Hi guys! I’ll be re-posting all of my trade ideas on USD/JPY in this thread from my blog, The Loonie Adventures of a Forex Noob. Wee! I’m so excited to hear your thoughts about them.
XOXO,
Huck
Look at that sell-off on USD/JPY! After it had traded within a tight range for the entire Tokyo and London trading sessions, the pair experienced a huge drop to the downside. It marked the third straight day that USD/JPY ended the day lower than its open price. Based on my analysis of the daily chart, the pair seems to be at the beginning of downtrend.
Given this, I think the pair still has the potential to go lower today but given how strong the move down was, I believe a pullback will happen first. I’m thinking of taking a day trade on the pair by jumping in around the 38.2% Fibonacci retracement level once Stochastic hits the overbought territory. I’ll aim for yesterday’s low but I’m open to holding my position even longer if the trade moves fast in my favor. As for my stop, I’ll place it around the 79.00 handle.
For the most part, I want to short the pair because of the most recent FOMC meeting minutes. Pip Diddy reported that the minutes caught a lot of investors off-guard when it revealed the Fed’s eagerness to launch more stimulus measures.
The central bank has been pretty vague on its stance regarding monetary policy for the past few months and the latest minutes provide the markets with the much-needed clarity. In my own opinion, I think it’s a game-changer and we’ll see the dollar continue to chalk up losses in the next few days.
But of course, I could also be wrong. With that said, I’ll be sure to be on my toes for reversal candles around 78.70 and for Stochastic to indicate overbought conditions before pulling the trigger.
If the confirmation signals materialize, I will:
Short USD/JPY around 78.70, SL at 79.00, PT1 at 78.20, PT2 at 78.00. 1% Risk. (Risk disclosure.)
Feast your eyes on this lovely setup!
Pretty nice, right?! USD/JPY is currently testing a major area of interest. Additionally, Stochastic shows that conditions are overbought. If resistance holds, we could see the pair return to its former lows at 77.15.
This is why I just sold the pair! Don’t worry! I’m well aware that catching tops and bottoms is difficult so I decided to split my position into two. I shorted half of my position at market, as I don’t want to get left behind in the event that the resistance area holds. Meanwhile, I’ve placed the remainder around the falling trend line, just in case the bulls still have some “oomph” left in them.
I know that Spain has been dictating price action for the past few days. However, I think that this week’s roster of top-tier U.S. data would move the spotlight back to the dollar, starting with the ADP employment and ISM non-manufacturing reports later and ultimately, the NFP report on Friday.
The Fed has gone all out in launching an open-ended QE3. But I’m pretty sure that I’m not the only one wondering how much farther the Fed could go in supporting the economy.
Worse-than-expected data from the U.S. would probably get the dollar sold-off as they could lead to speculations of more easing. On the other hand, positive figures could keep the currency afloat.
In any case, I will be on my toes for the reports. Should they come in better-than-expected and invalidate my trade idea, I will cut my losses early. But if they don’t I’ll surely be ready to catch the drop on USD/JPY!
Here’s what I plan to do:
Short USD/JPY at market (78.17) and at 78.75. SL: 79.25, PT 1: 77.15, PT2: to be determined, 0.5% risk on each position. (Risk disclosure.)
Please, please, please wish me luck!
XOXO,
Huck
Okay so the pair is trading within a tight, 15-pip range. However, we’ve seen quite some action on the pair for the past few trading days. I wonder if we’ll see a breakout on USD/JPY soon or if it will carry on with this boring price action for the rest of the day. Thoughts?
