Very interesting couple of days in currency trading. Even though the Euro, supposed culprit in behind recent market moves, has been recovering, other currencies just kept on falling. To not to mention the stock market. Commodity currencies have been getting clobbered, especially the Australian Dollar, with biggest losses coming against the Yen. The JPY is just charging ahead, so much in fact, that there is renewed talk about intervention by BoJ or perhaps even a coordinated effort by more central banks. We’ll see. For now the trend for all Yen crosses is down, however, the misery is not spread evenly among them. Each moves to a little different beat.

Lately focus of this blog has been on two of those pairs – AUD-JPY and CAD-JPY. Timing has proven to be correct for shorting them, with good results so far. Yesterday I had no time to post an update, but mission remained the same – selling Yen crosses and AUD pairs, too. This time I went for bigger targets, using 4H charts, still looking for simple breakouts. The Aussie-Yen in particular arrived at the low of “Flash Crash” from 2 weeks ago. Good place to short it.

The 76.80 low was breached briefly couple of times right after my previous trade here had been closed. I set that one out, which means that I had to lower short entry to 76.00, missing out on some pips. Move came early today and trade had an objective of 73.00. In the end, market went another 100 pips lower, but I was perfectly happy with my 300 pips. Expectation is for more downside from this pair, but how much lower? If there is no intervention 66.00-65.00 for this move is very realistic, but not tomorrow. If that goes, than perhaps even 55 is possible, but that is speculative at this point. I’ll be trading it with smaller objectives in mind, using either 1H or 4H chart, whichever one looks better at the moment. Right now I’d like to see some consolidation, a rebound, perhaps, but mostly a pause for at least few hours before any new trades are entered. Only short positions.

In CAD-JPY entry was on the move under 86.25. Objective was 82.00 but price hasn’t been achieved yet. Trade was closed at 83.67, as the move stalled. From now on I’ll be using hourly chart until the “Flash Crash” low is breached. We could see a support there, but if AUD-JPY is any indication, it will probably fail, even if it takes some time. Just trying to be a little cautious. When this support is broken, another 1000 pips slide could be possible. One step at a time, though.

Few days ago a sell in AUD-CHF was discussed. It worked out as planned, bringing 100 pips. With Australian Dollar seemingly in a free fall, I reentered soon after at 0.9717, with 0.9500 target. Things became a little rough soon after, when SNB intervened in Swiss Franc, but AUD was under such pressure, that it didn’t matter and price swiftly dropped to 0.9500. This snapshot was taken yesterday. Since then AUD-CHF sold off by another 200 pips. I had no more trades here. Few weeks ago a short trade in AUD-CAD using daily chart was covered on this. That trade was also closed yesterday and will be discussed in next update. So, for now, looking for more short trades in Yen pairs, even if some rebound should take place here

Mike K