The recent shift to positive global market sentiment has been enough to take my long yen plays to price invalidation territory, and with headline risk driving the markets lately, I decided to close’em down. Here’s a quick review.
Trade Idea: EUR/JPY Reversal To Continue?
This short on EUR/JPY was based on the idea of playing a range forming in March, on the potential for the Bank of Japan to start thinking about reducing their extremely loose monetary policy, and on a potential trade war between China and the U.S. sparks risk-off sentiment (which usually favors the yen).
Well, a lot of those themes did play out for a while and my trade collected positive pips, but at the end of March and in early April, trade war fears between the U.S. and China receded enough to bring back risk-on sentiment.
And despite some dovish commentary from ECB’s Smets today to bring out some euro bears, it wasn’t enough to reverse EUR/JPY breaking above and even bouncing on the major area of interest that this trade was framed around. So, with price action and sentiment against me for now, I decided to close the trade down manually (132.73) during the morning U.S. session:
Total: -123 pips/ -0.25% loss on 0.50% risk
Trade Idea: Major Support Break on USD/JPY?
This short on USD/JPY was based on the idea of playing a broken major support area around 108.00, also on the idea that the U.S. economy may be topping out while we’re starting to see enough positive developments in Japan for there to be a potential slowdown in the BOJ’s easy monetary policy.
And like EUR/JPY above, a lot of the price action in recent months have been driven by geopolitical developments, first trade war fears between the U.S. and China sparking USD bearishness and risk-off sentiment favoring the yen, but a recent reversal in that sentiment has USD/JPY bulls back in the game.
The market is now back above the broken support area around 108.00, so it’s pretty clear the downside momentum is not there any more. And with the markets still heavily influenced by geopolitical headline news, I decided there was too much of that uncertainty around to keep this trade on for now. I closed this trade manually (107.71) as well during the morning U.S. session:
Total: -122 pips/ -0.32% loss on 0.50% risk
With those trades in the books, I’m left with my NZD/CAD short as my only open position and EUR/NZD on my watchlist. Stay tuned next week as I may take on some risk-on type positions to play the current environment, but for now, I’m gonna head off into the weekend to do some reflection on these losses and get some rest before tackling the markets next week.
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