Weekly Strategies: Focusing on the Japanese Yen

Our decision to long EURNZD after the Fed monetary policy has paid off. We did consider re-entering EURAUD but in light of the recent gains it is no longer possible. One of the key events this week is Bank of Japan (BOJ) monetary policy. To recap, the BOJ triggered the impressive rally in JPY pairs and crosses as it announced one of its operations to curb the yield curve. We were holding a short trade in GBPJPY but as the entry was based on an intraday time frame (4hr chart) we were forced to shift the stop to the entry, which was later triggered by the market on Friday. Reports China seized a US underwater drone in international waters forced GBPJPY lower after Friday’s London fix. We have noted NZDJPY resistance at 83.36 remained firm, which lead to heavy selling in the cross. Friday’s selling may have provided us with an entry in Kiwi yen.

NZDJPY Weekly Chart

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Weekly Strategies: Focusing on the Japanese Yen

NZJPY Weekly Chart 18/12/16

Last week we layered a sell limit order around the 84.00 mark as we were expecting NZDJPY to trade in tandem with USDJPY following the Fed’s decision to hike rates and affirm 3 rate hikes may take place in 2017. Dollar yen gains were not reflected in Kiwi yen and the resistance was able to cap the buyers. Due to the magnitude of the retracement there is a fair possibility NZDJPY will re-test 83.36 this week. We should highlight this does not mean there is a long entry in NZDJPY. A short entry may only be presented only if NZDJPY corrects higher. Kiwi yen may correct higher as a result of the BOJ monetary policy decision or the Gross Domestic Product (GDP) that is scheduled for release later this week. We are likely to layer a sell limit order in NZDJPY after the market opens where we have until the end of the week for the entry order to kick into play. In an event NZDJPY will gap higher at the opening towards 83.36 we may initiate the short trade at the price and expect the BOJ to be trigger. We should also highlight there is a similar entry in AUDJPY, which increases the possibility the trigger may be the BOJ but of course we will have to wait and see. This is our strategy ahead of the BOJ.

Why is it the Euro So Strong?

Despite the Fed rate hike you may have noticed the Euro is firmer than other currencies in the Foreign Exchange (Forex) market. The strong US Dollar (USD) may or has already forced Asian central banks to intervene in the market in order to contain the meltdown of their local currencies against the US Dollar. The US Dollars are then recycled into Euro’s, which ensures the Euro remain elevated against a basket of currencies. In an event the US Dollar is moderately weaker, the central banks may still intervene and recycle USD into EUR. This creates a fundamental support for the Euro in the Forex market as long as USD will be continue being recycled into EUR. Mario Draghi has referred to this in the past, labelling the central banks as ‘distressed economies.’We should stress this does not mean the Euro can be bought anytime. We must have a technical entry to affirm EUR is due to correct higher as we have successfully executed in EURNZD.

We will begin the week with an entry order in NZDJPY. We are unlikely to initiate a trade at market price unless a significant gap takes place at the opening, which may provide new signals.

NZDJPY Entry Order

NZDJPY sell limit at 83.70
Take profit: 80.50
Protective stop: 84.38
Risk Ratio (RR): 1 : 3 (approx.)
Estimated duration: 14 days once triggered

Note: The entry is likely to kick into play by a spike due to the BOJ monetary policy or the GDP later this week. It is a weekly entry, by the book we have until the end of the week for the entry to be triggered. If we suspect the downtrend has already emerged we will cancel the order. We cannot initiate a short trade at current levels.

20/12/16 UPDATE: We have cancelled NZDJPY entry order. NZDJPY was heavily sold in today’s session.

EURJPY Trade Alert

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Weekly Strategies: Focusing on the Japanese Yen

EURJPY Daily Chart 19/12/16

EURJPY long at market price (121.73)
Take profit: 123.60
Protective stop: 121.15
Risk Ratio (RR): 1 : 3 (approx.)
Estimated duration: 4 days

Note: If EURJPY corrects higher and stalls around 123.30 (approx.) we may exit the trade. 121.45 may be re-tested but again, these re-tests are not guaranteed.

20/12/16 UPDATE: We expected a stronger rally in JPY pairs and crosses following the BOJ monetary policy. As this does not appear to be the case at the time of this writing we are taking action.

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Weekly Strategies: Focusing on the Japanese Yen

EURJPY Daily Chart 20/12/16

EURJPY is trading at 122.45 at the time of this writing, we are closing 40% of the long trade at market price and shift the protective stop to the entry.

EURUSD Trade Alert

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Weekly Strategies: Focusing on the Japanese Yen

EURUSD 4hr Chart 20/12/16

EURUSD long at market price (1.0376)
Take profit: 1.0590
Protective stop: 1.0305
Risk Ratio (RR): 1 : 3 (approx.)
Estimated duration: 3 days

Note: This is a 4hr entry. ,We may incur a kick to 1.0320, which is the key support but we are counting on the positive divergence to lift EURUSD higher.

20/12/16 UPDATE II: This was a tough decision but we decided to close EURJPY long trade at market price (122.43). We have ended the trade with a decent profit.

21/12/16 UPDATE: EURUSD is trading at 1.0419 at the time of this writing. We are closing 30% of the long trade at market price and shift the protective stop to the entry.

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Weekly Strategies: Focusing on the Japanese Yen

EURUSD 4hr Chart 21/12/16

This was an intraday entry, which is why the daily close is not essential.

AUDUSD Trade Alert

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Weekly Strategies: Focusing on the Japanese Yen

AUDUSD 4hr Chart 21/12/16

AUDUSD long at market price (0.7244)
Take profit: 0.7330
Protective stop: 0.7210
Risk Ratio (RR): 1 : 3 (approx.)
Estimated duration: 24 hours

Note: This is a 4hr entry with a relatively tight stop. If timed correctly, the gains should materialize throughout the Asian session or prior to the daily close.

21/12/16 UPDATE II: EURUSD is trading at 1.0432 at the time of this writing.

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Weekly Strategies: Focusing on the Japanese Yen

We are closing 10% of the long trade at market price and shift the protective stop to 1.0405.

22/12/16 UPDATE: AUDUSD triggered the protective stop loss order, USD weakness appears to have been limited to Euro Dollar.

22/12/16 UPDATE II: EURUSD is trading at 1.0459 at the time of this writing, we are shifting the protective stop to 1.0415 and close 10% of the long trade at market price.

22/12/16 UPDATE III: The resistance at 1.0470 capped the gains at the first test. We are tightening the stop prior to the US economic data. EURUSD is trading at 1.0448 at the time of this writing, we are shifting the protective stop to 1.0422.

22/16/16 UPDATE IV: EURUSD ripped through 1.0470, triggering stops as it extended its gains in the market.

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Weekly Strategies: Focusing on the Japanese Yen

EURUSD 4hr Chart II 22/12/16

EURUSD is trading at 1.0486 at the time of this writing, we are closing 20% of the long trade at market price and shift the protective stop to 1.0467.

22/16/16 UPDATE V: EURUSD triggered the protective stop at 1.0467, ending the trade with a decent profit.

Weekly Strategies: Focusing on the Japanese Yen

As all trades are closed this page can now be accessed by all traders. Open trades and relevant intraday strategies are restricted to members only. We have been providing trade alerts in the Forex market since May 2014.
Weekly Strategies: Focusing on the Japanese Yen
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Weekly Strategies: Focusing on the Japanese Yen