Today currency trading was dominated by something other than the Japanese Yen. At least the JPY was not the focal point of Forex. One could say that the Japanese currency was “market neutral” and other events were driving the prices. This can be easily observed by comparing crosses of JPY – they all look quite a bit a bit different. For example, the USD-JPY has very little in common with, say, EUR-JPY, with remaining pairs falling somewhere in between. One of those days when analysing each cross individually was more productive than simply playing them all. That will likely change by the middle part of next week and once again we should have at least couple of days of Yen induced anxiety.
Last couple of posts covered trades, or attempted trades, in Yen pairs with the Commodity Dollars, with the most recent one trying to catch the next move of AUD-JPY. Yesterday, on Thursday, the Aussie-Yen rebounded rather strongly, together with all the others, and that trend continued into the Friday Asian session. At that time plan was to go short, using hourly chart, once certain conditions were met.
Here is the chart as it was posted yesterday. The AUD-JPY was climbing up and starting to reach the Fibonacci retracement zones. At that time, the best spot to enter a short position seemed to at around 77.50, where 50% Fib and 100 SMA converged, if a candlestick reversal pattern emerged, preferable around the European opening.
Few hours later, the price reached the anticipated level, but is not reversing. It is pushing through the 100 SMA and showing no signs of reversing. If anything, at this point it could be a buy with a small objective, not a short. No trade, still waiting.
A little later, during the hour preceding the London opening (Frankfurt start of the day), a nice shooting star developed, which here is considered a strong reversal pattern. The price is still in the general area where the short entry was intended, so it is a sell at 77.64. Since I wanted to be out of it before the weekend, the objective is 76.75, few pips above a minor low from the day before.
About 4 hours later price misses the target by about 3 pips on the ask and the action consolidates into a, well, no action. A quiet hour before the New York session. While there were no really big news releases scheduled, I decided to close the trade here and realize the gains. So close to the objective, it would be a shame to give it away. Exit takes place at 76.87, for 77 pips gain.
This is how the day ended. A little later price indeed met my original objective, but even though I excited too early trade is still considered good. No more transactions here. I spent the remnants of the session nipping on EUR-JPY. I will revisit Aussie-Yen next week. Have a great weekend!
Mike K.
[...] Aussie-Yen up close | fxmadness.com For example, the USD-JPY has very little in common with, say, EUR-JPY, with remaining pairs falling somewhere in between. One of those days when analysing each cross individually was more productive than simply playing them all. … View full post on EUR/JPY – Google Blog Search [...]
Mike!! Did you trade the Euro/dollar, which has a really nice move to the down side after the FOMC. And it seemed to reach major daily up-trend support area.
So, what do u think?
hmm, I didn’t watch the yen pair much. Spend most time for the major dollar pair, say Assie-dollar, euro-dollar, do you sugguest i FOLLOW the yen as well, if I wanna trade FX?
Loadsss thx for ur advice, in advance!!
Right after the news the EUR-USD spiked up and then reversed, falling for the rest of the week. I had a couple of smaller trades there.
I rarely discuss USD pairs here, mostly focus on other crosses. There is a lot of data about the Dollar everywhere else, but not so much about, say, GBP-NZD, or CAD-CHF and they all have a life of their own.
Yen is always important and when it gets into a “mood” it can move a lot and fast. In 2008, during the height of the panic, GBP-JPY had a 2000 pips move in a day.
It doesn’t mean you have to trade everything. There are people who trade only one currency pair. I’d rather look for specific price behavior among all currencies. There is nothing wrong with trading just the Dollar, and maybe even the best way to start. But eventually it is probably wise to diversify a little. I’ll try to discuss Eur-Usd in next post.
I love it when you do these blow by blow discussions of trades. If not asking too much, can you do it more of ten? Please.
So, when do you start a signal service? I’m sure fair number of people would be interested. Like me….
Jess, I’ll try but it is not always possible, with so much going on.
Bob, really don’t have time for that. Signal service would demand constant updates during the day, something I just can’t currently do. Too much on my plate as is;)
Yes, yes totally!!
^^
Aussie-Yen up close | fxmadness.com…
I found your entry interesting do I’ve added a Trackback to it on my weblog
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