AUDJPY – Double Bottom at 81.00?

AUDJPY – Double Bottom at 81.00?

Chart Of The Day

Tomorrow is the FOMC meeting and the market is focused on both the dot plot and the tone of Jerome Powell’s first press conference as Fed Chair. If Mr. Powell remains upbeat about the US economy and maintains a hawkish bias with regard to US monetary policy that is likely to help USDJPY and all the yen crosses, of which AUDJPY remains the strongest.

The pair looks to have carved out a double bottom at the 81.00 figure and while the buyers and sellers are in a tug of war today, any clear signal from the Fed should help it to break out above the 82.00 figure in tomorrow’s trade and set it on a course towards 83.00

USDJPY – Surviving the Double Bottom

USDJPY – Surviving the Double Bottom

Chart Of The Day

USDJPY came close but held the double bottom low of 107.31 in New York trade today. As we noted earlier, the pair was driven lower by a combination of stop running, risk aversion flows and some market uncertainty about Governor Kuroda’s reappointment.

Earlier in the day, Japanese PM Abe stated that he has yet to decide on the reappointment of Mr, Kuroda and that lack of confidence along with a turn in the Nikkei could have contributed to the fall in USDJPY that dragged the pair to fresh six month lows.

Mr, Kuroda is the principal architect of Japan’s reflation policy and is widely respected by market participants. The market is pricing in an 80%-90% chance of a Kuroda reappointment so any hesitation or change of heart by Mr. Abe is sure to cause further turmoil in USDJPY.

For now, the selling flows appear to have ceased and if the pair can climb above the 108.50 level it will likely have put in a solid double bottom at that level. However, a break of 107.00 shows no support until 105.50 so a slide below those key levels could precipitate an avalanche of selling that could quickly push the pair to fresh yearly lows.

USDJPY – Double Bottom?

USDJPY – Double Bottom?

Chart Of The Day

The dollar has been a punching bag for the better part of three months, and just as it appears to have stabilized against other majors, it has yet to find firm footing against the yen. Today’s bout of risk aversion is not helping matters as USDJPY continues to hover below the key 109.00 level.

Tomorrow, however, the market will hear from the FOMC, and while no major policy change is expected a hawkish statement that reaffirms commitment to at least 3 rate hikes in 2018 would go a long way to helping the beleaguered dollar bulls. If USDJPY can clear the 109.50 barrier in the aftermath of the statement, it will have set a higher low double bottom and will have the foundation to rally further.

GBPUSD – Double Top or Fresh Highs?

GBPUSD – Double Top or Fresh Highs?

Chart Of The Day

Cable has stalled ahead of the 1.3600 figure since the start of the year failing to make fresh multi-month highs. The pair looks to be carving out a double top near the key 1.3500 figure, but the battle between bulls and bears is not over. A small retrace down to the 1.3300 level will still keep the uptrend intact.

In the meantime, however, a small correction appears to be due especially if US yields continue to rise and UK data starts to falter. Tomorrow’s Trade Balance is expected to miss and could be the catalyst for a move below the 1.3500 figure opening the way for a deeper correction to 1.3300. A break above 1.3600 however, will put a much more bullish structure on the chart paving the path to post Brexit highs above 1.3700

Can Kiwi Hold its Double Bottom?

Can Kiwi Hold its Double Bottom?

Chart Of The Day

Tomorrow the RBNZ will have its final rate decision meeting for the year, and while no one is expecting any action on the rate front, traders will watching carefully for any change of posture with respect to monetary policy.

Up to now the primary mandate of the RBNZ has been price stability. That means that it generally concentrated on inflation and left growth issues to fiscal policymakers. However, with the election of a new center-left Labor government, the RBNZ may now be tasked with the dual mandate of growth and inflation. This will be the first time that New Zealand monetary authorities will face the public and reveal their reactions to this proposed policy.

On balance that means the RBNZ should generally be more dovish in its outlook stressing the need for more growth, fretting about deflation and suggesting that the bank will follow a neutral path for the foreseeable future. However, recent data has actually been hawkish with both employment and inflation better than forecast. If the central bank bristles at any suggestion of a dual mandate and makes clear that it intends to maintain its independence than the kiwi could actually pop towards the .7000 barrier.

NZD – Double Top at .7400?

NZD – Double Top at .7400?

Chart Of The Day

The kiwi has been a stealth rally since the start of the year but it may be finding tough resistance at the .7400 level. Last night the pair was pushed to a high of .7376 on the back of hotter than expected inflation data, but the days’ reversal should make bulls cautious ahead of the RBNZ announcement tomorrow.

The RBNZ is expected to keep rates on hold, but the market will look for any signs the central bank may be willing to cut rates further. Although inflation is picking up, the recent labor data was disappointing with wage growth particularly weak. On the other hand, the latest Dairy auction saw prices rise suggesting that demand for country’s principal export remains strong.

If the RBNZ is relatively sanguine, the kiwi could make another foray to the .7400 figure, but any move above that level would require further weakness in the buck.

Cable Double Top?

Cable Double Top?

Chart Of The Day

Cable saw a sharp reversal today after BOE Chief Mark Carney stated that the central bank will likely ignore any budding inflation and will keep the policy accomodative for the foreseeable future.

After several weeks of strong performance, cable is showing clear signs of relative weakness as traders are beginning to become concerned that the UK economy may have peaked. Tomorrow’s UK PMI Services will provide a clear clue as to the state of the UK economy. The market is looking for a small dip lower, but if the drop is more severe the pair could easily give up the 1.2500 figure and may even test 1.2400 if US NFPs print above 200K.

Double Bottom for Cable?

Double Bottom for Cable?

Chart Of The Day

The woes of Brexit are well known. UK is in danger of precipitating a “hard” Brexit which would result in its expulsion from the single European market. Yet despite the fears of experts, the economic knock-on effects have yet to materialize. This week the UK economy showed its resilience by posting better than expected data in all three PMI reports. This suggests that UK economy may be stronger than the market thought and that the latest GDP figures could come in at 17-month highs.

Technically the pair has tested the 1.2200 level twice and today’s move back through the 1.2400 figure indicates that the double bottom is in. With 1.2500 now squarely in-view cable may be ready for a short squeeze as late shorts begin to scramble and cover. Topside the pair has no resistance until 1.2700 so there is plenty of scope for upside

AUD/JPY – Will Double Bottom Hold?

AUD/JPY – Will Double Bottom Hold?

Chart Of The Day

Its been a few weeks since we checked in with AUD/JPY and the pair is once again testing the double bottom at the 78.00 figure. The recent reversal in USD/JPY has really taken the toll on the cross but the failure of Aussie to break out above the .7300 figure has also hurt the longs.

Tomorrow is setting up as a seminal day for the pair with NFP looming large on the market. A weak number would once again put in doubt the prospect of a June or July hike and could send USD/JPY below its range lows at 108.00 which would drag AUD/JPY below 78.00. The Aussie itself is unlikely to rally much under those conditions as weak US data would actually increase the odds of an RBA rate cut before the summer’s end.

Only a very strong NFP data point could reverse the recent flows and create a V-shaped rebound that could take the pair back towards the 80.00 handle. Barring that turn of events the momentum in the pair is clearly down and the prospect of a break below range support remains high.

AUD/JPY – Double Bottom?

AUD/JPY – Double Bottom?

Chart Of The Day

Both Aussie and USD/JPY may have bottomed out for the time being which could set up for a rally in AUD/JPY off its recent test of support at 79.00 level. In Australia the RBA appears to be content with staying stationary after cutting rates 25bp at the last meeting. Most market participants do not anticipate any further rate cuts until August at earliest which should provide support for the pair until then. If tomorrow’s AU employment data proves positive that will only add to the AUD bullish view and should keep the pair well anchored at these levels.

Meanwhile USD/JPY has found clear support at the 108.00 level and with both spending and inflation data in US beating forecasts the buck should get some love in the next few days. Add to that the fact that most of the FOMC members continues to suggest that June will be a live meeting and the prospect of USD/JPY above 110 could be very real.

All of this creates the foundation for a rally in AUD/JPY over the next several days that cpuld take the pair towards 81-82.00 region before finding fresh resistance.

How To Double Your Money with Reasonable Risk

Boris Schlossberg

First things first. If you haven’t been able to make 1% per month for at least 6 months running on no leverage then your prospect of doubling your money is slim to none. In order to really “gun it” in FX you need to have well designed day trading system that has stood the test of time under real market conditions.

But if you can upload your results to myfxbook and can show to yourself that you managed to eke out 1% a month for 6 months or more then you have a chance to take your trading to the next level. But not before you do, you need accept a very important fact. In your quest to double your money you must be fully prepared to lose 50% as part of the process. That’s simply the basic math of trading. The best traders in the world have a runup to drawdown ratio of 2 to 1 so that if you realistically look to make 100% on you money then you have to prepare to lose 50% in the pursuit of that target. In short doubling your money is a strategy to employ only with high risk capital, but since many of us in FX are comfortable with such risks here is a couple of ways to make it happen.

Theoretically it may be possible to achieve these results via swing trading, but since I focus squarely on day trading let’s just use that approach in our discussion. Day trading first, foremost and always means small profits and short stops. It’s all about controlling risk, which is why if you haven’t been able to prove to yourself that you can consistently cut your losses you will never be able to double your money. If you managed to produce 1% per month on a non levered basis (meaning that every trade you make is no greater than the value of your account i.e. a 10,000 unit trade in a 10,000 USD account) then the path towards 100% is relatively straightforward. You simply increase your lever factor to 10:1 and if you can replicate your prior success then you will achieve 10%/month or more 100% per year.

Of course that’s easier said than done. First and foremost such high leverage approach should be done in what I call one shot/one kill manner. Ideally you should trade only one currency pair, no more than two times per day with a single entry/single exit approach. Let’s say you make 20 trades per month and each trade has a -20 pip stop and a +10 pip target and 80% win factor. Basically every time you trade in this manner you risk 2% loss to win 1% and if you are successful 8 out of 10 times at the end of the month you made 8% which will get you very close to doubling your money by the end of the year. If you were even more aggressive you could increase the lever factor to 15:1 risking 3% on each trade with 1.5% payoff on each win for a target of making 12% a month. But that would be the absolute maximum level of prudent leverage. At 3% risk per trade you would be down by 15% after 5 consecutive losers -- something that can easily occur several times a year even in the highest probability strategies.

If you simply can’t trade in the one shot/one kill manner, if you have to approach each trade in a more probabilistic fashion doing multiple entries in order to achieve a better price for an exit (what I facetiously call the “spray and pray” method) then you have to use a very different leverage scheme. Suppose you use a system that averages into a trade a maximum of three times. Under such conditions you really can’t level more than 1:1 on each trade. That’s because your total lever factor on each full position is actually 3:1 and your total risk reward becomes much more negatively skewed. In the same -20 Stop +10 Target structure with a 3 point entry at 5 pip interval your loss is always a max loss of -45 pips while the gains vary between +10 and +15 pips creating a risk reward skew that is 3:1 rather than the 2:1 of the single entry/exit method. Still some traders swear by the “spray and pray” approach, but if they want to use it to double their money they have to be extra vigilant about leverage and stops.

Trade with us for just $59/week

In the end like all things trading the goal of doubling your money is simple but not easy. First and foremost you need to develop a strategy on low leverage that actually proves its mettle under real market conditions. Then you can ramp up the lever factor in a judicious fashion and make a play for the 100% return but you must always take your stops and be willing to lose 50% of your account in the process.

EURAUD – Double Bottom in Place?

EURAUD – Double Bottom in Place?

Chart Of The Day

For the past few weeks the commodity rally helped to fuel a one way move in Aussie that has taken even the staunchest bulls by surprise. But with oil, gold and iron ore prices starting to peter out the Aussie rally may be finally running out of gas.

As the assent of the pair has slowed it’s gains against other majors have slowed as well. A good case in point is EUR/AUD which looks like its starting to put in a double bottom at the key 1.4500 level. Although there is little on the horizon to propel euro higher, the gains in the cross could come just from the correction on the Aussie itself.

The holiday calendar is barren next week, but if the macro factors continue to dominate trade and unwind some of the recent gains of the past few weeks, EUR/AUD could be well on its way to 1.5000 before the month’s end.