Pick of the Day: USD/JPY – Close Trade

Close Trade: 2009-05-20 09:26

Good morning! My short trade idea in USD/JPY was triggered at 96.50, where it had quickly found resistance and sellers to push the pair down as low as 95.50. With the FOMC meeting minutes coming up this afternoon, I have decided to close my trade down and lock in profits to avoid any unforeseeable surprises in data, commentary, or market reactions.

Close short position at market (95.76).

Total: +74 pips/ +0.61% gain

We have had a lot of new data signaling that conditions are still bad since the last meeting. The current market sentiment is that we are past the worst, but with so many downward revisions to recent data, conditions may continue to weaken – just not at a rapid pace. Any changes in rhetoric or tone towards no recovery in 2009 may hurt risk tolerance in the short term. Be cautious for the rest of this trading session! Until the next time, stay tuned!

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Trade Idea: 2009-05-18 17:19

PoD Chart

Good afternoon and welcome back to another wonderful week in Forex trading! Another strong Monday move in the currency markets, especially in USD/JPY as the pair rallies today about 150 pips. Is this an opportunity to jump back into the down trend?

Technically, the pair is in a down trend, but has retraced back off of its lows to the 38% Fibonacci level – an area of possible resistance. Stochastics have been indicating overbought conditions on the one hour charts and just now hitting those levels on the four hour charts. This indicates that buyers may be running out of steam and that we may see a return of the sellers.

Fundamentally, there’s no new economic data today, so risk sentiment was the main driver of price action. The Japanese Yen fell today on comments that the recent currency gains my hurt the Japanese economy. Of course, this sparks speculation of central bank intervention, and thus some JPY selling today. Tomorrow, we have some potentially volatile data with US housing data at 1230 GMT (forecasts are for better than previous month’s data) and then Japanese GDP at 2350 GMT (forecasts are for further contraction).

So, I am short bias on my technical reasons and I want to jump in the downtrend at a better price. The pair has already hit the 38% Fib level, but let’s see if it could take me back up there. Here’s what I am going to do:

Short USD/JPY at 96.50, stop at 97.70, pt1 at 95.30, pt2 at 94.10

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

Stay tuned and good luck!

14 comments

  1. pipsprof.

    Hello pipcrawler, this currency is not moving much and the threat of intervention from the japanese is making me to get out of this trade,also the daily chart has formed an engulfing pattern signaling a potential rise up,so i have decided to keep my 43pips,and watch out for another opportunity.Thanks for the trade idea,am out now @ 96.06.

    Reply
  2. pipsprof.

    Hello pipcrawler, this currency is not moving much and the threat of intervention from the japanese is making me to get out of this trade,also the daily chart has formed an engulfing pattern signaling a potential rise up,so i have decided to keep my 43pips,and watch out for another opportunity.Thanks for the trade idea,am out now @ 96.06.

    Reply
  3. zekelogan

    Rode wave to TP1. Carefully watched & closed 2nd contract a little lower than TP1. Good trade! Thanks!

    Reply
  4. zekelogan

    Rode wave to TP1. Carefully watched & closed 2nd contract a little lower than TP1. Good trade! Thanks!

    Reply
  5. PipcrawlerPipcrawler

    Thanks for the comments everyone! Surf67 – I pretty much post when I see opportunities and trade setups. This could be at any time. Right now we are looking to incorporate a better alert process, possibly twitter…. So, hopefully we’ll find something that works and let everyone know!

    Reply
  6. PipcrawlerPipcrawler

    Thanks for the comments everyone! Surf67 – I pretty much post when I see opportunities and trade setups. This could be at any time. Right now we are looking to incorporate a better alert process, possibly twitter…. So, hopefully we’ll find something that works and let everyone know!

    Reply

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