USDJPY to 110 and eventually 200: a few cases for staying Long or Buying on a Dip, or Adding to a Long Position

This is my Daily Chart for USD/JPY, and though I did not post this idea originally when I started establishing my long position months ago, there is new information pertaining to the possible future, and some new technical developments to merit a look back and a look forward.

USD/JPY Daily Chart taken September 09, 2014 at 23:20 EST

When I started establishing this position, I had recognized both the trend from 2012 (I bought much lower that year and cashed in because I did not recognize the opportunity (below 0.80 -which I am still kicking myself for). This currency pair has gone up since then, and was playing between 101 and 103 when I decided not only to start buying, but to hold (a bit unusual for me). In hindsight that previous area of range 100.70ish to about 103.10 now serves as a deep base for the move higher.

I began buying at around the 102 level, and on dips towards 101.50ish, and then even a few tiny additions in the 102/103 level. Now, I should have bought more on the break of 103.10 which was a plan, but instead I trimmed my position to take a minor profit. Nevertheless, I am currently long from 101.85 (Average contract price).

What has gotten interesting as of late is that downward sloping red line from left to right labled (16 year bearish (-ve) trendline...). This is trendline has been indicating that in fact USDJPY was headed downwards over a period of 16 years FXstreet article indicating major resistance started from 16 years ago with tops in place from 150 down to 124,  which by extrapolation put resistance to this trend at about 105.50ish. Price is now not only above 105.50 (closed on daily at 106) On Friday September 06, 2014 and the weekly candle had only a small wick, which technically establishes a daily and weekly break of this 16 year trendline. A monthly close above 105.50 would probably confirm price continuing higher.

For me personally, I am now cautious to add to this position because it is now at highs not seen since October of 2008, and because I have other trades in play as well (margin is precious).

Nevertheless, I have come across some interesting posts today that speculate that price will continue into the 110.00 / 112.00 area before year's end, for example Citi's Case for establishing long USDJPY

This article illustrates Kyle Bass' case for USD/JPY to reach 200 (Yes, pretty much doubling from here) in the next 3-5 years if you have the intestinal fortitude.

A few minutes ago, I came across a article adding to Japan's economic woes on Zero Hedge, as Japan began Monetizing Debt at Negative Rates which could begin the slow process of crashing the Yen.

Another piece of the puzzle is the potential United States Federal Reserve (ironic name considering it is a private bank, but never mind that) to schedule rate hikes in 2015, which would only add fuel to this position as it would become a proper carry trade in full.

After reading all of this and watching the exciting price action over the last couple of weeks, I myself have to take time to pause and reflect on the possibilities here, but I have begun to consider adding to my position on breaks higher should price continue to elevate. Another case, is to try to buy anything approaching that 16 year trendline should price go towards it.

Naturally, none of this information comes with anything close to a guarantee.

EURCHF Update, Potential for Intervention, 240 Minute (4-hour) Chart, Analysis, Order Plan, News, and History

I have been reading and studying possibilities based on my latest idea, buying (long) EUR/CHF above the 1.20 level. The first and foremost fundamental reason for this trade is the theoretical "floor" that the SNB (Swiss National Bank) has set for this currency pair. The premise of this floor is that in order to maintain (inflation / deflation?). The last time 1.20 came into play, this currency pair touched a low of 1.2012 in June of 2012 (numerically poetic?). This happened on June the 9th, of 2012, at 1:02 pm. The Swiss National Bank promptly intervened by selling their own currency / purchasing foreign currency thus driving the exchange rate higher on the pair.

Over a period of weeks, several interventions, to keep the 1.20 minimum exchange rate in place, the last occurring in September of 2012, the pair had a sustainable rally.

After a period of 9 days after the last intervention, the pair touched a high of 1.2180. Over a period of two weeks, once the rally was over, the pair retraced down to 1.2037 over a period of 10 weeks. After which additional movements led to the EUR/CHF pair to move up to 1.2571 (peak) on January 22nd, 2013, and later to 1.2648 on June 22nd, of 2013 (which was were to take profits if you were long this pair at that time).

Obviously, the profits on the successive movements for this pair, occurred well after the last intervention, where patience would have been the key to getting the most out of the investment (months).

My idea on this pair (I have already started purchasing) and laying the groundwork and conditions for additional purchasing (with a small fraction of the margin I have available) is to scale into the investment. Rather than purchasing at a set price with my entire allotment (the cash/margin) I intend to use, I am placing several orders to purchase as the price drops closer to the 1.20 "floor". I have started purchasing as of 1.20562 on August 28th at 06:04. I have additional contract orders to purchase in increments of roughly 10 points below said purchase price down to the 1.20 area.

As illustrated in this 4 hour chart, my pending orders are placed and will not be activated unless the price visits those levels, whereupon additional contracts are added to my position. Should those areas not be touched, my risk level remains even, and the potential reward is also remains even. Should intervention occur successfully, additional contracts could be purchased as the currency pair moves higher, but this would have to done carefully. My stop loss is established, but fairly lower that the 1.1950-1.20 mark where I imagine stops placed by other institutions and traders to have them, (my policy is to not publish my exact stop so that I do not feed the algorithmic traders/black boxes).

So why the floor of 1.20? According to a press release the risk of deflationary pressure on the Swiss Economy increases below this level. Fair enough.

There is a rumor that the SNB will introduce additional measures to maintain their exchange rate with the Euro. First, the possibility of negative rates where the SNB imposes negative interest rates to discourage foreigners from holding Swiss Francs (CHF). This has been done already, during the 1970s. Such an event would make holding Swiss Francs more expensive, and thus encourage other currency pairs to appreciate vs the Swiss Franc over time.

Another rumor is that the SNB will raise this line in the sand from 1.20 to 1.25 or even 1.30...raising the possibility of a profit of approximately 500 to 1000 pips just for buying at or near 1.20, mind you it is just a rumor, and the amount of CHF selling that the SNB would need to manifest a move like that and maintain it is staggering, but again, trading is about ideas followed by action, with no guarantees.

The other side of this trade probably has a mess of Stop-loss orders on the EUR vs the CHF below 1.20 where positions would be liquidated, thus driving the currency pair down even further below 1.20. Should intervention not occur as planned or even fail, I have skimmed one academic paper that states that the currency pair would be trading about 1000+ points lower, say at 1.10 or lower.

This is a game of patience, and it is not for the faint of heart.

I am looking at one chart currently, EURCHF on the Weekly

I have not posted in several months, but it is not a matter of lack of ideas or even lack of trades, just a matter of the lack of time, but I find myself with a few hours in the midst of a couple of days of, I am enjoying a coffee and free wi-fi at a starbucks and the sheer gravitas of this situation merits a post. I wish I could have posted more over the last few months because most of my ideas have paid off.

Nevertheless, the chart:

I will be writing and adding some analysis on this in the next few hours, but I have posted a couple of comments (the other comments and articles are of interest as well) on forexlive.com:

The theme, plan on buying somewhere in the vicinity if you have the margin, and are able to absorb any potential shocks, but be careful

http://www.forexlive.com/blog/2014/08/28/swiss-national-bank-on-the-bid-in-eurchf-circa-1-2050-29-august-2014/

http://www.forexlive.com/blog/2014/08/28/trading-ideas-european-session-28-aug/

my comments are listed under my name, Jason Macko

Good luck and be careful on this one

AUD/USD and AUD/JPY Trade Update - Bulls Win with Announcement of "QE Infinity"

With the announcement of the United States Federal Reserve announcing QE3 (link to bloomberg.com) with a pledge to continue asset purchases until the US economy improves, the USD has lost quite a bit of value in the course of a single trading day. My estimate, looking at my quote sheet is about 1 - 1.5 cents against everything so far.

I have a couple of trades on AUD/USD and AUD/JPY, long on both, prior to the FOMC meeting and press conferences, doing fairly well on average. After the announcement, it was quite a fight but both pairs have put in some impressive highs for the week, and the corrections (thus far) seem to be muted.

I am currently waiting on both of these positions to see if they have the potential to reach my first targets of 1.06 on AUD/USD and 82.00 on AUD/JPY, though I may have to wait to see what the Asian Session brings.

Review and Strategy Going forward into Autum 2012

After what I would consider a slow start to the year, with only a couple of trades (literally only one in February), and then a meager spring (only a few), my summer took off and never looked back. I have managed to reach the point where my trading activities are netting almost the equivalent to my day job salary. I work almost 50 hours a week, by the way. I'm not bragging, well, I have put in nearly 5000 hours into this over the last few years, and, it seems, while I was not a slow learner, I was slow to control myself.

This morning, I took my monthly statement from my broker, along with a notebook and sat down in a coffee shop and wrote a bit. My August was decent to say the least, $1670 in profit from a less than $5,000 trading account. 5k was a bit of a barrier for me as I had been there before and crashed afterwards. Now, I'm sitting nicely at $5,800 and looking to $10,000 in the coming months. So far, September has been decent to me with $670 earned this week. I have no illusions about not needing a day job at the moment, but I think the next book I purchase will be the The 4-Hour Work Week.

In the last couple of weeks, something interesting happened, I learned to pace myself, I learned to not sit at my desk all the time and stare at the charts for trades that I had under way. I learned to trust myself, step away and allow my trades to work out. I have in fact spent less time trading and my profits have improved.

Aside from everything else I am doing this weekend, I am going to put some time into studying chart patterns, and planning a couple of automated trades for the next week. I have only limited experience with this, so I will only be using light orders for this while I get my feet wet. In theory, a few minutes of analysis a day could earn profit without me having to manage the trades while they are in process. Now, time to study a bit.

AUD/JPY Bullish for now...

It is a bit late to share this idea, because the time to buy would have been 100-140 pips ago, when I did, but here it is. Good data out of Australia last yesterday and good ADP data, and good ISM data = AUD/JPY up.

In theory, based on ADP data earlier today, the NFP should be okay, and it could go higher. I have a target of 82 to 83, but who knows. Of course the trade balance data out in 20 minutes is pointing south so I may just collect my 100+ pips and call it a week on this pair.

EUR/JPY into Demand Zone in Theory

Supply and Demand, EUR/JPY is now into the session's Demand Zone shown by my trend-lines. Took a $40K contract long with the idea that it may go higher today.

As usual, the future cannot be predicted with 100% accuracy, but we can make plays based on patterns and indicators.

AUD/USD Update

Interesting to see a partial confirmation of my earlier Analysis. Hopefully going much much higher in the next day or so.

Immediate target of 1.0450ish area, and if this resistance zone is broken with sufficient strength, I'm confirmed for a move to at least the 1.0520 highs of last week, and depending, a break higher on that range to 1.06 / 1.07 area.

AUD/USD Update Downtrend Appears Confirmed but...

The Downtrend seems quite evident now on this pair, but it appears as though the low of the trend is in place for the time being. The long position may still have some validity, based on a possible upward move in the channel drawn on an hourly chart here:

A more conservative target of 1.0480 to 1.0490 might be possible, but it probably will not happen during this trading week. I would keep a stop below 1.0380 for the day and possibly even lower for the weekend if I were in a long position. While this might be a mistake, and it does violate a trading rule held by many traders, conditions are dynamic and can often change at a moment's notice. I am of the opinion that adjusting stops can be done within reason if conditions keep your goal within reach and the additional loss is not beyond your tolerance. There is no reward without risk.

EUR/USD Report August 16, 2012

I have been trading mostly with the YEN crosses in the last month and a half, through which I have had my best month ever. I wanted to take a breather from the volatility and decided to play a bit with the EUR/USD and also with the GBP/USD. I have found a possible bullish signal for EUR/USD, provided any bad news is limited in the next day or so. Looking at the 240 minute chart, there is a trend-line beginning in July:

If the July trend-line (starting July 24 lows) holds @ 1.2250/60, then there may be a bounce targeting 1.2400/50 depending, but if that line breaks, 1.2150 (Aug 8, 2012 lows) would be the first target of a move down. There are no guarantees either way, so be careful with your account and take responsibility for your own actions.

RIM Technial Analysis for March to May 2009

Please click on the image to see the proper details and please pardon the crudeness of this candlestick chart, as I haven't figured out how to bring up RIM with e-signal (if it's even possible). I have taken this from the TSX website and included MACD, Volume, bollinger bands (red), and a 50 day moving average (maroon). The Fibonacci levels (magenta) are drawn in and calculated by hand so to speak, and drawn the uptrend channel (green).

Fibonacci Study for RIM:

89-44 = 45

0.382 (38.2%) retracement = 89 - 45 x 0.382 = 89 - 17.19 = 71.81
0.500 (50.0%) retracement = 89 - 45 x 0.500 = 89 - 22 = 67
0.618 (61.8%) retracement = 89 - 45 x 0.618 = 89 - 27.81 = 61.19

For Long entries, the 71.81 level is a good level at which to buy, or 75 for more aggressive traders looking to catch a bollinger bounce. Based purely on technicals, the 71.81 represents both the 0.382 or at 38.2% retracement from the recent and rather massive move off the March lows of 2009 (44/45) to the High of 89/90 in May. Also, the 50 day moving average comes in at this level, along with the recent trend channel (marked in Green). Mind you, if this level is broken with strength, it would be a bearish signal (look for further weakness) and the price may attempt to revisit 61/60 which would be a 50% retracement of the recent uptrend. If I were planning on buying, I would probably be watching the price very closely if it moves below 75 in the next week or two. I may liquidate my position if it goes below, and cut my losses. If the price holds at 70 or above, a move which follows the top of the trading channel could see the price move near 100, and if this channel is broken with strength, we may see another power move of 20 or so points into the 120 area, based on the recent break of 60 - 80 at the beginning of April. This is purely technical and I haven't even begun to digest the fundamentals that I have been researching. Any significant move to the upside would certainly hinge on some positive news for both RIM and the global markets, and the same goes for the downside respectively; the future is still murky right now so naturally be cautious and only trade when you can afford the potential losses. When I am not occupied with the currency market, I will try to go over the fundamentals and update any significant changes to my technical studies for RIM.