Thursday, August 02, 2007

Follow up on the Aud/Jpy

Yesterday I commented I like the Aud/Jpy when the price was near 101.30. Right now it is at 102.36, do I still like it? Not as much frankly. We have slowed just outside of the past 3 day highs which also match up to our Fibonacci retrament levels. If I am going to be comfortable with a position I want to get in closer to a bounce or support or after we break above this short term level with a bounce above the level. I wouldn't be surprised if we blast right through and make the previous trade very profitable but I certainly not looking to add a position here. Not yet anyway.

Now if we can get that upward mobility, 105 is certainly not out of reach and possibly back to the 107 level as we discussed a couple of days ago. Potential bounce levels? 102, 101.40, 102.70

Wednesday, August 01, 2007

Usd/Cad Short, Aud/Jpy Long?

Both of these are looking good. Short term we could see a little pull back on the Aud/Jpy to keep our risk in check. Usd/Cad is looking good to me. I will post with graphs later.

Tuesday, July 31, 2007

Aud/Jpy Trade

In the comments from of yesterday's post, I mentioned the idea of not chasing the trade. Let it come back to you. So here it is back to us. To gather further insight to the trade set up, first look at John's posting at Forex Factory on the AUD/USD. Half of the trade I am looking at is tied up in the strength of the AUD.

Next let's look at the long term view of the AUD/JPY. The pair is still trading in the channel that goes back to Feb/March time frame. It is testing the channel support, approaching the 100% fib retracement level and the 38% fib fan "supports" the trade for the same time frame (groan... I can't believe Blake went for the cheap pun). All of these favor the setup of a long position. From the risk and reward stand point, a 100 pip stop could allow you to trade the pair back to 107.50 level. Risk 100 pips gain 650. Mmm tasty. But the upside trend line is moving higher as time goes on so the target could becom 110.00 now we have a 900 pip target for the same 100 pips stop...yummier.

I have talked a lot about giving yourself more room to trade than you think is necessary. What about a stop in the 97.50 level. We now risk 350 pips for the same 650 or 1000 pips. Though the risk to reward isn't as appealing, I think the view of taking bigger stops will make you more right more of the time. It only takes one more winning trade in 8 trades to make up for the additional exposure.

To be more conservative and time the trade, let's drop down into an intraday view. Waiting for a move to break the 102.50 level for confirmation of the break of the fib fan and getting back into the fib retracement from prior would be a good idea. BUT, WE SHOULD BE MUCH MORE WORRIED ABOUT THE LOWS AND NOT THE HIGHS. If we are going for a long or bullish trade then we concern ourselves with the lows or support levels. If those support levels are broken then our trade is over. The reverse is true in down trends. If we bounce off of the 101 level then we have a higher low and continuation of our trend. I will then use a fib fan and the 61% line to draw a support line off of the bottom of those two lows. The fib fan will give me a quick controlled out of the trade as well as a target for the next high. After we see a bounce I will post again.

Monday, July 30, 2007

Added insight

Adding to my encouragement for you to look at GLD, and the AUD/JPY, take a look at the video and blog on the Profiting with Forex home page and today's blog title Watching Stocks to Trade the JPY. Add that to the Aud/Usd analysis and put all the pieces together.

I am not kidding, take a stand, make a comment, show you have an opinion. No one is wrong, some of us will just be "righter" than others.

No time for graphs

See if you can see what I am seeing. I like the idea of a buy on the Aud/Jpy near 100.70-101.30.

Look at the long term trends, look at fib levels, look at gold... then post in the comments and let's talk about this one. What is the appropriate stop level? What would you expect long term? Is the pull back over? Is it time for a trade? Am I a few sandwiches short of a picnic?

This and more in the next blog post.