Pick of the Day: USD/JPY – Trade Closed

Trade Closed: 2008-09-12 00:44

My trade was closed at the end of the US trading session as USD/JPY rallied throughout the day. The pair hit its low of the day just above 106.00 before buyers bought back in on speculation on a possible Lehman sale, bringing the pair back above 107.00 – my adjusted stop.

1st Half: +75 pips
2nd Half: +100 pips
Total: +0.875% gain

I still like a short on this pair and it looks like another lower “high” is being formed on the charts, but I think I’ll stay out for now as we head into potentially volatile news events and the weekend. Stay tuned as I may have new charts to look at to get ready for next week!

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Trade Update: 2008-09-11 10:13

After nearly stopping out on my remaining position during yesterday’s US session, USD/JPY fell once again throughout today’s Asia and European trading session as traders price in further risk aversion.

This morning, we saw continued weakness in US data as the US trade deficit widens and weekly jobless claims continue to come in above estimates.

I still like this trade, but it looks like we may have a bit of trouble seeing 106.00 before the end of the European/US overlap. So, I am going to adjust my stop to lock in more profits and go for further profits ahead of major data on Friday.

Adjusting stop on remaining position to 107.00 to lock in profits. Adjust target to 105.00.

We have one more day of data to get through before the end of the week. Tomorrow’s US PPI and Retail Sales may give this trade a boost as energy and commodity prices continue to fall and consumers continue to cut back on their spending. Let’s hope that this be the case and see if there’s more pips to be had. Stay tuned!

Trade Adjustment: 2008-09-09 11:13

USD/JPY traveled lower throughout the Asia and European trading session, closing the gap as it made a low for the day around 107.26. It has been a roller coaster since then as the pair shot back up to 108.10 and then back down to the day’s lows as US equities opened up for the day.

With the pair trading near the lows of the day, I am going to make a few adjustments:

Close half position at market (107.25), to lock in some profit on the close of the gap. Adjust stop loss on remaining position to breakeven at 108.00. My take profit on the remain position will be 106.00.

This week’s moves were pretty big, so I think we may see a bit of consolidation. I still see a downward bias as I think risk aversion will continue to play on global slowdown. I will continue to watch this position, so stay tuned!

Trade Idea: 2008-09-08

PoD Chart

I’d like to start the week off by taking another look at USD/JPY. This weekend’s events created an event we do not see to often in currency trading – the gap!

In my experience, the weekend gap tends to fill itself back up over the course of the next day or so. We can see after the gap, the pair found resistance at the falling trendline, showing sellers are in control of this pair for the time being. And with the fill being in the direction of the overall trend, I like it even better this time around.

I would like to short USD/JPY based on this idea, and that this initial reaction by traders on the US government taking control of Fannie and Freddie may be short term.

Short USD/JPY at 108.00, stop at 109.00, pt1 at 107.00, pt2 at 106.00

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

Stay tuned!

  • xaser

    the USDJYP was on a uptrend b4 the weekend… its not coming down especially with the greenback strengthening against all other currencies. Just my 2cents.

  • enochbenjamin

    I am with you on this one! Fibs line up too!

  • Drav

    Unlucky on the stopout….the pair looks to be consolidating on the last rise before we get another move…I’d agree the USD does seem pretty strong today, will be interesting to see if it breaks the 38.2 fib retracement at 107.8ish as that seems to be a bit of a support level right now…..

  • Drav

    doh, read again, you’re not stopped out at all….lets see if price gets below 107.88 support level….could be v nice if it does :)

  • xaser

    support level has been broken.. lets see what happens

  • -Conan-

    It’s definitely coming down. :) I snagged 40 pips this morning.

  • Pipcrawler

    Thanks for the comments everyone! This may take a while to play out so stay tuned!

  • xaser

    the USDJYP was on a uptrend b4 the weekend… its not coming down especially with the greenback strengthening against all other currencies. Just my 2cents.

  • enochbenjamin

    I am with you on this one! Fibs line up too!

  • Drav

    Unlucky on the stopout….the pair looks to be consolidating on the last rise before we get another move…I’d agree the USD does seem pretty strong today, will be interesting to see if it breaks the 38.2 fib retracement at 107.8ish as that seems to be a bit of a support level right now…..

  • Drav

    doh, read again, you’re not stopped out at all….lets see if price gets below 107.88 support level….could be v nice if it does :)

  • xaser

    support level has been broken.. lets see what happens

  • -Conan-

    It’s definitely coming down. :) I snagged 40 pips this morning.

  • Pipcrawler

    Thanks for the comments everyone! This may take a while to play out so stay tuned!

  • linalm

    Hello! It would be very helpful to know how you determine your target entry price (108.00 in this case). Is this something you can expand on, please? Thank you in advance.

  • Pipcrawler

    Pretty simple linalm. It’s just below the falling trendline, and I didn’t think it would make it back up to 109.00 as I think that risk aversion will return. The rally was a temporary reaction to the Fannie and Freddie news. It’s not a quick fix and the markets may return to the sentiment that global growth is still slowing. The de-leveraging in financial markets will continue. Traders see that the resistance held and that sellers are still in control. Also, I like to play round numbers…. =)

  • linalm

    Hello! It would be very helpful to know how you determine your target entry price (108.00 in this case). Is this something you can expand on, please? Thank you in advance.

  • xaser

    I never like choosing such round numbers due to psychological resistances.. just my 2cents.
    Looks like you were right about the rally tho so ur word is clearly wiser than mine :)

  • Pipcrawler

    Pretty simple linalm. It’s just below the falling trendline, and I didn’t think it would make it back up to 109.00 as I think that risk aversion will return. The rally was a temporary reaction to the Fannie and Freddie news. It’s not a quick fix and the markets may return to the sentiment that global growth is still slowing. The de-leveraging in financial markets will continue. Traders see that the resistance held and that sellers are still in control. Also, I like to play round numbers…. =)

  • xaser

    I never like choosing such round numbers due to psychological resistances.. just my 2cents.
    Looks like you were right about the rally tho so ur word is clearly wiser than mine :)

  • woodenfootspa

    Hi Pipcrawler

    How often do u trade? Do you post all your trade ideas or do you trade another system apart from this one?

  • woodenfootspa

    Hi Pipcrawler

    How often do u trade? Do you post all your trade ideas or do you trade another system apart from this one?

  • Pipcrawler

    thanks for the comments everyone….woodenfootspa, i trade often, so i am unable to post all of my trade ideas….

  • Pipcrawler

    thanks for the comments everyone….woodenfootspa, i trade often, so i am unable to post all of my trade ideas….

  • DirkH143

    Got a question, it looks to me that USD/JPY made it painfully down to 107.00 or where it is right now. What are your measurements or assumptions that it will continue trending down?

    Thanks.

  • Pipcrawler

    USD/JPY currently behaves like a proxy to global risk appetite. For example, today institutions were risk averse and they sold equities and carry trades. Vice versa if traders became more risk tolerant. This correlation is not 100% all the time, but in today’s environment I see further decline in global growth, declining corporate earnings, a decrease in consumer spending, price pressures, and a de-leveraging by institutions out of riskier high yielding assets. What this last part means is that institutions will have to buy back Yen they sold to finance things like riskier investments in currencies, bonds, mortgages, equities etc. So, longer term we still have more risk aversion to price into the markets, but I’m sure we’ll see the occasional rally. Of course, that’s just my opinion and markets will do what they do. We’ll just have to wait and see what happens…..

  • DirkH143

    Got a question, it looks to me that USD/JPY made it painfully down to 107.00 or where it is right now. What are your measurements or assumptions that it will continue trending down?

    Thanks.

  • Pipcrawler

    USD/JPY currently behaves like a proxy to global risk appetite. For example, today institutions were risk averse and they sold equities and carry trades. Vice versa if traders became more risk tolerant. This correlation is not 100% all the time, but in today’s environment I see further decline in global growth, declining corporate earnings, a decrease in consumer spending, price pressures, and a de-leveraging by institutions out of riskier high yielding assets. What this last part means is that institutions will have to buy back Yen they sold to finance things like riskier investments in currencies, bonds, mortgages, equities etc. So, longer term we still have more risk aversion to price into the markets, but I’m sure we’ll see the occasional rally. Of course, that’s just my opinion and markets will do what they do. We’ll just have to wait and see what happens…..

  • woodenfootspa

    Hi Pipcrawler

    On an average how may trades do you take in week? Do all place all your trades similarly to your trade ideas in the blog, or do you trade multiple trading systems

    I hope you dont mind me pressing for the specifics. I am just curious to the frequency of your trades. As I am trying to trade a similar “swing” style as yours. So I wanted to have a feel if I am over-trading or under-trading.

    Thanks

    Cheers

  • woodenfootspa

    Hi Pipcrawler

    On an average how may trades do you take in week? Do all place all your trades similarly to your trade ideas in the blog, or do you trade multiple trading systems

    I hope you dont mind me pressing for the specifics. I am just curious to the frequency of your trades. As I am trying to trade a similar “swing” style as yours. So I wanted to have a feel if I am over-trading or under-trading.

    Thanks

    Cheers

  • Pipcrawler

    The amount of swing trades varies every week. It all depends on what’s happening. But I would say there are at least 2 to 3 swing trade opportunities per pair every week. :) Good luck!

  • Pipcrawler

    The amount of swing trades varies every week. It all depends on what’s happening. But I would say there are at least 2 to 3 swing trade opportunities per pair every week. :) Good luck!