$USDJPY - RISK OFF TRADE. BONUS $EURJPY & $GBPJPY TRADES
Updated
Recently seen risk aversion in the market with US equities almost 9% off the recent peak (SP), US 10 year yields off the highs from 3.25% as low as 3.11% where there is near term support, Traditional high yielding FX (AUD lower, NZD lower, EUR lower, GBP lower), WTI crude 14% off recent peak and safe haven flows lifting JPY, gold, silver and US bonds.
We're now seeing US equities stabilizing at 2700, USDJPY holding $112, US 10Y yield stalling at 3.11%, gold pausing for breath at $1235 resistance... as the market decides where to go next.
If
USDJPY stays above $112 this trade doens't count and can expect a rally and re-test of recent peak at $114.50.
If the risk off continues, JPY will strengthen across the board, key measure will be USDJPY will break through $112. Currently, trend line support and horizontal S&R @ $112 handle holding this market up, if that were to break, could take this market down to the $110 area, as always, taking profits along the way and managing stop loss.
There are other alternative trade ideas... that offer higher reward to risk ratios... EURJPY GBPJPY as posted below. As EUR is weak across board due to growth and political reasons... with the Euro Area PMIs missing this morning again and situation in Italy still at logger heads continued weakness for EUR and no clear light in sight. Sentiment is very bearish this market. Note that ECB rate decision Thursday and i cant see how Draghi can be optimistic about the slowdown of growth in EU.. what will his comments be on QE ending in DEC, growth, Trade tensions... at worst he could say that QE may be extended due to economic slowdown that Dovish rhetoric would be very negative for EUR across the board.
Then theres GBP which has the same outlook, economic data isnt great and the continued Brexit deadlock, GBPUSD technically breaking key technical levels and sentiment is very bearish on this market.
With US GDP reading on Friday (which is expected to be strong) and mixed earnings season with lot of analysts talking about how sales and revenue are slowing. Be worth keeping an ear on the sqwark (or Twitter) to note whether earnings are good/ bad and whether this GDP figure is good/ bad as a factor in determining where the risk sentiment will go next
We're now seeing US equities stabilizing at 2700, USDJPY holding $112, US 10Y yield stalling at 3.11%, gold pausing for breath at $1235 resistance... as the market decides where to go next.
If
USDJPY stays above $112 this trade doens't count and can expect a rally and re-test of recent peak at $114.50.If the risk off continues, JPY will strengthen across the board, key measure will be USDJPY will break through $112. Currently, trend line support and horizontal S&R @ $112 handle holding this market up, if that were to break, could take this market down to the $110 area, as always, taking profits along the way and managing stop loss.
There are other alternative trade ideas... that offer higher reward to risk ratios... EURJPY GBPJPY as posted below. As EUR is weak across board due to growth and political reasons... with the Euro Area PMIs missing this morning again and situation in Italy still at logger heads continued weakness for EUR and no clear light in sight. Sentiment is very bearish this market. Note that ECB rate decision Thursday and i cant see how Draghi can be optimistic about the slowdown of growth in EU.. what will his comments be on QE ending in DEC, growth, Trade tensions... at worst he could say that QE may be extended due to economic slowdown that Dovish rhetoric would be very negative for EUR across the board.
Then theres GBP which has the same outlook, economic data isnt great and the continued Brexit deadlock, GBPUSD technically breaking key technical levels and sentiment is very bearish on this market.
With US GDP reading on Friday (which is expected to be strong) and mixed earnings season with lot of analysts talking about how sales and revenue are slowing. Be worth keeping an ear on the sqwark (or Twitter) to note whether earnings are good/ bad and whether this GDP figure is good/ bad as a factor in determining where the risk sentiment will go next
Note
NOTE: I was long USDJPY at 112 and stopped out breakeven on the retestNote
EURJPY IDEA: 5 to 1 returnsTrade closed: stop reached
tough market
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