I can bet you all missed me, well I did miss you too. In the last week, I have no clear direction or signal provided by COT Data so I prefer not to write. For this week we have a yen combo, let’s check the facts and see how we can profit from it.
USDJPY – POSSIBLE BOTTOM
By now you probably know that this is our favorite signal and if you don’t yet add it to your favorites too. Its generated by Cot Index that is a normalization of Commercials net positions. So this is powerful, some may even argue that we are flirting with the dark side of the force. If you take a look at this Forex Weekly Report you will realize that we have a very similar scenario, and last time the outcome was extremely positive.
We have a myriad of signals aligning to a big run on USDJPY.
- 30-DAY FEDERAL FUNDS – Possible Top
- NIKKEI STOCK AVERAGE – RSI Sell Signal
There is one thing that I do not like about the data and this is the fact that non-commercials added some shorts last week. Not the best fact, but do not invalidate our trade. We will manage this in our trading plan.
The players are set to a run back to 112 on USDJPY. Before we see how we can play this, let’s take a look at some charts.
LAst 30-day federal fund possible top signal
LAst NIKKEI STOCK AVERAGE RSI Sell Signal
May was a terrible month for trend follower traders. Breakouts simply turned into fakeouts. In Brazil, there is a saying, “A dog bitten by a snake has afraid of sausage”. So let’s adopt this line and wait for the breakout to take place so we can enter it a cheaper stop-loss and with the trend.
Let’s be conservative about our approach. We already have some interesting running positions. USDCAD, CADJPY, EURJPY, and EURAUD. A strong breakout can make this a trade that will reward us for the entire year. So practice patience we must.
And don’t be stupid thinking you need one thousand ideas, trades, or strategy to be profitable.
A jack of all trades is master of none.
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