Gbp/Jpy going higher?

The Gbp/Jpy is climbing apparently in an unstable undiminished run. Analyzing the pair a little closer, there have been and will continue to be plenty of signals of reentry/position adding as the pair rockets up. Many traders are sitting on the sidelines ahead of the non farm payrolls, there is no reason to avoid trading the crosses.

From a fundamental view, is there any reason this pair will stop running in the short term. Answer: NO. Many have said the pair is too high. Let's look at the components. Is the Bank of England OK with continued strengthening of the Cable? Of course, strong currency is a good thing for the Brits. Is the Bank of Japan OK with continued weakness in the Yen? They couldn't be happier, weak currency means strong exports and strong economy for Japan. Neither of the involved reserve banks have the intention of reversing this trend. If the non farm payrolls come out tomorrow negatively or low for the US showing continued slowing in the economy, what will happen to the pair? The Gbp will strengthen a lot as it is a strong currency right now. The Yen has been weak against the USD, a weakening currency matched with a weakening currency will not cause much change and what change occurs will be outweighed by the difference between the Gbp and Usd. No worries for the announcement or current fundamentals then.

Technically, we agree with the fundamentals (see graph). We have had a consistent bouncing at the Fibonacci levels throughout this climb. It would not be surprising to see a pull back tomorrow or Monday of upwards of 250-300 pips, giving an awesome entry position before running up to the -61.8% level or to the -100% level as market on the graph. If by chance we blast through the -38.2% Fib (223.85) in the next 2 days, I would not expect the pull back until the 226 level. If the pair was aggressive enough to reach the 226 level without a pull back, I would expect the next pull back to be more dramatic, possibly to the 222 or even the 221 level from the 226 ceiling. If we get a pull back now, the odds of another aggressive 600 pip climb is greatly improved.

Gold at a cross road

When looking at gold, I see it standing at a cross road. One direction promises a brilliant bright shiny metal future, the other direction, dimming oxidation and a lack luster existence. As gold tests the bottom of this trending support, we see a divergence has formed on the 14.3.3 stochastics and has also moved to just barely out of the upper reversal zone (78%ile at close). If Gold continues down tomorrow, I will expect drop to $600, matching the width of the channel, the gap from 2 weeks ago and the consolidation in April. A further move could push Gold lower to $550, 2 channel widths and the prevailing support level from January through March.
A bounce off of the current channel or the 38% Fibonacci line at about $620 could be the confirmation to see Gold continue the bullish run back to the top of the channel near $680 if not the highs hit in May at $740. I would be willing to accept either direction with some confirmation. Tomorrow very likely will offer the clarity needed for a big move and sizable profitability.
My personal bias is to see Gold follow the divergence and stochastics losing ground and pushing to the bottom side. If you don’t have a futures account or account to trade spot gold, look at the AUD which is back in line with gold pricing after fighting the bullish move in gold previously in the year, the AUD seems to be correlated again. If you are looking to play gold weakness with the AUD but aren’t convinved that the USD can continue, look at the set ups with the AUD/JPY and the EUR/AUD, both are also at key levels of support/resistance.

USD/JPY

Entry order expecting a break above highs over the 116.60 market with a target 118.30.  This plays into major resistance and fibonnaci retracement levels.  Stop near 115.50

 

The Eur/Usd is trying to tempt me to trade this long yet I am not really comfortable with the FOMC meeting on Friday.  I am thinking of putting 100 pip entry orders both directions on the pair.  Expecting a significant move back to the top of the channel or a breakout.  It may remain flat all the way through Thursday.
 

Gold is relatively flat.  Watch for a break above 602 and then a move to 610.  A break above 612 watch for a move all the way to 635. The Aud/Usd is right near the 61% fib.  If this bounces and gold breaks it could be a major reversal all the way back up to .7600 or higher over the next month or two.  A break below could drop us to .7000. Short at .7250 with a stop .7380.  If it breaks up with gold through .7430, I will be more aggressive and get in long.

 

Watch the Usd/Cad.  Appears to be setting up for a bounce down.  Pivotal point.

Blake Young

Random Acts of Forex

 

Eur/Usd

Still waiting for a break/close below the 1.2550 level on the Eur/Usd.  Same level mentioned earlier.  Maybe an entry today, we are only 17 pips away right now.  I am also looking at the Usd/Cad for a short position.  This pull back could give a good entry price.  Let's see what happens in the next 5 hours.

 

Blake Young

Random Acts of Forex.

He's ALIVE!!!

Surprisingly, I am back. After finding good homes for my dogs, selling my house, moving to another house and launching trading rooms and the new OEC, I have carved out time for a posting. I felt this was very important to do as the ECB rate decision is due out in the morning. This decision comes at a very critical time. We had nearly a 750 pip run on the dollar but sentiment is uncertain. Many traders are still very bearish but I wonder if that is nearing an end. If the ECB raises rates higher than the expected, this could lead to a possible dollar catastrophe/panic. If the announcement is disappointing, it could be the catalyst to reverse the run. Taking a more conservative approach to the trade and waiting for a clear break out of the bull flag I see an entry at 1.30 with a target of 1.36 over the next 2 months, the reverse would be a close below 1.2550 and a target of 1.1950. See chart









6/8/2006
7:45 est
EU
ECB Announces Interest Rates
2.75% expected
2.50% previous


The other big trade I am watching is the Chf/Jpy. The pair has broke out of the ascending triangle and appears to be going for a small retest. A sudden move up could be justification for a long position and 250-350 pip target. See chart














I hope all is well, wish you the best of success and hope you are able to "print" some money on tomorrow's announcement.

Blake Young
Random Acts of Forex
actsofforex@gmail.com

Bad time for an update

I know this is not the most opportune time for an update but I haven't had much time the past 2 days.  I was stopped out of all my trades over the weekend and on Monday.  I am getting back into gold.  Looking for an entry on silver near 13.90 and then again at 14.05.  Looking for a short position on the Cad/Jpy at 98.22.  I am looking for a long position on the Eur/Usd at 1.2881.  Looking for a short position on the Usd/Jpy 109.20.  Straddling the Eur/Aud-- Long if it goes over 1.6860 and short if it goes below 1.6650. 

 

I am really deliberating on a short position on the Eur/Chf. Gut feeling says it is a short position right now. 

Instead I think I may just short the Usd/Chf.  Can decide yet on this one.  This would be a short 40 pip grab.  If I wait and see the Eur/Chf go below 1.5450, this would be more sizable and maybe take us down to 1.5260 .

 

While typing this, my gold position has moved positive making up a large night time spread and is up $30 from yesterday's lows.  Could be big day for the Aud/Usd.  A push above 0.7740 will place me in a long trade anticipating a move higher to 0.8150 over the next 2 weeks.

 

Best of success

Blake Young

Random Acts of Forex

Updated Positions

Got stopped out of most of the trades during the night. Re entered Silver and the Eur/Usd both long. See positions. I will try to write some comments on the week to come tomorrow. Remember trade balance is due out tomorrow. I may scalp a little in the morning if we get a strong movement.

Wild ride from the FOMC

Up and down up and down,... up??? The news appeared to have a net zero effect on the market. Lots of whip saw on the event. I was stopped out of the Eur/Usd again and then got back in. So I grabbed a couple of dollars and re-entered the trade. Also added to the Gold and back in on Silver. Remember you can trade IAU and SLV if you would like to trade the ETFs/iShares for gold and silver.

We are back over 200% again and still have 2 weeks to go for the end of month two. With gold and silver breaking out, I think we have a good chance.

Good luck in your trading.

Blake Young
Random Acts of Forex

Testing Barriers and stop losses

This morning there has been a bit of volatility as many currency pairs have pushed to the years or multiple year extremes. These attempts have included a bit of volatility and I have been stopped out of a number of trades and still have signals to get back in to the trades. This can be aggravating to be stopped out and have the trend continue, but it is better than taking to much risk. So, even though I was stopped out of the Eur and the Cad, I am back in those trades.

I have added to my gold position as gold makes an attempt at $700. This could be big. About 6 months ago I commented to a number of trader friends that I wouldn't be surprised if gold broke $1000 within 2 years. It certainly appears to be headed that direction.

Now pay attention here. FOMC Interest rate announcement. What is it going to be? Even though Bernanke said he may be done raising rates, analysts are expecting we are going to get another rate hike to put the discount rate to 5%. If the analysts are right and the market is expecting this, imagine the implication if there is a no rate hike. If the market has priced in the hike and their is no hike, we could see 150-200 pip move after the announcement. The question is, is the Eur/Usd reflecting expectations of a hike, no hike as Bernanke hinted at, or something in between. No matter what happens, I expect a lot of action tomorrow. Maybe a good scalping time. This could be another reason to play gold, due to uncertainty.

Below are the current positions. Note the entry price has changed due to new positions or adding to previous positions.

At a live event.

Do to presenting and the time required involved in the class, I am going to do my best to update this but updates may be late or missing while here.  I will send an email for every update between now and Friday if you are on the email list.

 

Thanks for your understanding

 

Blake Young

Random Acts of Forex

Non Farm Payroll

The ECB did what as anticipated and caused very little fluctuations. I am still expecting a big move this week, so let's see what the non farm payrolls will do. There could be a lot of volatility in the announcement. As I said in the previous blog, I will probably tighten stops right before the announcement and then trade the announcement. This means I will either be stopped out and flip trades or add to the positions as it runs after the announcement.

I was stopped out of the Usd/Cad due to volatility. I have an entry order at 1.1017, allowing a break below the lows.

I am looking at placing an entry order on gold and silver, both long of course. I haven't decided at what level to place it yet. We will see.

We haven't recovered all the uncaptured gains yet but we are still doing well and on track,and uncaptured doesn't count until you close it out.

Below are the current positions and current stop losses.

Have fun with the announcement. It could define the dollar.

Eur/Usd Long Trade

The Eur/Usd long entry position I placed yesterday was triggered and the Gbp/Usd is on a run.  I am buying into the Gbp as well, as of late the Gbp has shown more strength than the Euro so I like that trade better.  Danger being, non farm payroll in the morning.  I will probably tighten my stops up and trade the announcement tomorrow morning at 8:30 est.

 

 

Splitting the Euro

Tightened stops again, as we can see there was a pull back and silver slammed down and took us out of the trade.

Enough of the past, let's talk tonight. Any surprises from the ECB either in rate or in guidance will push the dollar one way or another. My best guess, if they change their guidance or alter the expected rate hike at all, the Eur/Usd will move 100 pips in the middle of the night, followed by another day or two of continued movement. I have place entry orders to add to my position if the Eur/Usd climbs by more than about 60 pips and I have my stop placed to stop me on a drop of about 40 pips and a short sell down about 60 pips again. So I don't care which way it goes, I plan on making money either way. This could be another pivotal day for the dollar and define a pull back closer to 1.20 in the next month or a push to nearly 1.30.

Good luck and happy trading.

Blake Young
Random Acts of Forex

I'm tired

Call it fatigue or call it intuition. I am tightening all of my stops a little tighter than usual. Note the stops in some cases are within the range of the day instead of below the lows of the day. They are not too tight because I wouldn't want to get stopped out when these could continue to run. You will note that as of today our equity position is now up over 200% since March 23rd. I know this is very aggressive to state but I would like to see us reach 100% by May 23rd which would put us at 300% ytd/2 months. Here's hopeful thinking. The reality is I am on a hot run and enjoying every minute of it. We will see how long this lasts.

Happy Trading
Blake Young
Random Acts of Forex

Mid day update, stopped out on the Usd/Jpy

I didn't get a chance to post an update yesterday, but I did adjust my stops and got stopped out of the Usd/Jpy, which then continued its run. Here are the current positions as of about 12:15 est.

Someone asked him how I exit my trades, most of the trades I exit on the stop losses you see in the current positions graphic. If you want to see where I get stopped out, double click the image below and see where my stops are positioned. Every day I tighten these based on my assessment of the current situation, allowing my profits to run.

I will get another posting up in about 4-5 hours.

Running behind

Will be posting an update later tonight.  Sorry for the inconvenience.

Now Let's Be Honest

OK, here is the question for the day. How many of you, honestly, thought to yourselves, "oh I guess, Blake blew it." or "the streak is over" or "He is insane" when you saw the 8% drawdown in one day? (actually dipped to about 12% during the night). Well I will have you know I was never nervous about all of those positions open at once. I just happened to stay up into the night and just got 4 hours of sleep, purely a coincidence, had nothing to do with my emotional state from trading... never doubted... never... Ok if you believe that send me $19.95 in a self addressed envelope and I will send you a deed to some beach front property in Arizona.

I don't like being in that many positions all at once. It makes me jittery. Thank goodness, once again, that I tend to follow rules. We did get a buy signal on the Gbp/Jpy which goes against the short Usd/Jpy signal. Probably just an indication of a very strong Gbp and a weak Usd, not necessarily a reflection on the Jpy. If you note the other quick postings you will see the other new trades.

I am tightening my stops a little more than I customarily do, primarily because I am tired and we are going into the weekend. I think all of these could still run after a breather but I need a breather too, not just because of trading but life in general.

So here it is, current standings, still soaring. Have a fantastic weekend.

Blake Young
Random Acts of Forex

Adding to the Eur/Usd and taking part of the silver positions off of the table

I am adding half of a normal position for myself on the Eur/Usd.  It is still running.  I have taken part of the silver position out (about 25% of the position) and part of the gold(33% of the position removed).  I felt over leveraged and didn't like the effect on my account nor my sleep patterns.  Over all we have already recovered from a peak of down $100 to up over $200.

 

Happy Trading

Blake Young

Random Acts of Forex

Selling the Usd/Zar

I have been watching the Usd/Zar, the interest payment is great in a sell postion and I believe it has found resitance.  Confirmation of price drop below yesterday's low.  Selling at 6.1226

 

Ups, downs and sideways

Busy day today but I think I am almost caught up. It was a very wild ride especially on the metals. Both gold and silver made good moves but reversed and then came back to center. I am OK with this initial pull back as I feel fairly confident in the metals for a long play (once again including the Aud and commodity related pairs).

The Usd/Cad and the Eur/Usd trades are still running well. I would not be surprised if this new Gbp/Usd trade were to pull back a little but then run up to 1.8220 if not 1.8420 *see chart*

















Current positions are listed below.