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Watching stocks to trade the JPY
[B]Watching stocks to trade the JPY[/B] By John Jagerson, 30 July 2007 Without a lot of economic data I think many traders will be watching U.S. equities to give them some information about the direction of the USD. I feel that this is particularly true for the USD/JPY. A move lower on equities, especially if that is accompanied by another downward move on yields will likely be very bearish for the USD/JPY. I like to find relationships like this because they tend to follow each other and in some cases provide a little lead time. The idea situation I look for is to find one market remaining stagnant while the other market is breaking away. The stagnant market will generally break out in the same direction. On a short term basis I have seen this lead by as much as 30 minutes. The relationship can lead with equities first then forex or vice versa. This morning is a great example of this kind of setup. The USD/JPY began bouncing up from a low very early in the North American session about 90 minutes before the U.S. equity markets had opened. the S&P 500 opened down and has since popped up 6 points. That may not sound like much, so far, but to an e-mini futures trader that is a nice win. The day is far from over and more opportunities are likely to appear. Watch for a breakdown in stocks that may lead the USD/JPY lower. [IMG]http://www.pfxglobal.com/images/john/usdspx.png[/IMG] 15 Minute USD/JPY and S&P 500 Index Source: MetaStockProFX