Monday, September 9, 2013

The development of a High Probability (HP) trade

  
The economy in Japan is seeing benefits from the application of Abenomics, the name given to the policies of the Japanese Prime Minister, Shinzō Abe, which include fiscal stimulus, or actions that have the effect of weakening the Japanese Yen against other major currencies.

The news over the weekend that the Land of The Rising Sun has won the bid to host the 2020 Olympic Games can only be expected to reinforce the sense of confidence in the measures that have caused a 28% decrease in the value of the Yen against the US dollar since this time last year, which in turn has made Japanese exports more competitive. Confidence in the efficacy of the measures, we believe, is most likely to lead to more of the same.

Accordingly, we are looking for opportunities to go long on the USDJPY pair (the pair will rise if the yen weakens).  The daily chart shows the strong influence of the 200 day SMA in checking any tendency for a retrace in the dominant upward trend. The pair has been in a sideways channel since May of this year (Sell In May and Go Away?) and uncertainty over macro factors, such as events in Syria and US tapering, reinforce this tendency in the short term. A perception that US Non-Farm payrolls were less than steller last Friday has even resulted in a fall in the pair this morning.

We will be watching the approach of price to the 200 SMA, once more, to define our opportunity. We will then bring the Omicron FX Silver Trigger routine into play to manage the trade.

5 comments:

  1. feels great to read this...thanks..

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  2. Much obliged for the comment. Enjoy.../SMcK

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  3. Thanks for sharing this post.
    I think this is the answer I've been looking for. It's like cash in the mattress,the objective is to not lose big.

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  4. I love The way you used the world wide events in your analysis. Thanks Doron

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