Another possible trade lining up, but a much riskier one. It’s one I’ve been considering for a while, and with the price creeping up again, I figured I’d have a go. Going to put down more thoughts here, as this is very much not a technical play.
Reasoning: The price is approaching the massive psychological level of 150.00 again. Every time in the last month, that the price has closed in on it, we’ve seen volatile swings downwards. Including the 1h candle on 3rd October 2300 JST where the price move down 149.051 points, between open and close, and the overall distance between the two wicks was 287.8 pips. Much speculation has been had around whether the BOJ intervened or not, but regardless, traders seem skittish around that level, and I’m guessing there might be a few other people with this trade in mind having entry orders around the 150 mark.
Sometimes it doesn’t quite hit the 150 mark before selling triggers, so just in case we’re going in just a pip under it.
Stop: 150.19 (20 pips)
This is just above the peak of the October 3rd candles wick (150.161). So even if there is some aggressive buying to counter the sells, hopefully we don’t get stopped out.
Lot Size/Risk: 2% of Account.
Honestly… I might be too greedy here on this quite risky play. Logic is telling me to put in a smaller amount and test the theory. But also there is only so many time the price can test the 150 mark like this before it either breaks up above (which puts Japan in a very rough economic position), or it slides down the other way due to some decision from the BOJ (likely around Yield Curves).
Target Price: 149.59 (-40 pips)
This is just below some of the spikes down, and above some of the others. I wanted initially to put it at the psychological level of 149.50, but (for once in this trade’s reasoning) I’m trying not to be too greedy.
There are a couple big news tickets coming out in the next few days, Fed Chair Powell speech in the early hours of the morning (JST), followed by Durable Goods Orders and GDP Growth Rate QoQ Adv tomorrow evening, and then a few other big US ones on Friday. And of course the BOJs Interest Rate Decision on Halloween (Tuesday).
All of this could have an impact on this trade, and depending on the timing and effects could cause the trade to get blown up, or just never hit the entry at all. As of writing, the price is at 149.94 for SELL, and has creeped up from 149.80 over the day.
Also need to be a bit careful holding this for too long if we do enter, as we’re in relatively strong negative carry trade setup. So if price doesn’t move much, and we’re holding till BOJ’s Interest Rate decision, that’s something that should be taken into account.
Honestly, I’m nervous as hell about this trade, but on the other hand, this is what Demo accounts are for right? Practicing and learning, and at the end of the day, my risk is managed. And it shouldn’t blow up my account as we would need some MAAAAAJOR slippage for that to happen. But also… these kinds of events are ones that can cause slippage (though hopefully not that much) so we’ll see.