AUDJPY Forecast

What the heck, I may as well jump out on a limb and let you know what I'm seeing with the AUDJPY.

Basically, if you look at the chart, we've had a good support line since the beginning of November.

Now, if I've got the right chart uploaded, take a look below:


Personally, I'd suggest taking a long position when the price approaches the support line. You can set a nearby stop and protect yourself from much by way of downside risk.

The only issue, for me, is that Sunday trading seems a bit wild at times.

UPDATE: Well, I hope somebody played the bounce...


It was worth it.

AUDJPY: Waiting For The Trend To Break

I often think that evening trading goes through a period of doldrums. It gets boring. Things move slowly, if at all. Ten pips gain or loss can take an hour or more to happen.

Zzzz.

At the moment, as you can see by the chart below, I'm waiting for the current trendlet to break:


This is a 1MIN chart, hence the "trendlet" concept.

AUDJPY: The Bounce At 68.06

I was watching the AUDJPY as it slid downward today.

As you might expect it was following a nice trend on the way down. It's currently following a nice trend line on the way up too.

Here's a 1MIN chart showing the upward movement from the 68.06 bounce.


I don't really place a lot of stock (heh, bad pun) in the 1MIN but it's interesting nonetheless.

... continuing ...

This is getting more interesting:


A trend line break means it's time to keep our eyes open.

... continuing ...

The AUDJPY prevaricates:


I don't show my complete setup on my snips, but I've got some stochastic and RSI evidence that we could be due for some selling. As ever, it doesn't mean it will happen, but it certainly could.

... continuing ...

I always like it when I'm able to call and catch a decision point. It's not that I expect to be right... just that it's time to make some decisions:


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AUDJPY: Weekend Analysis

If you've been following along you'll notice that I keep mentioning that I am long term bullish on the AUDJPY.

One of the reasons is that I think we've seen the worst of the panic and risk aversion. Another reason is that I think we're now closer to a recovery and following period of economic expansion than a lot of people expect.

Given these two thoughts, and the following chart, it's easy to see why I expect a slow return to higher AUDJPY prices;


However, what appears to be a large double bottom over a period of months does little to tell us what the price will be doing in the short term. The following 3HR chart shows us that we might be at a critical juncture:


The resistance line is spot on since early March. The support line is a bit spottier and appears to be in the midst of being tested. If you've kept your powder dry this might be a good time to figure out how to play upcoming moves over the next week.

Flipping to the one hour we see the consolidation trend that I was talking about at the end of last week:


Given my overall expectation of a long term upward trend, and the fact that the lower line in the 1HR has been active for a couple months, I'm apt to speculate on a new leg in the upward journey.

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Betting Against The AUDJPY

Well, with commodity prices spiraling down the toilet, it's a good time to be short of the AUDJPY.

Look, put an SMA 20 on your AUDJPY chart. Load up the 1HR or 3HR chart. What direction is the simple moving average going?

That's the trend.

So, if the trend is your friend, what's the best direction to play?

You guessed it in one... down!

If you know how to draw a resistance line, or to put something like a CCI, Williams %R or even possibly a stochastic or RSI indicator then you should be able to pick relative high points to pal around with your friend the trend.

Heck, even the SMA or a set of Bollinger Bands will probably do the job.

Really, it can be that simple, at least while you have a clear trend.

Get your trades on!

Timing Market Entry

I've noticed that the Forex markets move both fast and slow.

If you are busy sinking money into some carry positions, the market might suddenly decide to go sideways, or perhaps down, for the next week. So, you go underwater and don't get to lighten your load on subsequent upswings.

However, if you are light in the market, a piece of news will drop and leave your jaw on the floor as you miss out on a quick 100 pip swing. Obviously, if you play the news, it will come in on the wrong side or the market with interpret it in a way that surprises you in order to throw you under the wheels of the money train.

In short, it's not easy getting into the market safely with any quantity of net asset value.

The problem really arises when you take small bites, getting into the market without risking all that much, and then find out that you were wrong. The market will wiggle around a lot, near your entry price, enticing you into thinking it will eventually recover, and then sink a bit more. If you put in a stop loss, the market will hit that, then bounce back up -- taunting you with a profit that you can't participate in.

It's simply devious.

So, how do you get into the market? How do you accumulate a set of carry positions that are in profit? When do you enter the market? What signals should you be following? As I've noted before, technical analysis of the carry pairs is very tricky, as they are driven by market movements. These pairs are happy to run roughshod over your trend lines any time the markets are euphoric, nervous or calm enough to lure you in.

My suggestion is for you to work out the resistance points. As you approach a resistance point you can see how the pair reacts. If it stops or starts to bounce, you might feel it worthwhile to enter a position. You are basically risking the pip spread plus the distance to your stop loss. You simply have to risk a small amount of capital in order to play.

The key is pick your entry points when you have the best chance of seeing an upturn. It's not easy.

Recent Success

Well, it has been a few days since then, so I can't remember the full details, but I was able to catch an up-trend with a significant amount of my net asset value slipped in.

Basically, when an initial foray is in-profit, I'm ready to put in more when the trend seems apparent and things are acting rationally. So, after a few ups and downs, perhaps within an up trend, I could have accumulated several slightly profitable positions.

If this continues for a while, it's easy to get a large portion of your net asset value into a situation where tiny profits are locked in (stop losses set above the entry point). Then, if the market doesn't drop low enough to take you out, or perhaps a news event occurs in your favor, you can grab a large profit over the next hours or days.

In any case, I like to do this with AUDJPY, buying in during an uptrend, willing to let some carry positions accumulate until the market decides to either reward me or close me out because of my protective stop losses.

I am thinking of looking at some other currency pairs. The carry pairs seem to be closely driven by the stock markets, and hence have an awful lot of volatility, whereas some other pairs might be a bit more manageable.

Trending the 5 min AUDJPY

I've been having a great time spotting trends on the AUDJPY today. Well, of course, I have to point out that trends are good until they change. However, with that out of the way, I've been able to pick up some trends, identify channels, and generally advance my knowledge and confidence quite a bit.

Sure, sure, I know, everyone can float in a rising tide, but check the charts today, things have been a bit choppy!

It's a powerful thing to see prices bounce off the "walls" of your trend lines for two or three hours. While maybe only an illusion this gives you the ability to enter and exit trades with a feeling of control. Well, a semblence of expectation at the very least.

Similarly, there is a chess-like pattern to this dance. If you've got a gain, there is going to be a drop. If you've seen a quick drop, there is going to be a gain. These aren't truisms, but you can rely on one of two things. If you have a long position, and the short term average is under the price, the price will either hit the other side of the trend line, or your position will improve in profitability.

When you can start to see some inevitibilities, while a trend holds, you can start to plan, have enough confidence to hold aside both greed and fear, and reap profits while the market stays rational. When it falls apart, it's time to start looking for the patterns in the sea of chaos...