are still up ahead of tomorrow’s NFP report as equities and carry trades across the globe are up for the day on strong jobs expectations.

The pair is stalling around 111.40 at the moment as it is trading near the top of the daily range. We will continue to hold for now, but look out for an update as we may close the position ahead of the potentially volatile US jobs data tomorrow. Good luck!

Trade Idea: 2007-12-05 21:35

PoD Chart

Tonight’s “Pick” is a play on global risk and the strong correlation between the Japanese Yen and US equities.

US equities have been on a tear as traders pour into higher risk assets on speculation the FOMC will cut interest rates next week. As in the recent past year or so, as global risk appetites rise traders sell off the Yen. We may see this continue for the next day or so heading into NFP this week and the FOMC interest rate decision next week.

So, we will go long USD/JPY and as we can see on the chart we have a reverse head and shoulders pattern forming with the pair starting to break the neckline.

Long USD/JPY at 111.25, stop at 110.75, pt1 at 111.75, pt2 at 112.75

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

Good luck and good trading!

  • 4xpipcounter

    It’s going to 112.32 if it breaks 111.53. NFP should take care of that. US jobs should not have any problem breaking the projected figure

  • JeffDow

    Newbie here. What is NFP?

  • JeffDow

    Is that non-farm payrolls?

  • 4xpipcounter

    It’s going to 112.32 if it breaks 111.53. NFP should take care of that. US jobs should not have any problem breaking the projected figure

  • JeffDow

    Newbie here. What is NFP?

  • JeffDow

    Is that non-farm payrolls?

  • Pipcrawler

    Yes. NFP is the US Non-Farm Payrolls report. It’s probably the most anticipated economic event every month. Markets move very fast during its release meaning whipsaws and slippage. It is highly recommend to not trade around the release of this report.

  • JeffDow

    I had my first good trade with this call. Thanks so much.

    Looking forward to the next one!

  • JeffDow

    Are we still targeting 112.75 on USD/JPY?

  • Pipcrawler

    Yes, i stated in my last update that we will continue to target 112.75 and adjust our stops along the way.

  • Pipcrawler

    Yes. NFP is the US Non-Farm Payrolls report. It’s probably the most anticipated economic event every month. Markets move very fast during its release meaning whipsaws and slippage. It is highly recommend to not trade around the release of this report.

  • JeffDow

    Thanks. Looks like it is trying to break above 111.80 now.

  • JeffDow

    I had my first good trade with this call. Thanks so much.

    Looking forward to the next one!

  • JeffDow

    Are we still targeting 112.75 on USD/JPY?

  • Pipcrawler

    Yes, i stated in my last update that we will continue to target 112.75 and adjust our stops along the way.

  • JeffDow

    Thanks. Looks like it is trying to break above 111.80 now.