ForexSpirit

My last trade update was two weeks ago, just after what I interpreted as a spike and reverse on EUR-USD (as a result of the October NFP release). The following Monday the euro bulls ran out of steam and the spike low was tested. I pretty much just got out of my positions from the previous week at breakeven and waited to see if the 1.40 handle would be broken through on the downside (which was what I sort of expected to happen).

On Tuesday it looked as if 1.40 was going to hold as a nice move back up towards 1.41 took place. Not wanting to miss out on a euro bull train I jumped onboard with a Q1 entry which was closed out the next day for a nice bread and butter textbook trade.

The euro kept going up and I was back onboard at 1.4172 with a Q2 entry. Thursday I was in again with a Q2 entry at 1.4186. This second Q2 entry I closed for another bread and butter trade at 1.4221 on Monday of last week.

Tuesday saw me back in with another Q2 entry, this time from 1.4193. I am currently still holding both Q2 trades open.

On Thursday of last week with price in Q3 I had another bread and butter trade, nabbing 28 pips. On Friday I put back on a second Q3 trade and have gotten 40 pips out of it from the hawkish euro talk by the ECB’s Weber over the weekend.

I have been able to grab lots of bread and butter trades over the past two weeks catching the market nicely during its range bound moments while also having a couple of trades in place during euro bull moments. All in all it has worked out extremely well and I have trouble finding fault with any aspects of the trade decisions that I’ve made. Since it’s important to acknowledge the positives in everything we do I have no problem in giving myself a little congratulatory pat on the back.

I am going to see how the market positions itself ahead of the US data to be released on Wednesday and Thursday this week before deciding what to do about my remaining open EUR-USD positions.

As I explained in my post on Friday I also have traded on USD-JPY the past two weeks.

The Monday following the October NFP USD-JPY breached the spike high from the previous Friday. As I mentioned in my journal post at the time, if this happened I was going to exit my two short positions (for a loss) as I felt there would be follow through to at least the 118 level.

Instead of breaching 118, price stabilised and became stagnant between 117 and 118. On Thursday of that week one of the main investment banks released poor earnings for the quarter (blamed predictably enough on the credit crunch in July and August). This announcement caused a pop in yen strength so I entered a Q1 short at 117.09. In the end the move was short lived and the week’s range bound nature held firm.

As last week dawned the G7 meeting scheduled for the end of the week was at the forefront of every trader’s mind. The Chinese Yuan was certain to be singled out. What was less clear was if there would be any mention of the dollar’s weakness or the euro’s strength. The Japanese Yen was also a potential target but even a reference to the renminbi was sure to impact the yen, since the two countries are such close trading partners.

I felt there was a good chance the yen would show some strength, especially after the strong resistance level that had been put in place the week prior at the 118 handle. Last Monday I put in an Anti-Hedge short position at 117.36 (i.e. I basically just put back on the same position that I had closed out the week before).

The ride down was slow and bumpy, but it was going in the right direction so I held on. My target close out was to either hold till the end of the week or if price reached 114.22; whichever came first. In the end I held the two open trades all week long. On Friday morning price was hovering just above 115. I had the urge to take my profits off the table, while at the same time I had my trader’s instinct telling me to put on another short position. I went with my gut and a new Q2 short position was opened at 114.97 soon afterwards.

The G7 communiqué released over the weekend only singled out the Chinese Yuan. I was pretty sure that the yen would open stronger when trading first began today so I pushed my profit target down another 50 pips to 113.72. This target was hit an hour after the main markets opened.

I remained all square for only a short time. Not wanting to miss out on any more continued yen strength I placed a new Q3 stop order at 113.47. This has been hit and remains open. I’m probably just looking for another 50 or 75 pips from this at most right now. Of course, we might have already seen the majority of the yen’s move and the dollar could rebound from here. If price returns to the week’s opening price around 114.50 I’ll consider closing out this Q3 trade and being happy with what I’ve made from the move so far.