4 Reasons Why BoJ Hasn’t Intervened in USDJPY

Intervention Japanese Yen Kathy Lien

We have now seen the dollar fall approximately 600 pips against the Japanese Yen in just over week.  Alarms should be ringing at the Ministry of Finance and Bank of Japan because the 5% appreciation spells big trouble for Japan’s businesses and economy. However, everything that we have heard from the Japanese government so far suggests that they are not ready to intervene in the foreign exchange market to lower the value of their currency. The last time the Bank of Japan intervened in the currency was in 2011 after the earthquake and tsunami (and that was coordinated). Since then we have seen USDJPY fall as low as 76 and average around 102.25 over the past 4 years. So Japan has and can tolerate a stronger yen although they have less flexibility with monetary and fiscal policy because extensive action has already been taken through these years.

While we believe the Japanese government should intervene given the weakness of the currency, there are a number of reasons why they won’t:

  1. They could be waiting for the G7 meeting
  2. They could be waiting for fresh fiscal stimulus
  3. They could be waiting for the markets to capitulate first.
  4. They could also be looking into monetary stimulus rather than direct intervention to avoid being singled out for competitive devaluation of their currency at the G7 meeting in late May – because the host never wants to be embarrassed.

On a fundamental basis, it is becoming clear that the BoJ could allow USD/JPY to fall to 105 and maybe even 100 before taking action. In early February they let USD/JPY fall close to 1100 pips before there was also indication of intervention. While it has not been confirmed on February 11th, after dropping to a low of 110.98, USD/JPY jumped 200 pips in 20 minutes -- price action that is indicative of intervention. USD/JPY still has 500 pips to go before this capitulation point, which would put the pair right between the 100 and 105 level. However we would be surprised if the BoJ let USD/JPY fall 1000 pips from its March 29th high of 113.80 without checking rates near 105.

On a technical basis, there’s no support in USD/JPY until 106.63, the 38.2% Fibonacci retracement of the 2011 to 2015 rally. We expect USD/JPY to test and bounce off this level. However if the Fib is broken then it should be smooth sailing down to 105.85, the 200-month SMA. So while the Bank of Japan could allow USD/JPY to drop 1000 pips from its recent high, there are enough key technical and psychological support levels between now and then to make it a choppy and not one-way move.

usdjpy040716.png

5 Ways To Trade Better in 2016

Uncategorized

1. Less.
Less trades, less mistakes, less stops. 2015 was the year when I realized that you can’t daytrade more than 5 or 6 pairs and expect to keep your focus. Making three well chosen trades for 20 pips is a lot better than doing 10 trades a day and ending -20 on your P/L.

Most importantly 2015 was the year of less greed. It doesn’t matter how much money the trade would have made getting out early was always a much better choice because it saved me from countless disasters throughout the year and kept my win rate for the past three months at 97%.When in doubt -- get the f- out and reassess after. To paraphrase the Rothschilds -- How did you get so rich? By leaving lots of money on the table.

2. The only stop that matters.

Volatility stops? Equity stops? Who are we kidding? In the heat of the battle you are always going to modify your trades or just dive in unprotected as you either chase the move or fight the market. There is only one stop that works because its absolute. The money stop. You need to find a number that you are willing to lose on every trade and size accordingly. For simplicity’s sake make it $100.

So anytime you do a trade make sure that whatever stop you have on is 100 dollars or less. That is literally the only thing you should care about in 2016. Because here is something I will promise you -- almost guarantee you -- If every trade has a $100 stop you will not lose $5000 next year. On the other hand, no money stop and you are almost certain to do so on whatever fight-the-market-because-this-move-is-bullishit trade that comes along.

We are not trading currencies, pips, dips, rallies or anything else. We are trading money. So make it a money stop. Always.

3. The most powerful trading tool is your pen.
Pilots do it.
Surgeons do it.
Wedding planners do it.
Every professional no matter how skilled, how experienced, how good they are at their job does this one thing.
The checklist.
It doesn’t matter if you’ve done the thing a thousand times, if you don’t use a checklist you will lose money unnecessarily this year. Here is my checklist of events that I will be using every day to make sure I don’t lay out stupid orders in front of oncoming volatility locomotive.

Check the Calendar for:
Central Bank Events -- meetings, speeches, Q&As
Economic Releases
Beware of London FIX, End of Month flows, NY cut for option expiry
Cross Market Relationship oil to CAD Equity to EUR yields to JPY -- watch for big moves to spill over into FX
Non economic news -- terror, natural disaster, political upheaval.
Don’t roll a North American trade into Asia event risk
Technicals only work when there is no new news

4. Trust your set up

Once all the stat work is done. Once all the trading tweaks have been adjusted. Once you have seen the strategy do its thing in real market conditions, you need to trust it. Let the trade come to you and take it.

Want to start 2016 right? See my Free 5 Best Trades Below
Boris 5 Favorite Trades For 2016.

5. Collaborate

The Lone Ranger is long dead. The future of capitalism is collaboration. No matter how good you are, your teammates will always make you better. Premier League may be the best in the world but Germany is the one that wins the World Cup. The future of trading is team. So trade in a room with like minded people who will help you get better every single day.

5 Principles That Turbocharged My Trading

Boris Schlossberg

Over the last few months of summer I have been daytrading particularly, registering only 2 losing days over the past 40. (This sentence will no doubt now curse me) But at the risk of tempting fate I thought I would put to paper 5 things that I have been doing differently that I believe made all the difference.

  1. Pare your focus. As I mentioned in my earlier columns I only trade 6 currency pairs -- EUR/USD, USD/JPY, GBP/USD, AUD/USD, NZD/USD and USD/CAD. In fact I am so focused on those pairs that if you were to ask me the price of a cross -- say GBP/JPY or EUR/GBP for example I genuinely couldn’t tell you. Now that type of myopia may seem extreme to you, but on other hand I know every tick in those pair for the past 5 days running and that give a much better understanding of the price dynamics at play.
  2. Trade your setup only. Over the past year we have developed and refined a very good day trading system. It has proven profitable across more than a thousand trades. But like every bad trader I used to like to freestyle. Instead of sticking to the setup I would take a punt on news trade or just put on a position out of boredom. No more. The only creativity I allow myself is within the constraints of the setup. If the trade does not fit into the parameters I don’t take it.
  3. Chop it up. Trading, and especially day trading is a probabilistic enterprise. There is NO good price -- only a set of reasonable prices for entry and exit. So dividing your entry and exit in at least 3 different orders will increase your chances of success markedly.
  4. Strategy is good, but context is everything. Never, ever be a slave to your strategy. Strategy is simply a structure through which you trade, but you have to know when to use it and when to stand down. The most obvious example of that is not running your EA in front of news-but there are many more subtle clues that you have to take from the market to truly refine your trading. That’s why no automated system has ever made money over the long term. As one of my traders said, it’s market’s job to get you into bad trades and out of good ones, and it’s your job to avoid the bad trades as much as possible.

Join My Trading Room

Last, but most definitely not least the one rule that has truly made me the most money is -- EYES ON THE SCREEN. If you are day trading and decide to casually leave your positions be you might as well kiss your money goodbye. That’s why now, when I have to leave the office for more than 20 minutes, I close every trade and go flat. I even created a little ditty so I won’t forget -- If your eyes are not on the screen -- you won’t see green.

Day Trading Signals May 5 – Daily Tally +15 pips

News

BK NEWS TRADES with our Economic Data Projections   

Videos on How to Trade our 3 BK News Strategies 

How To Trade AJAX

How To Trade Crowd Fighter

How To Trade C -- Trade 

BK Day Trading Chat Room Results  5/04

BK Trading Room Results

EUR/USD +15 

   

Want to join our chat room (its included in your subscription)?

Just Email [email protected] with subject line “Slack”

   

****NOTE we are going to trade C-Trade and Crowdfighter on 15 Minute rather than 5 minute delay on all pairs today***

  

Date Currency
Event
GMT Strategy
May 5 -- Tue AUDUSD RBA 4:30 C-Trade
May 5 -Tue AUD/USD RBA 4:30 C-Frighter

 

  

Last 24 hours Results
Crowd Fighter 
No Trade
 

 
C-Trade
No Trade

 

  

CALENDAR CALLS

Here’s what we are looking for in tomorrow’s economic reports (May 5, 2015) -- Good Luck Trading!

1. Australian PMI Services (7:30PM ET) Bullish AUD — Potential upside surprise given rise in PMI manufacturing

2. RBA Rate Decision (12:30M ET) No Trade — Rate decisions are difficult to predict. Will be a volatile one

3. EZ PPI (5AM ET) No Trade — No change in German PPI

4. Canadian Trade Balance (8:30AM ET) Bearish CAD — Potential downside surprise given drop in IVEY PMI in March

5. US Trade Balance (8:30AM ET) No Trade — Hard to predict because no change in ISM manufacturing

6. US ISM Non-Manufacturing (10AM ET) No Trade — Hard to predict because no change in ISM manufacturing 

Day Trading Signals April 10 – BK Trade Room Tally +5 pips

News

BK NEWS TRADES with our Economic Data Projections   

Videos on How to Trade our 3 BK News Strategies 

How To Trade AJAX

How To Trade Crowd Fighter

How To Trade C -- Trade 

BK Day Trading Chat Room Results  4/09 +5

BK Trading Room Results

NZDCAD+5

 

 

Want to join our chat room (its included in your subscription)?

Just Email [email protected] with subject line “Slack”

   

****NOTE we are going to trade C-Trade and Crowdfighter on 15 Minute rather than 5 minute delay on all pairs today***

  

  

   

  

Date Currency
Event
GMT Strategy
Apr -10 USD/CAD CAD Employment 12:30 C-Trade
Apr-10 USD/CAD CAD Employment 12:30 C-Fighter

 

  

Last 24 hours Results
Crowd Fighter 
No Trade
 

 
C-Trade
No Trade

 

  

CALENDAR CALLS

Here’s what we are looking for in tomorrow’s economic reports (April 10, 2015) -- Good Luck Trading!

1. UK Industrial Production (4:30AM ET) Bullish GBP — Potential upside surprise given minor increase in manufacturing PMI index. New orders and export orders also increased

2. Canadian Employment (8:30AM ET) Bearish CAD — Potential downside surprise given sharp decline in employment component of IVEY PMI. 

BK Day Trading Signals for March 5, 2015

News

BK NEWS TRADES with our Economic Data Projections   

Videos on How to Trade our 3 BK News Strategies 

How To Trade AJAX

How To Trade Crowd Fighter

How To Trade C -- Trade 

  

All BK NEWS Signals are sent out instantly via our smartphone App by SNAPP Trader
 

  

  

  ****NOTE we are going to trade C-Trade and Crowdfighter on 15 Minute rather than 5 minute delay on all pairs today***

  

Date Currency
Event
GMT Strategy
Mar 5 -Th
AUD/USD
AU Retail Sales 00:30 C-Trade
Mar 5 -- Th
AUD/USD 
AU Retail Sales 00:30 C-Fighter
Mar 5 -- Th
EUR/USD
ECB 13:30 C-Trade
Mar 5 -- Th 
EUR/JPY
ECB 13:30  C-Fighter

 

  

Last 24 hours Results
Crowd Fighter 
AUD/USD +12
GBP/USD +12
EUR/JPY -- still floating

  

C-Hedged

No Trade
 
C-Trade
AUD/USD -15
GBP/USD -15

 

  

CALENDAR CALLS

 Here’s what we are looking for in tomorrow’s economic reports (March 5, 2015) -- Good Luck Trading!

1. AU Retail Sales & Trade Balance (7:30pm ET) Bearish AUD -- Potential downside surprise given drop in PMI manufacturing index and sales component of PMI services

2. Bank of England Rate Decision (7am ET) No Trade — Expected to be a nonevent for the British pound

3. European Central Bank Decision (7:45am ET) No Trade — Should be very market moving for euro but hard to handicap

4. CAD IVEY PMI Index (10am ET) Bearish CAD -- Potential downside surprise given drop in oil prices

BK Day Trading Signals for Feb 5, 2015

News

BK NEWS TRADES with our Economic Data Projections   

Videos on How to Trade our 3 BK News Strategies 

How To Trade AJAX

How To Trade Crowd Fighter

How To Trade C -- Trade 

  

All BK NEWS Signals are sent out instantly via our smartphone App by SNAPP Trader
 
 No Trades Today

  

Date Currency
Event
GMT Strategy
Feb 5 Th
AUD/USD 
Retail Sales 00:30  C-Trade 
Feb 5 Th
AUD/USD 
Retail Sales 00:30 Crowdfighter

 

  

  

 
Last 24 hours Results
Crowd Fighter 
EUR/JPY -17

  

AJAX 

No Trade
 
C-Trade
GBP/USD +10
  

CALENDAR CALLS

Here’s what we are looking for in tomorrow’s economic reports (Feb 5, 2015) — Good Luck Trading!

1. AU Retail Sales (7:30pm ET) Bullish AUD — Potential upside surprise given rise in the overall PMI services index along with the underlying sales component

2. Bank of England Rate Decision (7am ET) No Trade — No changes expected from the BoE

3. Canadian Trade Balance (8:30am ET) Bearish CAD — Potential downside surprise given drop in December IVEY PMI

4. US Trade Balance (8:30am ET) Bearish USD — Potential downside surprise given drop in ISM manufacturing index and new orders, export orders 

Update New Orders for 02.12.14 – 5 Orders Total

Swing

We are refreshing our EUR/AUD orders and new orders for AUD/NZD, GBP/CAD and GBP/CHF

These are our orders for 02.12.14

1. Place Order to BUY GBP/JPY at 170.18


Stop 169.18

Sell half at 170.68 move stop to b/e

Sell rest at 171.18

2. Place Order to Sell EUR/AUD at 1.4943

Stop at 1.5043

Close half at 1.4893, move stop to break-even

Close rest 1.4843

3. Place order to Sell AUD/NZD at 1.0730


Stop at 1.0790

Close half at 1.0700, move stop to break-even

Close rest 1.0525

4. Place order to Buy GBP/CHF at 1.5038


Stop at 1.4938

Close half at 1.5088, move stop to break-even

Close rest 1.5138

5. Place Order to Buy GBP/CAD at 1.8287


Stop at 1.8187

Close half at 1.8337, move stop to break-even

Close rest 1.8387

The market has responded positively to the BoE’s Inflation report and we think the rally in GBP has continuation. Tonight we have Australian employment numbers on tap and our EUR/AUD and AUD/NZD trades are in anticipation of that release.


New Policy: Keep all orders on until canceled. We will allow for 2 live trades at a time