The Weekly Update: Japanese Yen Setup and USD, May 2018

EURUSD Forex Signal Strategy

The Bank of England (BOE) cut growth and inflation forecasts for 2018 and 2019 in its latest monetary policy meeting. GBP was heavily sold against a basket of currencies, the market is now pricing-in the next rate hike in 2019.

The US Consumer Price Indiex (CPI) missed the market’s expectations. which weakened USD against a basket of currencies. We have expected a weak US Dollar, mainly in EURUSD. 1.1860 was successfully tested, which may imply EURUSD is set to target 1.2800. The uptrend may take several months, possibly until the end of 2018.

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The Weekly Update: Japanese Yen Setup and USD, May 2018

EURUSD Weekly Chart 13/05/18

Regardless of the potential target, initiating a long trade in EURUSD at current levels means a potential drawdown of around +100 pips. The potential drawdown is too high bearing in mind the negative swap. Should the price correct lower, preferably re-test 1.1860 it may provide us with a clean entry.

We are unlikely to target 1.2800 as we refrain from holding onto trades for such periods of time.

CADJPY Forex Signal Strategy

Our prior attempt in AUDJPY failed as President Trump’s announcement on Iran took place earlier than we have anticipated (which was 12 May, 2018). Last week we updated that we are also focusing on JPY pairs and crosses.

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The Weekly Update: Japanese Yen Setup and USD, May 2018

CADJPY Daily Chart 13/05/18

There may have been a breakout in CADJPY daily chart. We are aware that the NAFTA negotiations have yet to conclude and that Canada’s CPI is due on Friday. We are anticipating a weak Japanese yen as noted in other currency pairs and crosses such as EURJPY and AUDJPY. Our main focus is not on CAD.

If timed correctly CADJPY is expected to correct higher prior to the CPI data on Friday. The potential drawdown and the required protective stop is fairly minimal.

To summarize, we are expecting renewed risk appetite mode which may involve a weak USD and a weak JPY.

CADJPY Trade Alert

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The Weekly Update: Japanese Yen Setup and USD, May 2018

CADJPY Daily Chart II 13/05/18

CADJPY long at market price (ask 85.57)
Take profit: 87.25
Protective stop: 84.80
Risk Ratio (RR): 1: 2.0 (approx.)
Estimated duration: 10 days

Relevant as long as CADJPY is below 85.75

Note: The potential drawdown is a re-test of 85.00. Our focus is on a weaker JPY rather than a firm CAD ahead of Canada’s CPI on Friday.

14/05/18 UPDATE: We are shifting CADJPY protective stop to 84.90.

NZDUSD Trade Alert

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The Weekly Update: Japanese Yen Setup and USD, May 2018

NZDUSD Daily Chart 14/05/18

This was a a close call but we decided to opt for NZDUSD in our effort to capitalize over our expectations for a weak USD. The weakness that took place in NZDUSD reduced the size of the required stop.

NZDUSD long at market price (ask 0.6914)
Take profit: 0.7050
Protective stop: 0.6874
Risk Ratio (RR): 1: 3.4 (approx.)
Estimated duration: 10 days

Relevant as long as NZDUSD is below 0.6935

Note: This is a daily entry. The potential drawdown we well as the size of the protective stop is minimal.

15/05/18 UPDATE: NZDUSD triggered the protective stop, we are not re-entering the market. The US Dollar firmed against a basket of currencies due to rise in US treasury yields.

15/05/18 UPDATE II: We are shifting CADJPY protective stop to 84.95. If no progress is made within the next 24 hours we may decide to exit the trade as it is a daily entry, we are not pleased with the current price range of the cross.

Rise in US yields pushed USD higher against a basket of currencies in today’s session, no significant events took place.

15/05/18 UPDATE III: CADJPY is trading at 86.26 at the time of this writing, we are closing 20% of the long trade at market price and shift the protective stop to 85.38.

EURUSD Trade Alert

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The Weekly Update: Japanese Yen Setup and USD, May 2018

EURUSD Weekly Chart 15/05/18

EURUSD long at market price (ask 1.1842)
Take profit: 1.2190
Protective stop: 1.1697
Risk Ratio (RR): 1: 2.3 (approx.)
Estimated duration: 40 days

Relevant as long as EURUSD is below 1.1930

Note: This is a weekly entry. The potential drawdown is a re-test of 1.1720. We are aware of the negative swap that is incurred at the rollover. As it is a weekly entry the estimated duration is 40 days.

AUDJPY Trade Alert

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The Weekly Update: Japanese Yen Setup and USD, May 2018

AUDJPY Daily Chart 16/05/18

AUDJPY long at market price (ask 82.93)
Take profit: 84.40
Protective stop: 82.20
Risk Ratio (RR): 1: 1.93 (approx.)
Estimated duration: 7 days

Relevant as long as AUDJPY is below 83.10

Note: We are taking some risks in AUDJPY. As noted in the weekly update we are expecting a weak Japanese yen. We have some indications for AUD gains but we cannot determine whether it may be related to the upcoming employment data.

Although the risk ratio is poor the gains are expected to be immediate with a minor potential drawdown (re-test of 87.30). The price may re-test 82.75 prior to the economic data, however, we will not layer a buy limit order for several pips that can be absorbed.

To be fully transparent we had a choice between AUDJPY and NZDJPY.

17/05/18 UPDATE: CADJPY gains should have been stronger in today’s session. Canada CPI data tomorrow may set the tone for CAD pairs and crosses.

Please click on the chart to enlarge:

The Weekly Update: Japanese Yen Setup and USD, May 2018

CADJPY Daily Chart 17/05/18

We decided not to remain in the trade as the 4hr chart may be signalling some corrective weakness in the cross (potential) that we are unwilling to absorb. CADJPY is trading at 86.50 at the time of this writing, we are closing the long trade at market price.

17/05/18 UPDATE II: We are shifting AUDJPY protective stop to 82.50.

20/05/18 UPDATE: AUDJPY is trading at 83.43 at the time of this writing, we are closing 30% of the long trade at market price and shift the protective stop to 82.93. The partial closure is intended to reduce our overall exposure to JPY.

21/05/18 UPDATE: There are early indications AUDJPY gains are nearing the end before a potential retracement takes place. It is difficult to determine whether such a retracement (should it materialize) will affect GBPJPY. What we can write however is that we are now more dependent on GBP than on JPY in GBPJPY.

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The Weekly Update: Japanese Yen Setup and USD, May 2018

AUDJPY Daily Chart 21/05/18

AUDJPY traded near 84.10 before correcting lower. We are reluctant to absorb any retracements in AUDJPY. AUDJPY is trading at 84.00 at the time of this writing, we are closing the long trade at market price.

22/05/18 UPDATE: EURUSD has been held in a range for the past several days, similar to GBPJPY. In light of the current trends we decided to provide more room for the trades.

We are shifting EURUSD protective stop to 1.1665. We are not keen on widening stops as we would rather incur the loss (if required) but we have to provide more room the trades in an event of short-lived (bearish) spikes due to the price range.

25/05/18 UPDATE: EURUSD triggered the protective stop, we are not re-entering the market. Tension in Italy triggered EUR weakness against a basket of currencies.


AS THE OBJECTIVE OF THE STRATEGIES HAS BEEN MET THE FX SIGNAL IS NOW ACCESSIBLE TO ALL TRADERS


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The Weekly Update: Japanese Yen Setup and USD, May 2018

The Weekly Update: Japanese Yen Setup and USD, May 2018