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Trade Closed: 2013-11-08 8:15 ET

Good morning! Here’s a quick review of my USD/JPY long position after my stop adjustment yesterday.

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 1 hour forex chart
USD/JPY 1 hour forex chart

Yesterday during the morning Asia session, I decided to adjust my stop to just above breakeven (which I shared on my Twitter and Facebook pages) as I thought 98.70 was looking pretty strong so I wanted to reduce my risk. Plus, I was about to go on travel and be away from charts for a while, so it’s always prudent to reduce risk ask much as possible.

What happened while away was shocking in that we got a surprise better-than-expected read from the advanced US GDP data, summarized by my friend Forex Gump in one of his most recent Piponomic blog posts. Basically, the greenback found quick strength that was quickly reversed on doubts of the US’s ability for positive surprises to growth.

As we can see from the chart above, it was a quick pop higher, followed by a reversal that took USD/JPY back down to my adjusted stop at 98.35. Closed at stop orders.

Total: +4 pips/ +0.025% gain

Given the traveling situation I was in, the only thing I would have done differently was to change my order to a trailing stop. If I had using my stop, at the very least I would have gotten a 1:1 R:R.

I’m still on travel, so that’s it for me, for now. Stay tuned for new observations and ideas next week by following me at my social media pages mentioned above. Thanks and have a great weekend!

Trade Idea: 2013-11-05 7:01 ET

Good morning forex friends!  I took a simple technical setup on USD/JPY as the currency pair makes higher lows and the pullback stalls at a rising trendline.

USD/JPY 1 hr chart
USD/JPY 1 hr chart

As I mentioned in my USD/CHF trade review, I became long USD biased after the FOMC meeting last week. We saw a broad rally in the greenback to confirm that traders are speculating and positioning ahead of a Fed Taper sometime in the first half of 2014 (possibly even this December). And with the Bank of Japan still in massive stimulus mode with no change to policy in sight, I like a long play on USD/JPY for a simple, common sense trade.

I’ve already entered with a half position at market since the pullback seems to have stalled at the rising trendline marked on the chart, and I’m using a very wide stop for USD/JPY (below the last swing low) because of the data heavy week I’ve got ahead. Also, I’ll be quick to close the trade if it does break and hold below the rising trendline to limit my loss if it happens. My initial target is the major psychological level of 100.00, but it’s a soft one as I’ll get a feel for the environment first before deciding whether to close there or not. Here’s what I’m doing:

Long half position USD/JPY at market (98.31), stop at 97.60, profit target at 100.00

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

With this framework, my potential return-on-risk is over 2:1, and I will strongly consider adding to my position on a break and retest of previous resistance around 98.80 to maximize my profit potential.

Of course, anything can happen in the forex market, so if the story changes for the US Dollar, the Japanese Yen, or risk sentiment in general, I’ll be sure to adjust accordingly. Stay tuned by following me on Twitter and Facebook!

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.