Week comes to an end on a very slow note. Due to Easter, European and US markets have been closed today. This made for very sluggish currency moves and one was wise to sit on sidelines. No new trades for me and open ones were covered yesterday. In Japan, details of new stimulus package were unveiled. It is large, about $150 Billion or equivalent to 3 percent of Japan’s gross domestic product. By itself, this is not news, but couple provisions are interesting. One of them is an incentive to encourage car purchases. Japanese government would give 250,000 yen ($2,500) to consumers who trade in a car 13 years or older for a more fuel-efficient one. This particular provision might set precedence for similar move in U.S., such as “cash for clunkers” program already debated in the Congress. To finance stimulus package, the government will issue new bonds, a move that will expand Japan’s massive public debt, which at 170 percent of GDP is the highest among industrialized economies. Prime Minister Taro Aso said that ultimately taxpayers will have to pay the price through drastic tax reform, including increasing the consumption tax. I think citizens of all countries that so happily announce new stimulus packages, should pay close attention to these words. This spending spree might cost us all for generations to come
Just as stated earlier, both trades discussed in previous posts were closed yesterday. They turned out to be more than single trades. I think the concept of 100 SMA acting as support/resistance was mentioned here number of times before. One of these days I’ll devote a full post to it. I’m bringing it up now, because I used this simple principle in both of the trades from beginning of the week.
The one on Tuesday was a sell in NZD-CAD, and it didn’t work as planned.

Entry was at 0.7118. I didn’t have a firm stop in place, the nearest technical one for this chart was at just above 0.7200. It was a little too much in relation to my rather modest objective of 90 pips. Price turned against me and I closed it at 0.7163, or 45 pips loss. Price made a run on 100 SMA and stopped. Decent looking reversal formed, and I sold again at open of following candle. This entry also gave me very good stop at above the “star” plus spread or about 0.7212. Few hours later position was closed for 50 pips, break even between these two trades. I will be watching this pair if it moves down to 0.7075, looking for next sell.
Order featured on Wednesday, a buy in GBP-CHF, also used 100 SMA, but in a different way.

Entry was at 1.6920 and price broke almost immediately after. I could have used 1.6810 area for a stop, but it was so close to 100 SMA, I decided to see what happens. Similar situation had taken place couple of day before. With that in mind I opened second trade once a bullish candle formed, at 1.6810. Here also this gave a small stop of about 1.6775. On this time frame decisions like these don’t have to be made really fast. Each candle, or bar, takes an hour to form, easily long enough to think it over, and over. At any rate, nice move followed and price made new high. My exit was not the best, with one trade making 100 pips and the other loosing 10 pips, but total was positive and that’s what counts.
During the weekend, not sure what day, I’ll discuss results of my trading using very little leverage and employing techniques just like the ones shown here, including most of the trades from these pages.
Hope everybody has a great holiday!

Mike K.