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Trade Closed: 2010-04-07 19:35 ET

PoD Chart

Buenas noches mis amigos! Looks like the downtrend kicked off during yesterday’s Asia session continued throughout the European and session, pushing USDJPY down to my stop at 93.40 and close out my trade.

Risk aversion hit the pair as focus returns to the potential Greece debt default and as US data showed consumer credit shrank around $11.5B in February. Also, I mentioned how the FOMC meeting minutes revealed that the “extended period” of low rates “might last for quite some time.” This may have been in a factor in today’s bond market as 10-yr yields declined, which may have also contributed in the greenback slide against the Japanese Yen. The pair has fallen as low as 93.15 today and stopping out my trade along the way.

1st Half: +122 pips
2nd Half: +122 pips
3rd Half: +00 pips
4th Half: -90 pips
Total: +0.42% gain

So, not a huge gain, but a gain nonetheless.

I’ve thrown up a Fibonacci retracement tool on our review chart to show that it looks like the pair may be presenting an opportunity to go long again after this retracement. USDJPY is testing the 61% Fibonacci retracement level around 93.15 and stochastics on both the one hour charts and four hour charts are indicating that the pair may be short term oversold. Time to go long again? Maybe so. I will watch the pair for now to see if it holds, and I’ll let ya know if I decide to jump back in the current uptrend.

Stay tuned and thanks for checking out my blog! USDJPY Forums
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Trade Adjustment: 2010-04-07 00:25 ET

Hello! Hello! Another trade adjustment to my position after Friday’s NFP report shows that 162k jobs were added in March – below the consensus of +184k. How did USDJPY and my trade play out from there?

Well, even though it was below forecast, the markets took the addition of jobs as good news and risk takers jumped back into equities, commodities, and fortunately for my positions, long the greenback against the Yen. USDJPY rallied higher to hit my next entry orders at 94.30, where I entered another half position, and topped out around 94.70.

Since the start of this trading week, the US Dollar has lost some ground to the Japanese Yen (hitting lows around 93.60). This may continue after the FOMC meeting minutes showed that the “extended period” of low rates “might last for quite some time.” Also, we’re getting strong data from Japan this week as a surge in exports may be boosting consumer spending and employment.

So to be safe, I have adjusted all of my stops on this position to 93.40. Half of my open position would stop out at break even while the other half takes a small hit if the market retests 93.40. It’s all up to the market now, so Imma just sit back, relax, and see if it keeps handing me some pips. Stay tuned!

Trade Adjustment: 2010-04-02 00:05 ET

Good morning to my fellow Asia and European session trader friends! Quite a bit has happened since my initial trade idea, and with NFP coming up soon, it’s time for a few adjustments.

So far, my initial full position was triggered at 92.50 and after a bit of stalling, USDJPY was pushed higher to my next entry order at 93.40 where I added half of my original position. I adjusted all of my stops to 91.60 at that point to reduce and limit my risk on the overall position.

Now, we are going to see the US non-farm payrolls report, in which I have seen forecasts of around 184k jobs added in March. Really? 184k? I may sound skeptical here, but with ADP reporting -24k jobs in their report, my confidence really isn’t with the “experts” on this one. Anyways, who knows what the ‘real’ number may be with all the adjustments made by the government, and with the holiday around the world today, liquidity may be a bit thinner and potentially cause some violent moves. I’m not gonna take that risk with the profits I currently have on this trade, so it’s time for some adjustments.

I will lock in profits by closing down my initial position and adjusting the stop on my half position.

Closing initial position at 93.72 to lock in profits. Adjust stop on remaining position to 92.50.

This puts my stop below yesterday’s low and last week’s high prices. I believe these to be potential support levels, and if they break, it could bring in breakout players to push the pair down much lower. This leaves me open to any potential upside moves, and if the market goes lower, I still make a very small profit even if my half position gets stopped out. Isn’t trading great!?

So, I’m just going to wait and see how NFP plays out and avoid any new trades around the report as the reaction makes trade execution very, very dangerous. Trade safe.

For a cool little write-up on tomorrow’s NFP report, check out my good friend Forexgump’s analysis on the upcoming event.

Stay tuned my friends, good luck and good trading!

Trade Idea: 2010-03-25 11:47 ET

PoD Chart

The chart above is a lot busier than my normal charts, but there’s a lot of important technical signals of a potential move higher.

First, we can see the inverted head-and-shoulders pattern, which tends to signal a move higher as sellers have lost the power to the will of the buyers.

Second, the market has broken above a falling trendline and major horizontal S&R level, out of a symmetrical triangle, and above the 200 day simple moving average. I have talked about he break above the trendline and horizontal S&R level trade setup many times before, so I’ll briefly talk about the idea behind the 200 SMA and symmetrical triangle.

The 200 SMA is watched by pretty much everyone from institutions to small traders, so it serves as an strong S&R are and a break tends to bring in more buyers in. A symmetrical triangle shows consolidation and lack of commitment of traders to get in the market. This tends result in breakouts, as we are seeing now, and hopefully extended directional moves.

So, it looks like a strong break out trade to the upside, and there doesn’t seem to be any major resistance until we get to the 98.00 to 100.00 area.

Fundamentally, my friend Forexgump wrote a Piponomics article on Japan that reviews some of the major issues holding the ‘Land of the Rising Sun’ back from returning to growth. Of course, the US has its own debt, employment, and inflation issues of its own, but as I’ve said in other blog posts, the US dollar has the unfair advantage of being the world’s reserve currency. Also, the US markets are the deepest, most liquid, and are ‘currently perceived’ to be the safest. For now, money will continue to flow to the US, but be aware that if we see the US bond bubble pop, or if some other event brings another round major risk aversion, it could be trouble for greenback longs.

So, I’m going long based on the technical setup with my usual risk on the table. I’d like to see the market test 92.50 again before I go long, and my stop will be 180 pips (2 x the daily Average true range of 90 pips). My plan is to add half my initial position size every 90 pips and trail my stop on my overall position by 90 pips. If everything goes well, and I make it to what I think will be the first resistance area around 95.00, then I should get a 3-to-1 return on my risk. If it works without a hitch and goes all the way up to the 98.00 area then it should be well over a 10-to-1 return on my risk. Sounds like a good trade to me. Here’s what I am going to do:

Long USDJPY at 92.50, stop at 90.70, max pt at 99.70

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

Thanks for checking out my blog and stay tuned for updates!

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