Pick of the Day: USD/JPY – Close Trade

Close Trade: 2008-21-15:45

What’s up everyone! It’s the end of the week and as we see risk tolerance grow this afternoon I have decided to close my trade out to avoid weekend event risk.

Close open position at market (95.65).

1st Half: +200 pips
2nd Half: +85 pips
Total: +0.71% gain

This late rally is most likely due to US President-elect Obama announcing his candidate for the US Treasury Secretary and that he may announce his economic team on Monday. This brings a bit of confidence to the markets, but I don’t think it’ll last especially as we head into the holiday week in the US. I remain short bias for now and I may jump back in short on this pair next week.

Stay tuned and have a great weekend!

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Trade Adjustment: 2008-11-20 09:40

Finally seeing some action in the currency markets, and after another disappointment in US initial claims, USD/JPY fell this morning and hit my first profit target at 94.50. Half my position is closed and it’s time to make some adjustments.

Half position closed at 94.50 to lock in profit. Adjusting stop on remaining position to breakeven at 96.50 to create a risk free trade. Will trail stop by 200 pips from here on out.

So, more bad news as usual, so I’m sticking with the “risk aversion” theme for now. Stay tuned!

Trade Update: 2008-11-19 13:50

Good afternoon! Since I posted my ideas on USD/JPY, my trade was triggered but price action has been a big snoozer since then. Traders have kept the pair in a range between 96.00 to 98.00, even after US data jolted the sleepy currency markets this morning.

I still plan on holding onto my trade. Even though we haven’t seen a massive breakout, I still like a short on this trade as economic conditions continue to worsen. Today’s data is another example of weakening conditions as housing data continues to be weak and a drop in CPI doesn’t help the interest rate outlook at all. It’s not until housing turns that my outlook on risk will change, and it seems that will not happen for a while.

So, stay tuned for updates and hopefully adjustments (if this market ever moves). Hehe.

Trade Idea: 2008-11-17 20:20

PoD Chart

Greetings! Looks like I’m going to start out my week with a technical setup on USD/JPY. Check it!

On the one hour chart, USD/JPY is forming a familiar technical setup. The pair looks like it’s breaking lower out of a symmetrical triangle, possibly returning to the downside. Volatility has been waning at the end of last week and this week, which means we may see a breakout soon.

The catalyst for the breakout may kick in tomorrow as we see economic data from the US along with testimony from Federal Reserve Chairman Bernanke and US Treasury Secretary Paulson to Congress on the TARP program. We will probably see more weak economic data which may continue to drag down risk tolerance and the Greenback against the Yen.

So, the technical setup is lining up with the trend, sentiment, and fundies which makes for a good looking trade. Here’s what I’m going to do:

Short USD/JPY at 96.50, stop at 98.50, pt1 at 94.50, pt2 at 92.50

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

Stay tuned!

32 comments

  1. enochbenjamin

    Pipcrawler,

    I have noticed that the amount you risk has grown as of late. Is this due to an increase in your trading capital (keeping in line with 1% risk) or simply due to the volitility that we’ve seen over the past couple of months?

    Thanks – as always!

    Reply
  2. PipcrawlerPipcrawler

    My risk is always the same – no more than 1% of my account is risked. Actually it’s usually 0.25% – 0.50% of my account. If you mean my stop distance, then yes it has grown because of the volatility. Just gotta reduce your position size as the stop gets wider.

    Reply
  3. Anaiya

    I have been eyeing this trade Pipcrawler and entered just before you posted your trade alert. Like many others who benefit from your analysis I think I am getting the hang of seeing the markets as Pipcrawler sees them. I am confident this trade will play out, thanks

    Reply
  4. enochbenjamin

    Pipcrawler,

    I have noticed that the amount you risk has grown as of late. Is this due to an increase in your trading capital (keeping in line with 1% risk) or simply due to the volitility that we’ve seen over the past couple of months?

    Thanks – as always!

    Reply
  5. PipcrawlerPipcrawler

    My risk is always the same – no more than 1% of my account is risked. Actually it’s usually 0.25% – 0.50% of my account. If you mean my stop distance, then yes it has grown because of the volatility. Just gotta reduce your position size as the stop gets wider.

    Reply
  6. Anaiya

    I have been eyeing this trade Pipcrawler and entered just before you posted your trade alert. Like many others who benefit from your analysis I think I am getting the hang of seeing the markets as Pipcrawler sees them. I am confident this trade will play out, thanks

    Reply
  7. pippinforcash

    well it makes a lot of sense, the only thing is I am not so sure the breakout will be to the downside…I am actually short term bullish equities and there has been talk of japanese buying nikkei when it dips towards 8000 level…didnt anyone see the nikkei rally on monday for no reason…yea it could have been a short squeeze in an illiquid market but Im not so sure. I think we could actually see the crosses rally in the short term…I think it will likely play out as Pipcrawler says, and at the same time I will keep a close eye on it to see which side it breaks to

    Reply
  8. jivtree

    Thanks for the great blog Pipcrawler and for your contribution to the pipping community!

    I have taken this trade, but as there hasn’t been a break out yet (as of 19th Nov) should we hold onto this trade until the end of the week?

    Reply
  9. pippinforcash

    well it makes a lot of sense, the only thing is I am not so sure the breakout will be to the downside…I am actually short term bullish equities and there has been talk of japanese buying nikkei when it dips towards 8000 level…didnt anyone see the nikkei rally on monday for no reason…yea it could have been a short squeeze in an illiquid market but Im not so sure. I think we could actually see the crosses rally in the short term…I think it will likely play out as Pipcrawler says, and at the same time I will keep a close eye on it to see which side it breaks to

    Reply
  10. jivtree

    Thanks for the great blog Pipcrawler and for your contribution to the pipping community!

    I have taken this trade, but as there hasn’t been a break out yet (as of 19th Nov) should we hold onto this trade until the end of the week?

    Reply
  11. PipcrawlerPipcrawler

    thanks for the comments everyone! I hope the way I see it works for you Anaiya so that you may find your own way! Pippinforcash – liquidity is still out of wack, so it’s harder than ever before to gauge what may happen. I’m just sticking with the current trend and any rally may be viewed by anyone who is left to play the markets as a selling opportunity…Let’s see how it goes. Jivetree – you’re welcome! Looks like the markets are calming down, but we may see the occasional spike in volatility here or there. Be very, very cautious everyone and there’s nothing wrong with demo trading in this environment. Good practice and good luck!

    Reply
  12. petitepipper

    Hello,
    I am in the trade and watched during the announcements as it went against us. I notice now that it is making another symetrical triangle if it were to break up out of this would that be a sign to take the small loss as the original reason for the trade as well as the post announcement conditions would no longer be relevent?
    thanks,
    petitepipper

    Reply
  13. PipcrawlerPipcrawler

    thanks for the comments everyone! I hope the way I see it works for you Anaiya so that you may find your own way! Pippinforcash – liquidity is still out of wack, so it’s harder than ever before to gauge what may happen. I’m just sticking with the current trend and any rally may be viewed by anyone who is left to play the markets as a selling opportunity…Let’s see how it goes. Jivetree – you’re welcome! Looks like the markets are calming down, but we may see the occasional spike in volatility here or there. Be very, very cautious everyone and there’s nothing wrong with demo trading in this environment. Good practice and good luck!

    Reply
  14. camelman

    Hi Pipcrawler, thanks for your posts. Is it good practice to keep positions open before major announcememts? The calendar is full of US news on Wednesday by 6:30 AM. It’s a 50/50 chance for the position to go way up or way down.
    Thanks

    Reply
  15. petitepipper

    Hello,
    I am in the trade and watched during the announcements as it went against us. I notice now that it is making another symetrical triangle if it were to break up out of this would that be a sign to take the small loss as the original reason for the trade as well as the post announcement conditions would no longer be relevent?
    thanks,
    petitepipper

    Reply
  16. pippinforcash

    yea Im staring at this chart all day long in the Asian session and Im just not sure…I agree with camelman… guess now I have a slight downside bias, but not much. Anyways, Im wondering whether I should have registered my username as ColdheartPip, Pipslap, or PippinAsianHos…the possibilities for amazing usernames on Babypips.com really is endless! But sentiment seems to have changed a bit, and now my buddies etc who were calling for an equity rally are starting to question whether it will materialize. We could be in this 98-96.00 range for awhile…

    Reply
  17. camelman

    Hi Pipcrawler, thanks for your posts. Is it good practice to keep positions open before major announcememts? The calendar is full of US news on Wednesday by 6:30 AM. It’s a 50/50 chance for the position to go way up or way down.
    Thanks

    Reply
  18. pippinforcash

    yea Im staring at this chart all day long in the Asian session and Im just not sure…I agree with camelman… guess now I have a slight downside bias, but not much. Anyways, Im wondering whether I should have registered my username as ColdheartPip, Pipslap, or PippinAsianHos…the possibilities for amazing usernames on Babypips.com really is endless! But sentiment seems to have changed a bit, and now my buddies etc who were calling for an equity rally are starting to question whether it will materialize. We could be in this 98-96.00 range for awhile…

    Reply
  19. Babysteps

    Hello pip
    Just notice something in last weeks good or bad economy data release always help us$ to stronger front of other pairs,I don’t know why not logic but that what i notice.
    What u think?
    Thanks

    Reply
  20. Babysteps

    Hello pip
    Just notice something in last weeks good or bad economy data release always help us$ to stronger front of other pairs,I don’t know why not logic but that what i notice.
    What u think?
    Thanks

    Reply
  21. johnnykanoo

    well your first target was hit and im still holding on to see if the usd/jpy will continue its decline.

    I wanted to take this moment and thank you for posting your trade ideas and opening yourself to scrutiny. In some ways it must be harder psychologically speaking, to publically call a trade and then endure people disecting it.

    I have kept an eye on your trade calls and I am confident in your ability and you analysis. Thanks again, John

    Reply
  22. PipcrawlerPipcrawler

    Thanks for the comments everyone! Petitepipper – if we did see a breakout to the upside, it would have invalidated my trade, but because I’m pretty confident in running with the current trend and market conditions, I may have just taken a small bit off the table. Camelman – With my swing trades, I feel it’s okay to keep’em open, with the exception of super major events like NFP, interest rate decisions, etc. And then only if the market really has no clue where the numbers may read. Lately, we all know it’s pretty bad out there, so i’ve held on to most of my longer term trades through news events

    Reply
  23. PipcrawlerPipcrawler

    pippinforcash – I like how you think, but let’s try to keep it clean and positive, but fun! :) Babysteps – you have to understand the current environment. While the US data has been bad, the main focus for big players is global weakness and recession. And with the financial crisis, institutions have to reduce the risk in their books, meaning cutting down their assets like stocks, commodities, currencies etc. For years, these assets were bought up with funds from selling lower yield assets like the Japanese Yen and US Dollar. It’s all reversing now which is why we’re seeing the Sterling, Aussie, Euro, etc. fall and the USD and Yen rally. Does this make sense?

    Reply
  24. PipcrawlerPipcrawler

    johnnykanoo – You’re welcome…I get lucky sometimes :) It is tough psychologically to put yourself out there, especially during the losing streaks. It’s kind of a double whammy to the head when I lose because not only do I get hit in the pocket book, but I feel I let our visitors down. But hopefully, I’ll have the privilege to continue to blog and interact with everyone in hopes my experience does help a newbie or two at least develop realistic expectations and positive trading habits.

    Reply
  25. johnnykanoo

    well your first target was hit and im still holding on to see if the usd/jpy will continue its decline.

    I wanted to take this moment and thank you for posting your trade ideas and opening yourself to scrutiny. In some ways it must be harder psychologically speaking, to publically call a trade and then endure people disecting it.

    I have kept an eye on your trade calls and I am confident in your ability and you analysis. Thanks again, John

    Reply
  26. PipcrawlerPipcrawler

    Thanks for the comments everyone! Petitepipper – if we did see a breakout to the upside, it would have invalidated my trade, but because I’m pretty confident in running with the current trend and market conditions, I may have just taken a small bit off the table. Camelman – With my swing trades, I feel it’s okay to keep’em open, with the exception of super major events like NFP, interest rate decisions, etc. And then only if the market really has no clue where the numbers may read. Lately, we all know it’s pretty bad out there, so i’ve held on to most of my longer term trades through news events

    Reply
  27. PipcrawlerPipcrawler

    pippinforcash – I like how you think, but let’s try to keep it clean and positive, but fun! :) Babysteps – you have to understand the current environment. While the US data has been bad, the main focus for big players is global weakness and recession. And with the financial crisis, institutions have to reduce the risk in their books, meaning cutting down their assets like stocks, commodities, currencies etc. For years, these assets were bought up with funds from selling lower yield assets like the Japanese Yen and US Dollar. It’s all reversing now which is why we’re seeing the Sterling, Aussie, Euro, etc. fall and the USD and Yen rally. Does this make sense?

    Reply
  28. PipcrawlerPipcrawler

    johnnykanoo – You’re welcome…I get lucky sometimes :) It is tough psychologically to put yourself out there, especially during the losing streaks. It’s kind of a double whammy to the head when I lose because not only do I get hit in the pocket book, but I feel I let our visitors down. But hopefully, I’ll have the privilege to continue to blog and interact with everyone in hopes my experience does help a newbie or two at least develop realistic expectations and positive trading habits.

    Reply
  29. pippinforcash

    very nice call Pipcrawler. I’m thinking more and more it is going to head lower – as I type USDJPY is at 94.40 – I like to wait and sell a rally at 95.00 level – then hopefully watch that sucker drop!

    Reply
  30. pippinforcash

    very nice call Pipcrawler. I’m thinking more and more it is going to head lower – as I type USDJPY is at 94.40 – I like to wait and sell a rally at 95.00 level – then hopefully watch that sucker drop!

    Reply

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