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Forex Review: 2014-04-25

With the Ukraine-Russia situation coming back into traders’ focus–and sparking Yen rallies–I decided to close my positions to avoid weekend and geopolitical risk.

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

USD/JPY: Retesting Strong Support

USD/JPY 4 Hour Forex Chart
USD/JPY 4 Hour Forex Chart

As I mentioned in my last trade update, 102.70 was the next test for the bulls, and unlike the ’90s NBA champions from Chicago, unfortunately these bulls failed.

102.70 once again held, partly due to Japanese Yen strength on positive Japanese inflation sentiment this week and geopolitical risk aversion.  The tensions between Russia and Ukraine are coming back into focus, and with the weekend coming up very quickly, I decided to avoid any potential risk aversion news that may or may not come this weekend.  I manually closed at 102.00 for a very small profit.

Total: +10 pips/ +0.03% gain

In hindsight, I could have waited for a better entry price at the strong support level, 101.50, as well as cut this trade sooner when 102.70 failed.  My timing was definitely not in tune with this trade and I should have ended up with a bigger profit.

NZD/JPY: Hopping Back into NZD Long

NZD/JPY 4 Hour Forex Chart
NZD/JPY 4 Hour Forex Chart

The bulls in this pair were not only victims of a change in broad risk sentiment, but also lack of follow through to the upside after the Reserve Bank of New Zealand raised interest rates this week. Again, I was a bit afraid that the rally in Kiwi was overdone, and the markets proved me correct as there was no follow through to 88.50…only a reversal!  With this type of behavior, geopolitical risk, and the market now breaking below the strong 87.70 level, I decided to close out manually at 87.57 for a very small loss.

Total: -23 pips/ -0.07% loss

In hindsight, I thought I played this pretty well, but like my USD/JPY trade, I should have probably checked out after the reversal at the minor resistance area.  Plus, with volatility feeling like it’s slowly fading away into the summer, I should have taken profits rather than try to hold onto bigger gains.  At the bare minimum, I should have brought my stop up as the pair approached 88.50. Risk management lesson re-learned!

So, between the two trades, it was a minuscule scratch to my account and I don’t mind at all with risk aversion creeping back into the mix.  Anything can happen over the weekend between Ukraine and Russia, and I think I would sleep better knowing I don’t have risk on the table in case that did happen.

This content is strictly for informational purposes only and does not constitute as investment advice. Trading any financial market involves risk. Please read our Risk Disclosure to make sure you understand the risks involved.