Close Open Orders: 2009-08-19 10:28

Good morning! It looks like I missed out on some strong risk aversion moves as USDJPY made a high around 95.30 (20 pips under my entry level) before dropping lower. I have decided to close my open orders and look for opportunities elsewhere.

Close open orders to short USDJPY at 95.50. No trade.

So, it looks like my thesis that there is a shift in sentiment towards "risk aversion" is playing out. For how long? Who knows as this is definitely a traders market. For now, I continue to look for short term opportunities to short "higher yielding" assets. Stay tuned!

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Trade Idea: 2009-08-17 22:02

Good evening Forex Freaks! We've seen strong moves in "risk aversion" over the past couple of trading sessions. Is it time for a rebound and another chance to jump in the "risk aversion" bandwagon?

I'd decided to trade USDJPY this week on the idea that sentiment has changed on where the global economy's growth prospects are at. There are thoughts that China's stimulus has overinflated growth, and without the backing of a strong export economy, China's growth will be slowed if that stimulus is pulled away. In the US, we saw recent weak reads on retail sales and consumer confidence. Coupled with continuing job losses, credit worries, and bank failures, it looks like the consumers won't be demanding much anytime soon. The "x factor" this week is the US housing data. Positive reads could give a short term boost to "risk," but it's always a good idea to look at the underlying data. Be wary.

Technically, I have the four hour chart up on USDJPY, and we can see a few things happening on this pair. We saw a break lower of the rising trendline, and now the pair is retracing higher. It may reach the previous area of interest, around 95.75, where we may see sellers hold. I have used the Fibonacci retracement tool as well to pick out a better short entry point, and I like the 61% retracement area as it lines up with the previous resistance level. Here's what I am going to do:

Short USDJPY at 95.50, stop at 96.50, pt1 at 94.50, pt2 at 93.50

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

Stay tuned and be safe in the markets! Good luck!