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The fact that equities are in the red leads to dollar strength historically, but after a Non-Farm Payroll there will be a time of alignment; 33% of the global market was closed as the NFP release moved prices, and that takes time to adjust. There are many variables to trade momentum on Sunday/Monday, and therefore care needs to be taken in tonights Asian and European session.
"The Short Equity/Long USD/JPY trade is not something that will always follow through; we saw in trade on Monday that USD/JPY moved in a tight 60 pip channel for 24 hours, TheLFB Trade Team said. "If that pair does not move, the Jpy crosses will only be able to replicate the major Usd based moves. Jpy trading then becomes volatile, and to some degree pointless".
"The spreads are higher, the volatility increases because of price average leverage, and it turns into nothing other than trading CAD/JPY, for example, at 200% increased spreads, increased volatility, and a lack of stability that comes with USD/CAD trading if USD/JPY is not moving".
"The Jpy Trade Plans cover the potential if other fundamental drivers align; putting trade plans on, especially Jpy based plans, can be a recipe for disaster if equity momentum, Usd direction, USD/JPY sentiment, and overall major pair desire, is not factored in to the time that a ticket is placed".
The Jpy cross pairs have their own nuances to work to, and their own specifics of times to place around the regional market opens. Blanket yen trading will not be as reliable as choosing the one backed by strong momentum against the Usd.
"If USD/JPY is channeling, forget trading Jpy based pairs" the Trade Team said.