World of Forex trading is full of rumors. Blogs, forums and chat rooms are filled with all kinds of “information” which is normally nothing more than personal opinions of writers. And sometimes just wishful thinking. Probably no other event fuels the rumor mill more than intervention. Real or imagined. Currently Forex cyber-world is abuzz with expectation than Bank of Japan is going to step in and halt the rise of Yen. Recent statements from Japanese officials would surely support this assumption. One must remember, however, that by issuing these vague threats of intervention, they try to influence market sentiment, without having to commit themselves. Interventions are expensive, and BoJ or any other central bank, don’t want to do it unless it seems absolutely necessary to them. Also, we have heard about the possibility of BoJ action for at least 2 months now. Anybody who bought, say, GBP-JPY, for this reason alone, would be out about 1500 pips, which, in case of most speculators, means ruined account. Bottom line is, intervention should not be a primary reason for entering into a trade. It is next to impossible to time (they will not announce it before), and results are not guaranteed. There is nothing wrong with trading in the direction of the supposed intervention, but it should be done for other reasons. And if central bank steps in, it is a bonus and should be treated as such.
I have been trading JPY pairs on the long side only for some time, trying to find the bottom. Market proved me wrong by moving lower, especially in GBP-JPY, which dropped like a rock 1000 pips below the level I thought would hold. Somehow during this time I avoided major losses and even scrambled some profits by waiting (impatiently) for charts to line up with my flawed views. Which means I have forgone potential profit on the quick down moves and have not been very active, since most of the time is spent sitting on the sidelines. Point is that it is possible to do OK, by sticking to trading plan, even when markets don’t behave the way one “thinks they should”. Avoiding emotional and impulsive trades is  must. Buying on rumors of intervention falls into that category.
True to form, I’ll look for JPY short trades – this means long the crosses.

I have a buy order in NZD-JPY at 48.07, with a 200 pips objective. This is the resistance level price has to go through before it gets any higher. Most of JPY pairs charts look very similar. For example, CAD-JPY had a buy point at around 71.60. Price moved above it late on Friday. This is encouraging for all other crosses. Doesn’t guarantee success, but a positive sign.
More rumors. Pound situation is apparently serious enough to be a subject of next G-7 meeting. Probably “grave concerns” will be expressed combined with more rethorics of “united front” and “strong response”. I want to start selling EUR-GBP with or without G-7 impact.

It was tried last week for a small loss. Market is developing a congestion zone, with signs of possible turning. Sell order was placed at 0.9328 with 100 pips objective. If this works, more trades will follow.
Few posts ago I floated an idea of buying GBP-JPY using daily chart. Want to buy it if price goes above high of previous daily candle. Target is 136.00. This can easily take few weeks, even if right.
Just like every Sunday, opening gaps are possible something to pay attention to. Should I take any trades based on gaps, I’ll try to cover them tomorrow.

Mike K.