Swing Short on USD/JPY – Trade Closed

Trade Closed: 2013-08-22 5:00 ET

While it wasn’t a huge market mover, yesterday’s FOMC meeting minutes showed how the members were comfortable with trimming stimulus this year. This was very USD bullish as the Greenback fell against the majors.

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There are also expectations that initial claims and housing will continue to be positive and boost the Greenback further this week. With the market already breaking above the week’s high and easily moving above the Fibonacci area that held last week, I thought I’d save myself a few pips by closing out at market (98.43) to reduce my loss:

Total: -117 pips/ -0.39% loss

Overall, I think this was a good setup both fundamentally and technically, but the story changed so I had to too. Plus I think it was a good trade management decision to close early early since the Fed’s openness to taper this year and positive US data will push the US Dollar higher in the short-term.

I’m back to being USD bullish, but I think I’ll wait until after this weekend’s Jackson Hole Symposium to take another swing position. For now, I’ll look for day trades to see if I can catch the current shift in momentum. So, stay tuned by following me on Twitter and Facebook…good luck and good trading!

Trade Idea: 2013-08-20 7:06 ET

Good morning forex friends! My homie Big Pippin’ put up a nice chart on USD/JPY on Monday that I couldn’t ignore. And with risk aversion grabbin’ hold of the markets, I’m cautiously back to buying up some Yen for now. Cautiously?

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Now I say “cautiously” because we do have a major event tomorrow in the form of the FOMC Meeting Minutes. This is a hit or miss event in terms of sparking big volatility, and for this month, let’s remember that the last meeting was held before we got recent weak US data from the manufacturing and consumer sectors. So, traders are more likely to not pay much attention to these minutes unless we get a huge surprise statement.

So, I’m cautiously playing the current risk-off sentiment we’re seeing expressed through falling equities–especially in emerging markets–and the rising US Treasury yields. This environment has been very kind to the Yen, so I hope to jump into the down trend of lower highs and lower lows as seen on the chart above. The pair failed to break above the Fibonacci area drawn on the recent swing lower, telling me that sellers are in firm control of this pair. I’ll be going in with a half position in this area and depending on what happens with the FOMC meeting minutes, another half position on the ready if the moves in my favor. My target is the previous, major support area. Here’s what I am going to do:

Short half position at market (currently at 97.26), stop at 98.75, max profit target at 94.00

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

I’m only risking 0.50% of my account, and this trade structure gives me a 2.18:1 potential return-on-risk. Right now, I don’t expect a big reaction because of the meeting timing relative to new data, and that the downtrend will continue. Of course, I could be very wrong, which is why I’ll be ready to close it down quickly if sentiment shifts back in favor of the Greenback vs. the Yen, but also be ready to add to a winning position if the trend continues. Stay tuned by following me on Twitter and Facebook!

Good luck and good trading!

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