After few days of enduring a slowly progressing trade, I decided to close my CAD-JPY short position. Couple of hours ago price dropped to 84.41, undercutting latest low of 84.70. Unfortunately, price didn’t remain under that level and climbed right up above it within the same hour. This produced an impression of a failed move, possible reversal point, so I decided to get out. Exit took place at the top of that hour, at 84.71, for a gain of 111 pips. Yes, hourly chart was used for exit and 4H for entry.
I do not necessarily think that move down is over. Rather, I caught the bug that has been around for a couple of days- indecision. Especially today, currencies have been behaving erratically, with sharp moves both ways, changing direction with every bit of news released. Trade was showing decent profit and I would hate to see it slip away now. For the second time, although first one was fully expected, or at least given room for. When in doubt- get out. I can always reenter if my opinions get strong enough, under the low, for example. Frankly, NZD-JPY looks better for that play. So, that is it for Loonie-Yen. For now.
Markets are in a crazy mood today. British Pound, for example, gets floored after minutes from latest Bank of England meeting are released early in a day. At that time it was announced that Bank would expand its quantitative easing campaign by £50m billion. Turns out that governor King wanted more resources to this plan, but was outvoted. Few months ago currencies were rewarded if central banks went that road, now the opposite happens. GBP fell sharply on the news, only to be rebounding as rapidly now. Behavior of Pound sums up today’s picture really nicely.
Australian dollar has been on its own roller coaster. EUR-AUD appears to be turning around from the down trend, as seen on this 4H chart. Euro is fighting very hard here, but appears to be gaining ground. I plan to buy it on a breakout about 1.7305, with a 200+ objective. Even though move seems to ready to happen, if price stops at this resistance, it can easily be few more days before something interesting happens. I don’t have expectations of immediate outcome here.
Trade in AUD-CHF, also introduced in Currency futures, has gained some ground today and currently is about 60 pips in the black. However, it is moving in sync with JPY pairs, so I see signs of slowing down and maybe even reversing. I’ll be in front of computer for another two hours or so, and might very well close this trade. Details tomorrow.
Mike K.
This was very nice exit out of cad/jpy. Most people would be perfectly happy with 100+ pips. What do you mean by saying that nzd/jpy looks better?
Well, if the price was to fall under recent low, I think that chances are better for this cross to make a more direct move as opposed to cad-jpy.
I’ve been away for a while, traveling. Didn’t keep up with your blog. Now I’m back and see you are still doing just fine. It has been a long time of good trade calls, Mike. Congratulations!
Thank you.
This was some exit out of cad-yen trade. Price advanced since, reaching 86.20. Do you think this could be a good buying opportunity if it gets above this point?
Heather, 86.40 is pivotal here, and I’d like to see another dip, too. After that yes, it looks like a potential buy.
cad/jpy is working hard to get any lift. Maybe something is holding it down or maybe it does not have the same momo mentum as the good old gbp/jpy. I would feel better about selling cad/jpy and going to sleep than the other crosses. I will say that I am mystified by gbp however. A country that is thoroughly bankrupt, deindustrialized and dependent on Russian and Arab conversions for survival of its currency. However there is no point in discussing fundamentals when the bulk of the trading being done is on the behalf of CB accounts, and I don’t know if there is any use even bringing it up since I want to stay focused on technicals and price discipline.
Fundamentals are confusing to a lot of people. Most of us, by my reconing. A lot of things are not logical at all. That’s probably why we have these wide swings whenever some new data is released- players are changing their minds. It is not easy.
cad/jpy broke out on the tremendous upside surprise on wholesale. Take out the junk for clunk stimulus and the auto sales and wholesale actually missed expectations.
One more thought. I am scared by the mortgage delinquencies number this morning.
The mortgage debacle is a problem. I mean, 13% of households is either behind or in forclosure. This can not be good, I don’t care if the news is already “included” or “discounted” by the markets. No matter how you slice it there is nothing positive about it.
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Margaret
http://cardrawing.net