Watching USD/JPY for a Technical Trade – Review

Setup Review: 2012-12-06 11:46 ET

Good morning forex friends! While I didn’t take a trade on it, I thought I’d review the setup for myself as it was a good lesson on trade psychology.

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

pcpod.20121204.review.jpg

From my chart review above, we can see that the divergence signal worked out well this time as we saw broad Yen weakness mid-week. USD/JPY traders took the pair up to that area of minor interest that I marked on the chart at 82.15, where it found little interest this time, and moved to the top of the range to the minor psychological resistance level of 82.50.

Now, I didn’t take this setup because that bullish breakout candle after the consolidation happened in the evening (10pm ET) after I close out my charts for the day; at least that’s what I want to tell myself.

I think the real reason, though, is that after a couple of recent, consecutive losses that have taken my YTD return below break-even, I’ve become a bit hesitant to pull the trigger. Had I just kept on chugging on as I normally do, this trade would probably have taken me back to positive territory.

So, the lesson for today kids is that you gotta keep on, keeping on. We can’t possibly win every trade–or even a majority or our trade ideas–but if we manage our risk and create trades with good reward-to-risk ratios and a little bit of edge our way, the winners can outweigh the losers in the long run.

Well, that’s it for me. I did point out in the chart above that 82.50 may be the top for the week, but I think I’ll stay out for now to watch out the ECB’s latest monetary policy decisions and outlook, and tomorrow’s NFP (check out Forex Gump’s GBP/USD NFP trading guide), may affect short-term risk sentiment.

For those who took a USD/JPY long, congrats, and for those still trading into the end of the week, good luck and be safe out there! And thanks for checking out my blog!

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Trade Setup: 2012-12-04 10:10 ET

Good morning friends! We’ve got a lot of top tier events this week on the forex calendar, so I’m in recon mode. This week I’m watching USD/JPY for a technical setups and price confirmations.

pcpod.20121204.jpg

This morning I caught USD/JPY giving me a bullish divergence signal as it tested an area of previous support. On the 60m chart above, we can see the market consolidated at 81.80, with buyers eventually taking control and pushing the pair higher. So, I’m watching that area for a long trade, but I’ll wait for similar behavior as last week (i.e., consolidation and buying support).

I’m also watching the 82.15 area as that also attracted plenty of orders on both sides of the market all last week. A retest there and consolidation may end up being a nice setup for a short-term sell on USD/JPY, and what seems to be anti-dollar/safe haven sentiment as the markets price in a US fiscal cliff deal, as well as recent positive global manufacturing PMI data.

Again, we do have a pretty heavy week of economic events on the forex calendar, most notably monetary policy decisions from several major central banks and the US jobs data. That’s why I’m staying away from having a strong fundamental bias and waiting for price action confirmation. Also, depending on if we see any shifts in monetary policies or global outlooks, breakout setups may be in play as well. It’s an exciting week, so stay tuned by following me on Twitter and Facebook. Good luck and good trading!

6 comments

  1. Divofurion

    The Yen will be consolidating untill Election time. We don’t know what course will take the new regime. Enjoy ranged Yen and keep a look out on those elections.

    Reply
  2. Mark

    Longer term my elloitt wave work tells me it will continue long topping out at around 83.850 area, forming a double top from back in March this year. Wait and see

    Reply
  3. Leonardo Vicente

    i beg to disagree, daily time frame chart shows a bearish engulfing, MACD stoch both on bearish sentiment. I only need more 1 bearish candle stick to confirm that it would be a 3 black crow. If you plan to take it long, it could have been a retracement. this is only my opinion. Lol

    Reply
    • Pipcrawlerpipcrawler Post author

      Thanks for your thoughts Leonardo. I’m looking at a much shorter time frame if I took a trade on this–maybe only a couple of days max and for only 20 – 30 pips.

      On the daily timeframe, that consolidation at 82.00 looks like a bear setup. If it breaks lower, 81.00 and 80.00 is definitely possible within the next month or so. Good luck to ya on that trade!

      Reply

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