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Trade Closed: 2009-10-30 17:30

crosseyed chart

EURJPY couldn’t find a bid today as sellers came in and pushed the pair lower throughout the three major trading sessions on concerns the economy wouldn’t be able to sustain itself once stimulus is withdrawn. This reduced the demand for riskier plays, and pushed EURJPY lower – eventually finding a bottom for the day around 132.30. My first and second profit targets along the way.

1st Half: +150 pips
2nd Half: +280 pips
Total: +1.43% gain

Looks like I got a bit lucky and was able to end the week strong on a return to risk aversion in the financial markets.

It’s the weekend now so it’s time to take a break, but on Monday I look for new entry points to jump in the new found risk aversion sentiment. Until then, thanks for checking out my blog and have a great weekend!

Trade Idea: 2009-10-29 12:45

crosseyed chart

Looks like some nice price action in the currency markets today as the first read of third quarter GDP during the morning US trading session. Expectations were for a read of around 3.1% growth, but actual numbers came in at 3.5%. This brought back the “recovery story” into traders minds and pushed risk tolerance higher.

In my opinion, this is another opportunity to jump into the recent downtrend we saw in EURJPY and over all risk tolerance sentiment. Third quarter GDP is in the past folks, and what I see in the future is a US government between a rock and a hard place. They either spend more money to hold up the economy, which increases the deficit and pushes the US that much closer to bankruptcy, or they stop stimulus programs at a time when jobs and consumer spending levels are not yet strong enough to sustain the economy. Much more recent data like housing and consumer confidence is a better gauge for what is happening now and in the near future – and it’s not looking to good. Again, just my humble opinion.

So, we see a nice retracement of about 50% on the one hour chart, and stochastics are indicating this fast move may be a bit overdone. I like a short term trade, probably won’t hold this longer than a day or so, going short in the area between the 38% to 61% Fibonacci retracement levels. My stop will be 150 pips (daily average true range) and I will ultimately target the previous swing lows just below 133.00. Here’s what I am going to do:

Short EURJPY at market (135.60), stop at 137.10, pt1 at 134.10, pt2 at 132.80

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

Quite a few bits of data in the Forex calendar to get through before the end of the week, including Tokyo CPI, as well as some Eurozone inflation data. Stay tuned and thanks for checking out my blog!

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