GammaJammer
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Lots of news. China raised the RRR, risk trade up and down like a whore's drawers on europe (greece) etc, 90.40 very big tech level, audjpy TFX overhang is massive, some Toshin issuance I think as well. In short, lots of factors pulling in opposite directions.
blancspa
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90.40 sounds familiar, I hope this will drop soon, I have a saw stickin out my shoe nose
Ever heard of the business news?
blancspa
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sure did .... plenty of them in the lavatory... couldnt make any sense of the buzz
TraderNumber7
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Another way to look at the matter.
Every pair in the world of Forex has a distinct bio-rhythmic domain, within which all price action can be projected across X time-intervals. The key, of course, is in knowing the bio-rhythm of each pair you engage.
If you take a close look, many of the Yen pairs like to trend on the Weekly bar. Take a look at the major JPY Counters (USDJPY, EURJPY, GBPJPY, CHFJPY, AUDJPY and NZDJPY) and then go back to January 1, 2010, on a 4 hour chart - then come forward to today's date. The overwhelming matching synergy among these pairs has been Short from January 1, 2010 through the Friday of last week when that trend was broken. The time span was just about 1 month.
Notice that there is no Major Pair containing the JPY as the Base in the list above. JPY is always the Counter among the Majors. This makes the synergy math just that much easier because you can then group all Majors that contain the counter JPY by their specific region and/or central bank. Not only does this help with determining News vectors that drive the counter JPY, but it also helps in calculating sort of Global JPY Performance Indicator by region and/or central bank.
Because the JPY is spread out across the globe and counters the U.S., U.K., Great Britain, Switzerland, Australia and New Zealand, the value of calculating and having available a Global JPY Indicator is without question. Therefore, it becomes much easier to understand why there would be (at times) some volatility in general terms - as the JPY is pulled on by most of the world.
Going inside the numbers, however, reveals something rather interesting about the JPY. Because it is locked-in as the counter against most of the world, which makes creating a Global JPY Indicator that much easier, it also creates the possibility for the creation of a Leading Indicator for other non-JPY counters, specifically those containing the USD.
Using a 4 hour chart, go back two weeks prior to January 1, 2010 and notice the roughly two week delay in the EURUSD, GBPUSD, AUDUSD and NZDUSD in following the lead of the JPY. Using a Global JPY Indicator, you would have gotten a 1-2 week leading indicator of the Short move coming in these pairs. A move that lasted for about a month.
You can easily tell the Global Currency Flows, if you place each major pair into its own Global Indicator, as best it will fit. The JPY, USD, EUR and GBP are great candidates and they allow you to see Global Money Flows and more importantly, how the next block of leading pairs might be derived.
Expect another week of JPY volatility (Moderate to High) with 91.27 and 88.54 as barriers to breach either Long or Short through the end of February, 2010.
The way I trade, I don't really care what direction the pairs take - I just care that when they move, they move BIG. So, don't be to down on high volatility. You can use it to your favor and to add to your bottom line.
TradeSMART, by Managing your Positions.
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blancspa
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Thanks. TraderNumber7
Some interesting thought. Glad you shared. You must like trading Yen. I understand the capital outflows out of Eurozone, are being tarnsferred to safe heavens as they say - Japanese yen. I just cant understand why Japanese economy is thought to be one for the "rational" investor?
Anyways I dont mind the volatility as long as its not too choppy.
GammaJammer
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Hmmm - actually an increasing amount of the volume these days is JPY/KRW (where jpy obviously IS the base). And it was a pretty high conviction trade for many people earlier in Jan. BoK helping to add to the conviction with some chunky volumes at times. Needs another sustained bout of retarded, global, all correlations go to 1 type risk-aversion to really kick in though.
TraderNumber7
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LOL! You and me both. But, if the market thinks that, so it shall be. As if Japan has not had about 17+ years of economic challenges to deal with on its own. LOL, don't let the world drive you nuts, just learn to roll with the punches. Whether they are rational or irrational, should never matter to the trader or money manager. What I care about as both trader and money manager (my own funds - I never want to manage anyone else's cash, ever - Amen), is that position my capital to take advantage of the "next" wave of "movement" in price. I want to get into high-probability solution-sets that I can exit on my terms not when the market decides to break me even in the trade.
The USD was in the driver's seat against Europe and the Yen today, while the Yen was once again highly volatile against Europe - just as indicated yesterday in my post. There are technical drivers that explain this with rather amazing precision, but of course, that's not something that I can reveal as it gets too deep into my Edge.
Not the Yen price action. It has made what my system calls a SB2 (sorry, can't explain it). This signals the Yen moving either Horizontal (flat) or Down (Short) against the rest of the world.
Well, if money was flying out of the Yen earlier this week and the Yen Shorts for the remainder of the week, then what does that bode for the Europe against the Yen? You guess it - European Yen Crosses either going Flat or Short simultaneously. Well, now, if Europe is going Flat to Short against the Yen AND the USD is going Flat to Short against the Yen, where does the rest of the world go for the remainder of the week?
Hmmmm, let's see. Oh, oh, I go it! Right back into the Yen. Bingo, you win the stuffed Purple Monkey sitting on the shelf. Drop another quarter and play again.
Very important:
Too choppy inside a short cycle is very normal. All it signals is that there is short-term price consolidation, no big deal when you start Swing Trading and very profitable if you are a hyper-short-term trader. But, if you are a pure Day Trader, this can get very messy and leave you behind the power curve more times than not, trying to 'catch' the elusive trend that appears to never solidify.
This is one of the reasons why I prefer to Swing. And, using a Multi-Pair strategy, I get optimum risk mitigation during times of smaller cycle congestion periods, while the larger cycles (weekly and monthly bars) remain intact. Or, while I remain in-phase with the larger cycles from the bigger time-frames.
