Technical Play on the USD/JPY Range – Trade Closed

Trade Closed: 2012-08-08 6:25 ET

Good morning! USD/JPY played out in my favor as the pair retested the previous resistance areas and held. With technicals signaling short term minor support–and the BOJ decision coming soon–I decided to close out my trade.

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

PCDPOD20120806.review.png

Looking at the chart above, the one hour stochastic is showing oversold conditions after the pair hit the 78.70, held and then dropped to its current levels around 78.26. As I mentioned earlier, I’m not leaning one way or another on how the BOJ decision will play out, so I decided to not let an early gift of profit turn into a potential loss; I closed out my full position at market (78.28).

1st half: +22 pips
2nd half: +42 pips
Total: Avg. +31 pips/ +1.06% gain

In this choppy, summer environment I feel it prudent to not try to push for big gains ahead of major market events I’m not very confident on. I still expect the BOJ to do nothing, and the Yen to rally, but if I can take a sweet profit early and focus on a new opportunity, then I will. Of course, time can only tell if I made the right decision or not.

For now, I’m still looking out for short term plays, and who knows, I may have an idea in mind to react to whatever the Bank of Japan may come out with on Thursday. If I do, you know where to go to check out my ideas and observations: Twitter and Facebook

Stay tuned, good luck and good trading!

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Trade Idea: 2012-08-06 8:25 ET

Good morning forex friends! Welcome to a new week of fx trading and this time around I’m looking to play the top of the USD/JPY range formed over the past couple of weeks.

PCDPOD20120806.png

For this week, it looks like US data is light and the Eurozone issues may not be of as much focus, so I look to get ready for the Bank of Japan (BOJ) monetary policy decision later this week. In the past few releases, it has been the catalyst for down moves in USD/JPY, and this week may not be any different if we see another “no decision” by the BOJ as forecasted.

Technically, the pair has been grinding lower until it began its range between 78.00 – 78.80 after breaking that upper level about 3 weeks ago. If we see that area retested, I look to scale into a short position to swing play the longer term trend, with my target around the strong support area at the bottom of the range. Here’s what I am going to do:

Short half position USD/JPY at 78.50, stop at 78.90, profit target at 78.00

Short half position USD/JPY at 78.70, stop at 78.90, profit target at 78.00

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

This trade structure gives me a potential reward-to-risk of 2:1 if both positions are entered, and I’ll look to hold onto it until the Bank of Japan monetary policy decision. I’m not as confident on what I think this central bank will do compared to how I played the Fed and ECB decisions last week, so I’ll be prudent and adjust my position/orders beforehand. If that is the case, be sure to follow me on Twitter and Facebook for my observations and adjustments.

Until then, the market will probably focus on the slew of Comdoll events, so be sure to check out Happypip’s Comdoll Trading Kit to get up to speed on this week’s potential event driven price action.

Thanks for checking out my blog–good luck and good trading!

5 comments

  1. Michaelsedgley

    This is looking good as you predicted – will you use any trailing stops or add to your positions now or just wait to reach your target. 

    Reply
    • Pipcrawlerpipcrawler Post author

      I wish I could say I predicted it, but it was all probabilities.  I actually just announced on Twitter and Facebook that I took 1:1 on this.  In this environment, I’m not gonna take another chance at losing a sweet profit.  Blog update to come soon.  Stay tuned!

      Reply
  2. flinders_87

    Pipcrawler, great call. Had a look myself and placed conservative positions. Bagged 20 pips with my Long then went Short for a profit of 35 pips. 

    Reply
  3. Digitalgypsy

    Good luck bro!! I was actually looking for a retest of 78 to get long targeting the range top. We’ll see how it plays out.  Good idea wanting to play the BoJ rate decision ;-)

    Reply
    • Pipcrawlerpipcrawler Post author

      Thanks!  Good luck to you too!  It looks like 78.70 triggered and holding for now.  It’s up to the market now :)

      Buying at 78.00 looks like a good trade as well and was actually my first thought after the NFP report, until I looked back at past BOJ interest rate decisions. 

      Reply

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