Rising Trendline Break on USD/JPY? – No Trade

No Trade: 2011-06-17 00:00 ET

USD/JPY failed to make any moves lower during Thursday’s session, so it’s no trade for me as I closed my orders and the end of US trading.

Before you move on, for those who are not familiar with my framework, signals, setups, or acronyms, please visit my discretionary trade blog.

PCDPOD20110616.review.png

So, no day trade for me, but it looks like the pair made another run and tested 80.50 during this morning’s Asia session. The pair is starting to form a descending triangle on the 15m, so we may see a move below 80.50 and stay there if risk sentiment continues to remain in reversion mode.

As for me, I think that’s be it for the week as I don’t see anything on the forex calendar to change sentiment or spark any meaningful moves. No trades this week means no loss…that’s a good thing, right? :)

Anyways, thanks for checking out my blog, have a great weekend and be sure to touch back with me next week for new ideas on navigating these crazy markets!

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Trade Idea: 2011-06-16 04:05 ET

Good morning! I see another short-term technical trade setup as it seems sellers are trying to push USD/JPY below a rising trendline. Will it break or hold?

PCDPOD20110616.png

A simple technical setup on the hourly chart above, we can the rising trendline connecting the higher “low” being tested one more time. With a couple of big bearish bars and divergence (higher price “highs” & lower stochastic “highs”) it looks like this might be the real deal break.

Fundamentally, we saw risk aversion take hold of the markets this week as an official second Greek bailout has yet to materialize as expected at this time. This is obviously a sentiment changer, and in my opinion, today’s trading session could stay in “risk off” mode. Even with second tier US data on the forex calendar to spark off volatility, I don’t think the overall mood will change until we do see Greece get its act together to secure that bailout.

So, with USD/JPY back above the trendline at the moment, I have decided to short if it drops back below. My stop will be the daily average true range of 60 pips and my target will be just below the major psychological level of 80.00. This trade structure gives me a potential return-on-risk of 1:1. Here’s what I am going to do:

Short USD/JPY at 80.50, stop at 81.10, pt at 79.90

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

Since this is a day trade, I have decided to only risk 0.50% on this trade. Of course, stay tuned for updates and adjustments by following me on Twitter and Facebook! Good luck everyone!

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