Maxsmarts Trading Journal and Discussion

The USD/JPY has not been able to take much advantage of the recent rally in equites as much as the aud/jpy, gbp/jpy, and cad/jpy. Now it is forming a potential head and shoulders pattern. The pattern will not be validated until the uptrend line, which makes up the neckline of this pattern, is violated with a significant close below that line. While my bias is bullish for the USD/JPY and I expect a bounce off of this uptrending support line, it is something to be aware of. If you take a look at the weekly chart, this uptrending support line makes up the bottom of an ascending channel. I think that if we get a bounce it should the pair back to the top of the channel. In addition, I find that that Head and shoulders patterns with diagonal necklines are often not as dependable as head and shoulders patterns with horizontal necklines. Often, in these instances the pair begins to trend sideways in a ranging market.

Well so far my Yen short positions haven't worked too positively yet except with the commodity currencies, the cad, and the aussie. These are long term positions; however, and they will gain when the economic recovery begins.

The USD/JPY has activated its head and shoulders pattern and would target about 90 yen. I'm still not sold; however, even though technical analysis points to more downward movement. I think the Yen rally may stall at 93.50-94.

The U.S. is injecting more money into the economy today, so I would expect USD weakness today even with risk aversion very little USD strength. Yesterday, Retail sales for the U.S. came out very negatively which put a damper on investor hopes for a swifter U.S. economy. As I have so often stated, we have not seen any important economic indicators to indicate growth in the economy and very little evidence to indicate a slowing in the detioration of the economy. Yet we have seen in increase in business and consumer confidence as well a plethora of optimistic rhetoric from the IMF, Fed chairman Bernanke, and other central bankers calling for a recover "THIS YEAR!".

So that is what my short yen positions are based on. The market may bottom and begin recovering on investor optimism before the actual recession ends. In other words, even though job losses are sky high, and the consumer is still in the thick of the recession the market can be recovering. Make any sense? Well thats the market for you.

Today retail companies have come out with results that are not quite as disappointing as expected, although Wal-mart's numbers were disappointing, and we are seeing a bit of buying in equities even though we saw a negative number in retail and core retail sales just yesterday. It may be hard to trade the fundamentals right now since there are so many negatives out there for the global economy that are just being completely ignored like the chrysler and gm potential bankruptcies. Investors are looking for any signs the worst is over and looking to jump on the bandwagon of an economic recover. Every analyst I listen to right now wants to be the first to call the bottom of the market and the end of the recession. If we have already experienced the bottom, one thing is for certain it is still gonna be bumpy ride for the carry trade (which includes the short yen positions) with waxing and waning risk appetite.

I'm not entering long the eur/usd on the Head and shoulders pattern that has been validated on the hourly chart and will soon be validated on the 4 hour chart that targets 1.33 area.

In addition, tic data is positive for the U.S. as well as we have gotten inflation above expectations for PPI and CPI which may force FED to raise interest rates sooner than later.

And also, SNB is intervening in the currency market.

These Longer term chart patterns on the Daily and the weekly chart on the currency pairs have taken a while to play out lately after validation and some have even been whipsaws after weekly and daily closes above levels. I think this is due to alot of indecision in the market about whether the economic recovery is imminent or later down the road and if there is more air to be let out of equities. Horizontal price points of support and resistance are acting as a better technical reference than diagonal trending lines lately as a result.

It should be interesting to see if the break out of the weekly descending triangle plays out to target 1.45 with all of this indecision and now that we have a validated head and shoulders reversal pattern on the hourly and 4 hour chart targeting 1.33.

Also the break out of the descending channel that we had on the EUR/USD did initially target 1.3725 which was met; however, it should overall target 1.42. It should be interesting to see if this longer term pattern plays out as well.

The Double bottom that we have seen on the EUR/JPY on the daily chart has taken an extremely long time to play out and it looks like it is heading back down to its 125 support. Overall, Sometime this year, however, I am sure that we will see 150. 125 should be a good place to set up longs.

I am selling the option back for $6,580 premium. So a profit of $3,680

I guess I should have stayed in the pound trade it would have been an extra 2 grand.

Long spot eur/usd @ 1.3769 on the breakout. Targeting 1.42. Stop loss 1.36

Its funny I lost faith so quickly after the breakout on the weekly triangle that targets 1.45 and didn't re-enter the trade in the 1.34's. I thought that fundamentally equities looked overly optimisitic with all economic indicators so weak. Now notice, that the GBP/USD is at dynamic resistance while the Eur/USD is breaking out. The GBP might have even higher to go or this could be a false breakout on the EUR/USD

Despite Higher equities, the USD/JPY has been pulled even lower and is trading in the 95.2's at the time of writing. That's one advantage of having a diversified portfolio of short yen positions since other currencies are taking advantage of the bounce in equities.

I sold a put to expire on the 28th of May. Premium payed to me: 108 pips or $1,080.

Treasurys are up, equites are down, and the USD is still taking a beating. From a technical perspective still targeting 1.40 initially and then 1.42.

Out of long eur/usd trad ahead on the weekend at 1.40. Profit made 228 pips after pip spread or $2,280.

I got out way to early on the call at 1.50 on the GBP. Its all the way up at 1.59. The SP downgraded its prediction on the Uk economy to negative but that has done very little to slow down the currency so far.

On the daily chart we had a breakout on the USD/CAD a while ago through the 1.15 support level. The weekly charts next support level is 1.07 and then 1.05. I'll be looking to buy a put next week and I will post the chart this weekend.

Here is a post of the weekly chart for the USD/CAD showing the breakout below the 1.1450-1.15 region. We had a strong close below this region and as you can see the next support level is not until the 1.0650 level.

Fundamentally: Commodities have been on the rise, specifically oil on optimism of an impending global recover, cut production by OPEC, and increased demand over the summer. The candadian dollar has been benefiting from this rise in oil due to its strong relationship to oil. Next week we have Existing home sales expected to increase, GDP is expected to be negative but to signal a slowing down in the detioration of the economy, and durable goods orders are also supposed to show a slower decrease in durable goods orders. Of these announcements, a surprisingly good durable goods orders and gdp will most likely increase the price of oil due to an expected increase in demand for oil on the economic recovery and businesses using more oil to transport their goods.

German IFO report creates alot of volality for the eur/usd and will be out early monday. Since an increase in the number is expected in the report, above expectations or meeting expectations should send this pair higher, while dissapointing numbers should cause this pair to correct.

Technicals: If dollar gains ground to start the week due to oversold levels, profit taking, or risk aversion, expect the 1.3720-50 level to serve as support for the Eur/usd and on the USD/CAD for the 1.1461 level to now be resistance as it was once support.

Sentiment: Overall I expect the eur/usd to at least touch 1.4180-1.42 and the USD/CAD to continue its downward movement to 1.0650. Over the next 8 months and possibly longer I am expecting further depreciation of th yen as the economic recovery slowly begins to take shape.

I bought a 2 lot put on the USD/CAD at 1.1250. Premium payed: $3,360 or 189 pips. Option expires Jun. 18th.

Targeting 1.0650.

Limit buy @ 1.38 for eur/usd in the spot market.
stop loss @ 1.36 and profit target @ 1.4180.

Long spot market GBP/JPY here at 152.50. Targeting 165. Stop loss: significant close on the daily chart below 150

long here targeting 1.4180. Stop at 1.36

Can you post a chart for the usd/cad trade that you made and show why you went into that trade? I think i see why, according to the chart, but I'm not positive. Also if you can post a chart on the eur/usd trade? I don't see why or what your basing your trade off of there. Any help would be greatly appreciated. One last thing, why did you do a spot position on the eur/usd and not do an option?

The option I sold expired out of the money on the Eur/USD. I get to keep the entire premium. Profit made: $1,080

Still waiting on my ac adapter for my laptop. But if you take a look at the other charts and posts it shows why i entered long mode for the medium term on the eur/usd on the break f the descending triangle on the weekly chart and break of the descending channel on the daily chart which targeted at least 1.42 while the triangle targets 1.45-1.47. As for the USD/CAD, Yes that chart is the reason why i entered short combined with rising commodity prices, rising equites, quantitative easing on the part of the U.S., and general broad weakness of the dollar. 1.08 is providing stronger support than anticipated. However, last summer it provided strong support as well. We are at important levels on both pairs and would not be surprised to see a correction in either pairs.

Profit was taken at 1.42 on the eur/usd.
Still in put positon targeting 1.0650 but may settle for 1.08.