Pick of the Day: USD/JPY – Trade Closed

Trade Closed: 2009-05-28 09:15

Good morning! Last night, a report from Japan shows demand grew for overseas assets among Japanese investors, adding to the growing sentiment that the recession is abating. This sparked a sell off in the Yen and pushed USDJPY higher. This was enough to trigger my short orders at 95.60, but unfortunately it was enough to take it out to my stop at 96.20. Grrrrrrr!

Stopped out at 96.20

Total: -60 pips/ -1.0% loss

An unexpected report took me out at a small loss, so I guess I can’t be upset. That’s just how the game is sometimes. For today, look for risk tolerance growth on this Japanese report and a positive surprise from US Durable Goods data. Good luck and stay tuned!

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Trade Idea: 2009-05-26 21:28

PoD Chart

Good evening! USDJPY has been on a down trend as money flows out of the Greenback against the majors over the past few weeks. The Greenback has bounced back this week, but is this another opportunity to jump in the downtrend?

Technically, the pair is retracing higher in a downtrend, giving me an opportunity to short at a better price. Stochastics are indicating that the pair is overbought and I have used the Fibonacci tool to find possible points of resistance to enter.

Fundamentally, the major themes weighing down on the Greenback include speculation of US credit rating downgrade, huge deficit, and quantitative easing policies. Also, US housing data may continue to weigh down on the US Dollar as today’s S&P/Case-Shiller continued to show a fall in housing prices. Tomorrow’s US housing data may continue to look weak and bring a round of risk aversion….we’ll just have to wait and see.

For today, here’s how I’d like to play USDJPY on my short bias views:

Short USDJPY at 95.60, stop at 96.20, pt1 at 95.00, pt2 at 94.40

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

Stay tuned and good luck!

  • mrcool4

    Hey buddy..ur picks are excellent but could you please let me know what time zone you are in.
    Iam from australia. Iam missing your posts :(

  • evra

    Hi! could u tell please, on h4 we see divergence from level 99.44 to 93.80 – why do we plot Fibo from just last move? I have long to 96 (38 Fibo). And one more thing – 4th wave of last move – just right on 50 Fibo on 96.60. I just wanna ask why do we plot like this if this is bounce for another move?

  • mrcool4

    Hey buddy..ur picks are excellent but could you please let me know what time zone you are in.
    Iam from australia. Iam missing your posts :(

  • evra

    Hi! could u tell please, on h4 we see divergence from level 99.44 to 93.80 – why do we plot Fibo from just last move? I have long to 96 (38 Fibo). And one more thing – 4th wave of last move – just right on 50 Fibo on 96.60. I just wanna ask why do we plot like this if this is bounce for another move?

  • camelman

    Hi Pipcrawler, you used to have much bigger stops. Now they are very tight that i think they have been taken out even when your analysis is correct. Any reason why the change in sentiment regarding the stops? Thanks

  • evra

    You see? The market just tald that we should plot with all move, pitty about your stop :(
    But this is really good expirience, they bounced from 50% Fibo (right on 4th level 4th wave of all move) I wanna u understand me, u helped me very much! I closed cool profit, now waiting for wave b down(but not enter, just wait for good price for long). Good luck!

  • camelman

    Hi Pipcrawler, you used to have much bigger stops. Now they are very tight that i think they have been taken out even when your analysis is correct. Any reason why the change in sentiment regarding the stops? Thanks

  • evra

    You see? The market just tald that we should plot with all move, pitty about your stop :(
    But this is really good expirience, they bounced from 50% Fibo (right on 4th level 4th wave of all move) I wanna u understand me, u helped me very much! I closed cool profit, now waiting for wave b down(but not enter, just wait for good price for long). Good luck!

  • Pipcrawler

    Thanks for the comments everyone! evra – I was taking a shorter term view on the pair and I do not use elliot waves, so I can’t say I saw the same thing you saw. Camelman – my stops are smaller for a few reasons: 1. volatility has dropped since the beginning of the financial crisis. 2. we are heading into the summer season where the markets tend to range 3. I am taking short term trade positions as the markets have been ranging and will probably continue to range.

    I hope this helps!

  • Pipcrawler

    Thanks for the comments everyone! evra – I was taking a shorter term view on the pair and I do not use elliot waves, so I can’t say I saw the same thing you saw. Camelman – my stops are smaller for a few reasons: 1. volatility has dropped since the beginning of the financial crisis. 2. we are heading into the summer season where the markets tend to range 3. I am taking short term trade positions as the markets have been ranging and will probably continue to range.

    I hope this helps!