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Close Trade: 2010-02-03 11:11

PoD Chart

Good morning! I’ve been holding on this short USDJPY for while, but I’ve failed to get the break and follow through that I have been hoping for. With the NFP data coming out this week, and the continued uncertainty of the current market/political environment, I have decided to close this trade down for now.

Closed remaining position at break even.

1st Half: +75 pips
2nd Half: +00 pips
Total: +0.18% gain

I still have my short EURUSD trade on and it’s doing quite nicely at the moment. But just like this USDJPY trade, with eurozone interest rate decisions and NFP up this week, I will probably make adjustments soon to avoid high volatility that may be potentially negative to my position. Stay tuned!

Trade Adjustment: 2010-01-25 15:55

We have more potentially volatile housing data from the US, and with existing home sales in the US surprising to the downside in December (a 16.7% drop versus the expected 9.8% drop) we may see more weak housing data the could spur further risk aversion. This works well for my trade, but I am more concerned with the interest rate decisions from both the FOMC (Jan 27th) and the Bank of Japan (Jan 26th) this week. I don’t know the outcomes of these events so it’s best to lock in some profits now and reduce risk ahead of the data. Here’s what I am going to do.

Close half position at market (90.25). Adjusting stop on remaining position to 92.00.

What this does is it locks in a small 0.18% gain on the first half and leaves a risk of 0.25% loss on that remaining position. So, if USDJPY moves back up to 92.00 my max loss on the total trade is a measly 0.07% of my account. If it continues to go my way to 85.00, then I gain a total 1.68% gain.

So, instead of totally closing out my position to avoid event risk, I leave a minute amount of risk to take the chance it continues to go my way. Plus, I plan on adding back to this position if it does go my way, so the max profit could potentially be more. We’ll see where the market takes me.

Until then, I plan on putting shorter term trades this week on EURUSD and maybe GBPUDS, so stay tuned for that. Thanks for checking out my blog and I hope to see ya again soon!

USDJPY Trendline Break? 2010-01-12 10:44

PoD Chart

Good morning fellow forex traders and welcome to my first trade idea of 2010! A simple technical play is forming on USDJPY as the pair breaks a rising trendline–time for a swing back lower?

Fundamentally, both the US and Japan are debt-ridden out the wahzooo, so it’s really a choice of “who’s worse” when picking a direction in USDJPY.

Taking a looking at recent data, I’m getting the impression the lesser evil might be the Yen in the short term. We just saw a recent reading that Japan’s current account surplus grew by 77% year-over-year in November, a surprise to the upside, while this morning’s US trade balance data came in worse than the previous month’s reading at -36.4B. I also think that the recent negative US jobs report shifted sentiment back to a weak dollar as traders don’t expect any near term interest rate hikes or pull back in easy money policies.

I’m a bit short bias on USDJPY because of the fast rising debt load in the US and the fact we may see risk aversion influences if traders start to bail on the notion we will see a recovery in 2010. With the US still unable to produce a month of real job growth, I think recovery will be weak to non-existent, especially if governments close the pumps on easy money flow into the global economy to combat rising debt.

The rest of this week’s events does not look to be a major influence on price action, but always be sure to stay on top of these events by checking out our Forex calendar!

Technically, we can see USDJPY breaking both the rising trendline and minor support around 91.25. Will it continue to break and drop? I don’t know, but it looks like momentum is currently to the downside, which makes the break an attractive entry point. I have set my stop to 200 pips (2 times the daily average true range), and I will target 2009 lows around 85.00. This makes the trade an attractive 3:1 reward to risk ratio–higher for those cowboys who like to scale into winning trades. That’s a trade worth taking. Here’s what I am going to do:

Short USDJPY at 91.00, stop at 93.00, tp at 85.00

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

This trade is a longer term one, so it looks like I’m gonna sit back, let it ride and see where it takes me. Stay tuned! USDJPY Forums
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