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Greetings! With the US elections wrapping up, bringing a bit more certainty to the environment, and a continued reduction in interbank borrowing has brought a bit of risk appetite back to the markets. It seems sentiment is shifting, changing my view, so I’d like to cut my losses here.

Close trade at market (99.75)

Total: -125 pips/ -0.625% loss

So, a small loss, but from here we may see continued risk appetite push carry trades and higher-yielding currencies higher. This may lead to an opportunity to short into the upcoming rate decisions, but that’s for another post to discuss. Stay tuned!

Trade Update: 2008-11-03 17:20

Shortly after I posted my trade idea, USD/JPY rallied higher during the Asian session on a return of risk appetite and triggered my short entry orders at 98.50 along the way. It didn’t stop there though, but fortunately, it found enough sellers to push it back down around 99.00.

It looks like it’ll hang around this area for a bit, especially as we head into the US Presidential election tomorrow. Afterward, the focus will return to the economy and the credit markets, and if we continue to see a drop in interbank borrowing costs, this may further risk appetites.

It looks like the pair has yet to break the falling trendline and until it does, I’m still going to hold onto my short position. Stay tuned for updates!

Trade Idea: 2008-11-02 18:05

What’s Up! After a bit of correction, it looks like USD/JPY is giving a possible short opportunity right out of the gates. Let’s take a look shall we….

Another simple setup using trendlines. The pair is still in a downtrend and after hitting lows around 91, the pair has retraced back up to a previous support area and falling trendline.

It looks like the retracement has run out of steam (as indicated by stochastics), and the bulls and bears have decided to battle it out here as the pair consolidates. The sellers may win this battle out at the resistance areas and we may see a return to the overall downtrend. I am going to short in this area.

Short USD/JPY at 98.50, stop at 100.50, pt1 at 96.50, pt2 at 91.00

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

Stay tuned for updates and adjustments!

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