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February 28th, 2017 @ 8:20 pm by Muhammad Azeem

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usd/jpyTrend is bullish in 4 hours time frame. Vital support is present at 111.59 price level. In last few trading days, price action in USD/JPY currency pair has moved up. In my judgement, current bullish price action is part of a Bullish Wave C leg. So, Wave B was a Zig Zag but it is possible that Wave B is still in progress.

As the trend is still up, we could look for a buy trading opportunity once price action shows us few bullish bars. However; price should stay above 111.59 support level or bullish Elliott Wave count will become in-valid. In such case, I will stay out of the market and re-analyze the price action in 4 hours chart of USD/JPY currency pair.

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July 13th, 2009 @ 11:44 am by Matt "NewstraderFX" Carniol

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There were two very good articles (actually, one is a thread in the forum section) posted on FF recently that I thought had a lot of relevance for traders. What I’d like to do here is expand on both and tie them together because I think there are some very valuable forex trading lessons to be had. The first was an article posted by Piptrain called “How The USD/JPY Can Predict The End Of The Recession” and the thread that caught my attention was called “Giving Up” by Jimmy Jones.

Piptrain made the very astute observation that USD/JPY had gone from being a co-incident to a leading indicator for the S&P. This is incredibly important because if you know the market is setting up to be in either a “risk on” or risk off” trend, you can enter some trades with potentially huge returns.

To review, “risk on” means investors are buying riskier assets like stocks and commodities as they sell the safe ones-the USD and Treasury’s. Risk off is of course the opposite. The market went into severe risk off mode after Lehman Bros. collapsed last September and we’ve now come to the end of the risk on rally that Bernanke ignited in March.

What also happens when the market is in risk on mode is that the yen falls as traders sell it against the (formally) higher-yielding currencies. At least, that was the case until USD/JPY apparently became a leading indicator of the market’s appetite for risk.

USD/JPY (as well as the other yen crosses) had basically been falling right along with the S&P ever since the market peaked in October 2007 and the move into the yen accelerated when global stock markets collapsed through last Fall after the Lehman bust.  But starting at the beginning of 2009, things changed.

USD/JPY started appreciating in January even as the S&P headed lower, making a bullish divergence just as the MACD sometimes does. The way things look now, what USD/JPY was telling us was that the market was setting up to be in risk on mode; the only thing it needed was the right fundamental catalyst which it got on March 15 when Fed Chairman Bernanke went on 60 Minutes and announced the Central Bank was “electronically” printing dollars. Active depreciation of the dollar is a pretty sure way to ignite a stock rally because if the dollar looks set to depreciate, anything you buy with it (like stocks and commodities) has to gain in nominal if not real terms.

Even more interesting is that during most of the recent rally, USD/JPY was going down-in other words, it was making a bearish divergence, signaling that the rally could only go so far because investors were not truly buying risk. All it needed to completely kill it off was perhaps something like the poor NFP report we got 2 weeks ago.

An even stronger indication that the market is moving into full risk off mode is that USD/JPY is continuing to depreciate even as stocks head lower-in other words, it isn’t making a bullish divergence now which is entirely justified especially after all the recent talk about deflation being a bigger concern than inflation along with the G8 saying that now is not the time to begin withdrawing the extraordinary monetary and fiscal policies that have been implemented during the crisis.

So what can be gained from this?

  1. It does indeed look like stocks and commodities are headed lower, which means the dollar will gain against the higher-yielding euro, pound and A$.
  2. If stocks do go down and USD/JPY starts showing a bullish divergence, we’ll know the market is at least prepared to gain given the right set of economic fundamentals.
  3. If stocks eventually gain and USD/JPY shows a bearish divergence, stay ready for an eventual decline
  4. If USD/JPY gains along with stocks, the rally probably has legs.

Giving Up

Jimmy Jones is talking about giving up trading because after finding success during the rally, he’s found things to be very difficult more recently. The exact reason why Jimmy Jones has found it so difficult to trade lately is because the market entered a consolidation period where price moved back and forth but did not trend. Trading is relatively easy when markets are trending because you can “set and forget” or even take profits along the way and buy on dips (in an up-trending, risk on market) or sell on strength in a down trend. But when markets are moving sideways, as they have been over the past few weeks, it’s very easy to see your account get shredded.

Trend following systems like moving average cross-overs all share the same characteristics-they look good in a trending market but fail utterly when markets are moving sideways. They cannot tell you when a trend will end and they certainly can’t tell you when markets will go sideways, which as we know are the most difficult markets to trade. In fact, sideways markets are the main reason why so many forex traders fail.

There are some traders who claim to be good in these types of markets but for the vast majority of us (myself included), they’re just too hard. I basically avoid them like the plague and if that means I don’t have trades for a few days, weeks, or even months-fine. I’ll keep my powder dry for the time when I believe markets can trend. In other words, the decision not to trade is a trade itself.

The only way to avoid this type of price movement is to be an astute observer of what’s happening with the markets in terms of the willingness to buy (or sell) risk and what makes that especially hard is that is that different circumstances create a different set of conditions. For example, what killed the March rally in my opinion was all the talk about deflation from people like Bill Gross of PIMCO, economist Nouriel Roubini and FOMC member Janet Yellen. Why? Because if deflation is truly the risk, the dollar is not likely to depreciate which means the risky assets bought with it (stocks and commodities) are not likely to gain.

I’m not saying this is easy. You have to do your homework. But being aware of what’s going on will help you spot when the trends might start and more importantly, end.

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February 21st, 2008 @ 10:11 am by Mihai Marinescu

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Hello again everyone!

Today the EW picture was rather unclear, therefore we focused on mid-term setups awaiting better opportunities.

GBPUSD and GBPJPY benefited from a good fundamental support and rallied, GBP remains supported short-term with possibility of retracement at the end of NY session. We took a short based on EW, short-term trade: SELL@1.9586, stop@1.9630, target 1.9523.

Yen-based pairs are apparently continuing the short-term retracement up, we are looking for confirmations to buy USDJPY and GBPJPY during the next sessions.

Happy trading everybody!

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February 13th, 2008 @ 10:28 am by Mihai Marinescu

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Greetings everybody! A lot of interaction and good setups in the LTR today, overall many opportunities to look at.

We started with a look at the USDCAD, where since yesterday we’ve been waiting for a bearish signal (a TD break on 4h charts) – finally the TD resisted and we are still in consolidation at the time of this writing.

The AUDUSD presented a possible aggressive opportunity to buy for some large targets, but we decided to wait for the conservative entry (proved to be a good decision later, when Aussie dipped towards our projected stops) .

Today we focused our attention on the JPY pairs and started the day with a bullish perspective on all three majors – USDJPY, EURJPY, GBBJPY, an outlook that was later confirmed through different technical setups: Elliott Wave formations on several levels, divergence, trendlines, and finally a nice triangle on USDJPY that was broken while we were observing the pair.

We managed to jump right in on a USDJPY long @107.54, with a mid-term target of 109.18 and with a protective stop @106.95. The stop was later raised to breakeven during the NY session, therefore we are now enjoying a risk-free ride (at the time of this writing our trade has reached +70 pips, and counting) .
Will stay in the trade and possibly add to the position at a pullback towards 107.95.

Happy trading and see you tomorrow morning!

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October 28th, 2007 @ 7:42 pm by Eugene Teplitsky

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This is a video summary of the Live Forex Trading Room session on October 26, 2007.

Today’s Summary, by Sunil Mangwani:

Lets go over the long term things first which we’ve been following. On the GBP/USD, we were looking for a breakout on the daily timeframe from a Bullish Flag Formation. Price has been moving with lots of upwards momentum, and so far has remained above the mid channel of the flag. We were expecting a breakout this week, but it has not yet taken place. We have a penetration, but not a close.

On the intraday timeframes we did have an indication that today we might not get the close that we are looking for, because we had a Bullish 1-2-3 Formation. As I always say, “give me a 1-2-3 formation, and I can give you the targets”. We plotted Fibonacci Expansions to determine our targets, and price was rejected at the 127 level, so we do expect some retracement. Today is just not the day for the breakout. Lets see how it goes. Monday we do expect strong upmoves on the GBP/USD. Read the rest of this entry »

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October 26th, 2007 @ 1:51 am by Eugene Teplitsky

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This is a video summary of the Live Forex Trading Room session on October 25, 2007.

Today’s Summary, by Sunil Mangwani:

Lets start with one of the trades we were following since yesterday’s recap – the GBP/CHF on 30 min timeframe. The trigger was a Bearish Divergence. Price made higher highs, while stochastics were giving lower highs. We consider this an aggressive “Class A” divergence. The entry for this trade was determined by certain Fibonacci Retracements, and price did go down beyond our target of 2.3940.

We also use the Andrew’s Pitchfork in different ways to confirm the entry. In this case, the price broke through the midline of the APF, and came back to retest it as a resistance. This is another strong confirmation that a downtrend is in progress. In our room we do like to twist around the technical tools available to give us better results.

Lets go over an intraday trade we ended up taking today. The GBP/JPY, one of the most popular pairs in our room, had a Long trade, though the extent was not too large. As I always say, its the technique and methodology which is always more important than the result. Read the rest of this entry »

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October 24th, 2007 @ 1:44 am by Eugene Teplitsky

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This is a video summary of the Live Forex Trading Room session on October 23, 2007.

Today’s Summary, by Sunil Mangwani:

No trades today, just observing the markets after the large moves of Monday’s open, and waiting for the currencies to recover and gain some technicals to let us enter into new trades.

Looking at the GBP/USD, the pair recovered – and the recovery was quite amazing, to say the least. After the large drop on Monday, it recovered almost the entire move, and while we were expecting a recovery, we did not expect quite so much of it. Read the rest of this entry »

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October 21st, 2007 @ 7:15 pm by Eugene Teplitsky

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This is a video summary of the Live Forex Trading Room session on October 19, 2007.

Today’s Summary, by Sunil Mangwani:

Just one confirmed trade taken today, but a few interesting points for discussion. Fundamentals are beginning to affect the forex market on a longer term basis – yen crosses, carry trades, interest rates, etc. The Dow Jones is having an effect on the yen crosses, the equity markets getting correlated… All these things have to be kept in a deeper perspective.

But we are technical traders – as soon as we find a setup, and it confirms our technical analysis, we go into a trade. More often than not, this works. We look for higher probability trades, with a greater chance of success.

On the GBP/JPY intraday, one of the favorites among the carry trades, we had a technical pattern of a Bullish Divergence, with price making a low and a lower low, Stochastics making initial low below the 20 level. When your second lower low on the price takes place, your stochastics do not have the momentum to carry forward to the oversold zone. This is a very aggressive divergence, signifying that a change of trend is due and a significant reversal could take place. Read the rest of this entry »

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