USD/JPY: Yen Is Weakening After Verbal Warnings From Tokyo
- Finance Minister Taro Aso said Japan will intervene in the currency market if "one-sided" yen rises last long enough to hurt its economy. It was the second straight day Aso explicitly used the word "intervention" in warning investors against pushing up the yen too much, a language the finance minister had avoided using even when the yen was surging at a pace of 5 yen in two days late last month.
- Aso told parliament on Tuesday that Japan has no plans to manipulate currency moves on a long-term basis to give its exports a competitive trade advantage. But he added that it was a shared understanding among G7 and G20 nations that excessive currency volatility was undesirable.
- The strong warning, which compared with the usual, more indirect language that Tokyo will "act appropriately" against excessive yen gains, underscores the concern Japanese policymakers have over the pain recent yen gains could inflict on the fragile, export-reliant economy.
- Japanese authorities have stayed away from the markets since they last intervened in 2011. At the time, Tokyo got G7 consent to intervene to stem a yen spike driven by speculation that a devastating earthquake would force Japanese insurers to repatriate overseas funds to pay for damage claims
- The jawboning pushed the USD/JPY up to 109.00 today, off the 18-month low of 105.55 yen hit last week. It broke above 50% retrace of recent 111.90-105.55 drop. Weaker JPY is good news for our EUR/JPY, GBP/JPY and AUD/JPY longs. We have locked in profit on EUR/JPY long at 124.00 and raised the target to 125.50.
EUR/GBP: We See A Risk Of Trend Change
- We see a risk of trend change in the EUR/GBP. The EUR/GBP has failed to register a daily close above an important resistance level of 0.7926. This upside failure has helped bears. We have locked in profit on our short-term and long-term strategies at 0.7860.
- We will consider opening short positions if our EUR/GBP position are closed with small profits.
FOREX - MAJOR PAIRS:
FOREX - MAJOR CROSSES:
It is usually reasonable to divide your portfolio into two parts: the core investment part and the satellite speculative part. The core part is the one you would want to make profit with in the long term thanks to the long-term trend in price changes. Such an approach is a clear investment as you are bound to keep your position opened for a considerable amount of time in order to realize the profit. The speculative part is quite the contrary. You would open a speculative position with short-term gains in your mind and with the awareness that even though potentially more profitable than investments, speculation is also way more risky. In typical circumstances investments should account for 60-90% of your portfolio, the rest being speculative positions. This way, you may enjoy a possibly higher rate of return than in the case of putting all of your money into investment positions and at the same time you may not have to be afraid of severe losses in the short-term.
How to read these tables?
1. Support/Resistance - three closest important support/resistance levels
2. Position/Trading Idea:
BUY/SELL - It means we are looking to open LONG/SHORT position at the Entry Price. If the order is filled we will set the suggested Target and Stop-loss level.
LONG/SHORT - It means we have already taken this position at the Entry Price and expect the rate to go up/down to the Target level.
3. Stop-Loss/Profit Locked In - Sometimes we move the stop-loss level above (in case of LONG) or below (in case of SHORT) the Entry price. This means that we have locked in profit on this position.
4. Risk Factor - green "*" means high level of confidence (low level of uncertainty), grey "**" means medium level of confidence, red "***" means low level of confidence (high level of uncertainty)
5. Position Size (forex)- position size suggested for a USD 10,000 trading account in mini lots. You can calculate your position size as follows: (your account size in USD / USD 10,000) * (our position size). You should always round the result down. For example, if the result was 2.671, your position size should be 2 mini lots. This would be a great tool for your risk management!
Position size (precious metals) - position size suggested for a USD 10,000 trading account in units. You can calculate your position size as follows: (your account size in USD / USD 10,000) * (our position size).
6. Profit/Loss on recently closed position (forex) - is the amount of pips we have earned/lost on recently closed position. The amount in USD is calculated on the assumption of suggested position size for USD 10,000 trading account.
Profit/Loss on recently closed position (precious metals) - is profit/loss we have earned/lost per unit on recently closed position. The amount in USD is calculated on the assumption of suggested position size for USD 10,000 trading account.
Source: Growth Aces - Forex And Precious Metals Trading Strategies