Japan’s Central Bank on Friday upgraded its assessment of the world’s second-largest economy, saying that recession may be easing. The BoJ’s  policy board voted to leave its overnight call rate at 0.1 percent, a move that was widely expected. Nothing left to cut, so why bother? The bank also said it would accept foreign bonds in foreign currencies as collateral from banks when providing credit for market operations, which could make it easier for such banks to raise funds. This is believed to be first such action among central banks, aiming to facilitate money supply.  However, the board modestly upgraded its economic assessment. It said the economy was still deteriorating, but exports and production are beginning to level out. It is similar story to those from other countries. Since things do not deteriorate as fast as before, they must be improving, right? I could argue that this is at least strange line of thinking, but who cares? Bank of Japan cautious statement was interpreted as good news, which made Yen…. sink. Strange world we live in, if “good news” make respective currencies plunge.
I don’t mind this development at all, since I’ve been bearish JPY for some time and that’s how I trade it. Any news pushing Yen lower is welcome, irrespective of its source or logic. This not only supports my longer term views, but also helps my daily small time frame trades. Like the ones from Friday.

Three trades, all gains, although none reached my intended 60 pips target. By the time last trade was entered, I changed objective to 45 pips, since clearly, the market “pulses” or “beats” got smaller. This worked, for the best trade of the day.
Somebody send me an email, saying that I’m “one dimensional” and my trading is “unbalanced” because of these one sided GBP-JPY trades (always long). Don’t even feel like getting into discussion on the subject, other than saying that the sender can trade in any way he wants while I’ll keep trading the way it pleases me.
Not that everything does. EUR-CAD trade detailed in recent post, was disappointing.

After entry at 1.5804 and making marginal gains, this pair fell and I pulled a plug with 79 pips loss. Once it was certain that hourly chart closes under 100 SMA, it was enough for me. Next logical step would have been at around 1.5660, which was too far. Have no immediate plans to take more trades here.
On and off I’ve been discussing longer term GBP-CHF trades. I think it is time to update the situation. Daily chart of this pair have been moving in a relatively wide range, setting up potential breakout trade. The above link described a set up that I closed with decent results, commented on Pound in pain post. Well, few hours after that trade, I decided it was a good time to buy GBP-CHF again. This trade was closed late Friday, just before I ran out to chase sunshine.

It netted 374 pips. What I’d like to see is a pull back of 300-400 pips, before next leg up. If that happens, 1H charts could provide good entry for a trade. This is one of possible scenarios, most important of which is a breakout about 1.7500. A buy order is placed there. Objective for this move is large, at least 1.8500 and maybe 1.9000. I don’t know what will happen and, even if my analysis is correct, there is no guarantee we will see a directional move. It is very possible that 2-3 trades will be needed to get there, depending on how the price develops. This is something that will be brought up in future posts on this blog.

Mike K.