Pick of the Day: USDJPY – Close Open Orders

Close Open Orders: 2009-10-28 09:21

Good morning Forex fanatics! It looks like I was a bit too conservative in my entry order as traders didn’t want to wait until the market hit the 50% Fib before dropping some sell orders on USDJPY.

The pair topped out around 92.30 before dropping throughout yesterday and today’s morning Asia and European trading session. The momentum is pretty strong at the moment and I think it will continue without a retest of the 50% Fib and falling trendline.

With the pair looking to continue its move lower, and with major US data coming out tomorrow, I have decided to close my open orders and look for trading opportunities elsewhere.

Close open orders. No trade.

Potentially big day tomorrow for currencies with the advanced third quarter GDP in the US. Be cautious when trading around this event and be prepared for a potential spike in volatility. Stay tuned for new ideas and thanks for checking out my blog!

Trade Idea: 2009-10-26 04:10

PoD Chart

Good morning! It’s been a while, but me and the crew are back after a quick hiatus from the FX world. After doing a bit of catching up, it looks like the USDJPY may be presenting me a technical setup to jump back into a downtrend move. Is the trend my friend again?

I have the daily chart up on USDJPY, and it looks like there are potential resistance areas in the pairs sights. First, we have areas of broken minor support between 92.00 and 94.00 that may turn into potential resistance. Also, the pair is heading towards a falling trendline that the pair has previously tested and failed to break. All of this happens to coincide with the 38% – 61% Fibonacci retracement levels of the recent swing move lower from around 98.00 to 88.00. Finally, stochastics are indicating that the pair may be a bit overbought in the short term on this daily chart.

Fundamentally, USDJPY has been moving higher as market players perceive the global economy continuing to move out of recession. I couldn’t tell ya if that was true or not, but we do have plenty of data coming from the US this week that should give us a clue. We will see reads on everything from housing to jobs, but the most notable (and potentially market moving) is the US Q3 Advanced GDP.

Expectations are that we will see around 3.0% growth in the third quarter, and I wouldn’t be surprised if we do as the US comes off it’s worst levels of decline and the US government has been busy giving away cash without prejudice. Whether or not we see a good or bad read, we may not see a protracted move with so much other recent data and US earnings influencing market sentiment. We’ll just have to wait and see.

So, I am taking a short on USDJPY based on my technical setup. My entry level will be at the 50% Fibonacci area/falling trendline, and my stop will be 220 pips (above the falling trendline, 61% Fibonacci area, and 220 pips is around the weekly average true range). Because of this week’s economic data, the situation calls for a wide stop. I will target the recently tested support area around 88.00 and take some profits along the way. Here’s what I am going to do:

Short USDJPY at 92.90, stop at 95.10, pt1 at 90.70, pt2 at 88.50

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

Stay tuned and good luck!

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  • Pipster4lyphe

    Hi Pipcrawler…As I’ve learned from School of Pipsology no 2 Fib levels will be the same…but base on your posting I drew a trendline as well and used the Fib tool. At your entry point at the 50% level based on my charting wld be breaking the falling trendline…however the 38.2% level lined up exactly with the falling trendline and to me wld be a more appropriate entry point…but based on news releases, I thought that’s why you had put your entry point so hi to take into consideration the wave of the market…was a good technical analysis however, but just missed the mark…I’m trying to work on my entry strategy so I follow you guys religiously…Thanks for the hard work!

  • Pipster4lyphe

    Hi Pipcrawler…As I’ve learned from School of Pipsology no 2 Fib levels will be the same…but base on your posting I drew a trendline as well and used the Fib tool. At your entry point at the 50% level based on my charting wld be breaking the falling trendline…however the 38.2% level lined up exactly with the falling trendline and to me wld be a more appropriate entry point…but based on news releases, I thought that’s why you had put your entry point so hi to take into consideration the wave of the market…was a good technical analysis however, but just missed the mark…I’m trying to work on my entry strategy so I follow you guys religiously…Thanks for the hard work!

  • forex29

    Do u think EurAud is a good opportunity today? Ive been looking this chart
    http://files.ac-markets.com/Newsletter/2009-11-10/AlertChart10Nov09_1246.png
    thanks

  • forex29

    Do u think EurAud is a good opportunity today? Ive been looking this chart
    http://files.ac-markets.com/Newsletter/2009-11-10/AlertChart10Nov09_1246.png
    thanks