Good morning forex friends! I just wanted to share what I’m watching at the moment: USD/JPY and GBP/USD.
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The 4 hour chart of USD/JPY above is one of the swing trades I’m looking at the moment. After 4 weeks of downtrending behavior thanks to political issues in the US, the eventual government shutdown last week, and the US debt default scenario brewing. After a week of trading, the initial reaction to the government shutdown seems to be priced in, and with the market consolidating around the 97.00 handle at the moment, I’m not sure if this move has any more legs for the next couple of days. This is why I’m thinking that this is a potential consolidation-breakout scenario in the making.
A potential catalyst for a breakout could be a resolution to the budget deal, but that is highly unlikely with neither side looking to budge. There’s also the FOMC meeting minutes, but those minutes will come from the Sept. 18 meeting, in which the Fed already took into account various scenarios that may play out in the US government. Besides those two events, I’m not seeing much. That’s why I’m going into watch-mode for now on currencies rather than anticipating a move, with a bias towards a breakout news trade. And given the stubbornness of US politicians, my bias is in favor of the Yen and risk aversion flows for now.
Besides that, I may have a day trade idea up for this week’s MPC monetary policy meeting. That event is usually a catalyst for great short-term volatility, so stay tuned for potential ideas and observations on that event by following me on Twitter and Facebook!