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Close Trade: 2009-01-13 19:45

What is up my peoples! It looks like the move lower has run out of juice as USD/JPY stalls at previous support. I have decided to close my short position for now on the possibility we may see a retracement back higher and look for another opportunity to short on any retracement.

Close remaining position at market (89.50)

1st Half: +203 pips
2nd Half: +345 pips
Total: +0.91% gain

So, a nice little gain for my account. I expect some profit taking after four days of down movement we will see a bit of retracement. I will probably look to short once again around 91.00 or 92.00. Stay tuned!

Trade Adjustment: 2009-01-12 13:34

Hello! Just a quick update and adjustment as USD/JPY continues to fall further at the beginning of the trading week.

Not much going on today in the way of news events and the Japanese markets were closed for holiday. So, last week’s events and risk aversion continued to be priced in, along with further expectations of continued weakness on the consumer and job front.

So, I will continue to hold but make a quick adjustment to my stop to lock in some profits.

Adjusting stop on my remaining position from 92.95 (breakeven) to 90.65 (just above the opening price levels this week) to lock in 230 pips.

Stay tuned as this week is filled with plenty of US data to move the markets one way or another.

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Trade Adjustment: 2009-01-09 08:10

Good Morning! US employment data is set to be released within minutes, so I have decided to lock in some profits ahead of the very volatile US Non-Farm Payrolls report.

Close half position at market (90.92) to lock in +203 pips. Adjust stop of remaining position to breakeven. Will continue to target 86.95 and adjust stop on remaining position along the way.

Please be very cautious making trades around US NFP as the markets become very fast and orders can be filled at a very different price than you intended. I’m staying away from trading for probably an hour or so myself.

I expect a bad number, but look for revisions to November and October’s numbers at well as they could be just as market moving. Stay tuned!

Trade Idea: 2009-01-07 10:54

PoD Chart

Greetings and Happy New Year! I’m back and it looks like currencies are back to their volatile ways. For my first trade of the year, I’m going short USD/JPY. Let’s take a look at the fundamental and technical reasons why I think this pair may continue to trend lower.

This week we are receiving fresh economic data and it still looks pretty bad in the US. Manufacturing, housing, and employment data has come out weak this week, and most notably we saw today’s ADP employment report print a loss of 693K jobs last month. That is a significant number and if the Bureau of Labor Statistics number is anywhere near it this Friday, we could see a pull back in short term confidence in the Greenback. Also, the FOMC meeting minutes were released this week, and the Fed projects a sharp decline in GDP for the first half of 2009 and a continued rise in unemployment to 2010. Even with talks of another big stimulus package for the US, it may not help bring back risk tolerance as I think traders will focus on the thought that we may see low interest rates and a very slow recovery in the US into 2010.

Technically, we can see USD/JPY has been in a downtrend since August 2008. The recent rally may just be a pullback and new opportunity to jump back in the downtrend. Stochastics are indicating overbought conditions, and the retracement made a high roughly in between the 50% and 61% Fibonacci retracement area – potential resistance. I am going to build a short position in this area with a stop of around 300 pips. I picked 300 pips for my stop as that is roughly twice the daily average range of 168 pips. This should give me enough breathing room to weather the volatility. Of course, to stay within my plan of not risking more than 1% of my account, I will have to reduce my position size. Here’s what I’m going to do:

Short USD/JPY at market (92.95), stop at 95.95, pt1 at 89.95, pt2 at 86.95

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

So, I’m going short on the basis of the downtrend and that traders will focus on the fundamental weakness of the US. We’ll see how it plays out. Stay tuned!

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