Hold Your Horses...

My USD/JPY and EUR/JPY trade from last week is still moving in my direction and isn't showing any real sign of abating. Aside from taking some profit from my USD/JPY position, I've basically held my trade as is until I see reason not to... I raised my stop for the USD/JPY to 91.69 (locking in 70 pips on my existing lots) and EUR/JPY to 134.71 (locking in over 200 pips).

Language Worth a Thousand Pips

Aside from Durable Goods and New Home Sales figures due out this Friday (both have positive expectations), the FOMC is expected to announce the Fed Rate this Wednesday, which is widely expected to remain at 0.25%. I'm not sure anyone on the planet expects rates to actually be hiked this Wednesday, however, there is debate about the language that will be used. The transcript to every Fed rate decision is carefully analyzed for certain key words that may have an enormous effect on the equity and forex markets. If the Fed's commentary is somewhat hawkish, signaling that a rate hike has moved up in its timetable, then the status of the USD as a pure "safe haven" currency will begin to diminish, and it will once again be looked upon as a high-yielding currency where investors can park their cash. This would undoubtedly begin a change in momentum for the USD against some of the majors, particularly the EUR and GBP. If the Fed makes it known that rate hikes will begin soon, the EUR/USD can easily come down from it's current 1.4600 level to the 1.3 level within weeks or months. If not, the current USD bearish trend may very well extend through the remainder of the year.

Holding onto a Good Thing

Since I doubled down on my bet against the JPY about 24 hours ago, things started to go my way in a hurry. A rush of positive economic data from the U.S. has pushed the markets higher, which in turn creates more risk appetite for higher yielding currencies. I'm up over 150 pips on my EUR/JPY trade and I'm in the green on my USD/JPY trade, which was about 20 pips from being stopped out for a loss yesterday. With housing starts and initial jobless claims due out any minute, I expect the market to take these pairs even higher. We shall soon see....

Betting Against the JPY

The USD/JPY trade from last night hasn't gone very well so far, but I am still in it and have not been stopped out.

Considering the good news this morning out of the U.S. for CPI and Industrial Production, there should be some risk appetite in the market. I will add to the flame here by increasing my position against the JPY. Instead of going in the USD again, I will go long the EUR/JPY with a stop just below the 131 level, where there is some clear daily support. About 200 pips is a lot to risk for one trade, but I am not going in too heavy and there is a ton of room to the upside here, so I still believe the risk/reward ratio is in my favor.

risk ~ 200 pips

reward ~ 250 - 500 pips

Charms and USD/JPY Opportunities

My wife and I just finished feeding our twin sons. The level 3 nipple is still working like a charm, especially at night-time, as there's less spillage at night than in the day. The boys are already fast asleep in their crib (they are still sharing a crib). let's hope it stays that way for at least the next 6 hours...

Now that I'm up, I took a look at the market and see a nice little opportunity to get into the USD/JPY. It's trading near some hourly support, which is around the 90.80 level, which isn't far from the daily support at around the 90.20 level. I'm going long a few lots around here as I think this presents a favorable risk/reward situation. With the recent favorable economic data coming out of the U.S., and the CPI and Industrial Production coming out in the morning, there should be plenty of volume to move the market.

My Twin Boys - Feeding Frenzy and the Epiphany

My twin sons, Noah and Benjamin, were born on 7/27/09, Noah being the first (by a minute) and the bigger at 5.7 lbs, while Ben was born at 4.14 lbs. Ironically, Ben went right up to the nursery, eating like a horse and burping like.... well, like his dad... Noah had to spend 3 days in the NICU for monitoring, as his blood-sugars weren't where they were supposed to be. After 3 long days, the boys were reunited!

After 2 weeks at home with the boys, and no more 24 hour help around, it hit home pretty hard that these 2 guys completely depended on us to care for them, no matter what! So, the feeding frenzy began and hasn't quite ended. Working out a schedule with my wife proved to be far more difficult than I imagined. Feeding both at the same time, while essential in keeping as "normal" a routine as possible without having one long, constant feeding, is more difficult than it seemed. After the 1 hour mark of a single feeding, while the little ones took turns falling asleep in mid-feed or just being uncooperative, one can lose one's train of thought, and one's mind, very easily...

Even when my wife and I fed them together, taking one each, it was still quite difficult, as the feeding still often took over an hour to complete. Once the feedings were done, we had possibly an hour or so of quiet time before the next feeding began. Quiet time never seemed to go as smoothly as we'd hoped...

With my sanity and my marriage in utter dismay, we got a visit from an unlikely short, petite, Russian brown-haired girl. An experienced speech therapist who also consults on infant feedings, came by and heard our story. She suggested a few things, but the epiphany came when she uttered the 3 most beautiful words I had heard in 6 weeks - "try bigger nipples!" Although this might sound somewhat controversial, to use level 3 nipples on 6 week old infants, I was desperate and needed to try something... Considering we have been putting a little rice cereal in the boys' formula (a recommendation our doctor made to alter the consistency and help keep the formula down), the bigger nipple idea seemed to make more and more sense. I instantly went right over to the nearest Babies R' Us (a place I'm beginning to call my second home) and purchased 3 packs of level 3 nipples. That very night, with Noah in my arms and Ben with my wife, the boys downed about 3.5 ounces of formula with rice cereal, let out a burp that sounded more like a Mozart symphony to my ears and went quietly into a deep sleep, laying in their cribs like 2 peas in a pod, all in under 35 minutes. Alas! the day is saved!

With time to spare, my wife and I gaze at each other with an indescribable look of joyous insanity, with a hint of skepticism, as sometimes things are too good to be true. However, 3 feedings later, this new scheme seems to be the answer (I'm knocking on wood). Who knows, maybe tonight, we'll even watch an entire movie together....

Return to Liquidity and the EUR/JPY

With a relatively light economic calendar week ahead, yet a potential return to liquidity in the markets, as the Summer doldrums should be officially behind us, trading should turn awfully interesting over the next few months. I expect a great deal of volatility and potential break out before the year is up.

I'm turning to the EUR/JPY, as this pair is very indicative of risk appetite in the global markets. Most recent economic data has pointed to a global recovery, including housing, jobs and earnings.

EUR/JPY looks poised to break out to the upside, per my chart above. I will be looking for opportunities to buy this pair. Of course, I will always look for an appropriate risk/reward situation before entering a trade.

I think the first Daily support level exists around the 131 level. Below that is 128 and then 125. I will look for opportunities off the hourly charts to get involved in what will hopefully be a very long and profitable series of trades.

No Crying in Trading

So, my EUR/USD trade from yesterday got stopped out for a 120 pip loss. That's ok, because this is a game where one needs to know how to lose as well as how to win. When I take a loss, I will be the first to admit it, but it doesn't mean I was wrong to do the trade. In fact, there is no right or wrong, just like there is no crying in trading. Right or wrong are moral distinctions. This is trading! Before every trade, I understand my risk and potential reward possibilities. I am well prepared to either take profit or take a loss at certain levels. The only thing that can go wrong is if one doesn't stick to those levels and begins to use their feelings to assess a trade. I do not do that, I stick to the plan. always!

Moving on, the EUR/USD still looks bullish to me (as does the EUR/JPY), but as I indicated in my piece on Monday, there is plenty of wiggle room to the downside here (about 500 pips until Daily support). So, I will sit back here and let the markets adapt to the latest rumors of U.S. bank trouble and get back in when I see things have stabilized somewhat - off the daily chart!

Enter the EUR/USD: A Short Tale

I just went long the EUR/USD at 1.4315 with a stop around the 1.4194 level. The chart below should speak for itself: a well defined hourly uptrend with an entry point near the 100 and 200 day EMAs.

I'm also keeping a close eye on the Yen, especially EUR/JPY. Based on the 2 time-frame chart below, EUR/JPY looks to be sitting right at some major support. I would be ready to risk a trade as long as it stays above the 132 level. So far, just keeping an eye and waiting for a nice entry point.