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1. Cancel EUR/USD sell order – won’t trigger any time soon
2. TWO New Big Trade Orders
Place Order to Buy 1 Lot USD/JPY at 118.20
Place Order to Buy 1 More Lot of USD/JPY at 116.28
Stop for ALL at 114.35
The meltdown in Chinese stocks has meant significant losses for USD/JPY. However last night’s actions by the Chinese government to support its sinking stock market through a short sale ban for major investors and buying of equities by state controlled funds shows how responsive China will be to disruptions in their markets. While the Shanghai Composite Index opened down 3% overnight, it rebounded to close down only -0.26%. The markets are nervous but between China’s actions and the stabilization in their stock market, we believe that the slide in USD/JPY should come to an end soon. U.S. policymakers remain optimistic that the impact of China’s rout on U.S. markets is limited. The Fed may be less discouraged to raise rates again in this environment but no one expects another rate hike until March so they won’t be talking down rate hike expectations so early in the year. In other words, monetary policy divergence still favors USD/JPY in the long run and these could be bargain levels to buy USD/JPY.
Place Order to Sell 1 Lot NZD/JPY at 79.80
Place Order to Sell 1 More lot at 81.80
Stop for ALL 83.60
Investors are still nervous and with our USD/JPY trade idea we are looking for a deeper correction before buying. With NZD/JPY we want to ride the move lower. At the very first dairy auction of the year, prices turned negative which is not a good start for the New Zealand dollar. Unexpected changes to dairy prices typically have continuation in the Asian trading session so between the drop in dairy prices and risk aversion, NZD/JPY could test the 23.6% Fibonacci retracement of the November to August decline near 77.50. The currency pair also appears poised to close below the 100-day SMA which would represent a significant trend change for the pair.
3. Big Trade Recap:
Place Order to Buy 1 Lot AUD/USD at 0.7284 TRIGGERED
Place Order to Buy 1 More Lot at 0.7084
Stop for ALL at 0.6920
Order to Sell 1 lot EUR/GBP at 0.7035 TRIGGERED
Place Order to Sell 1 More Lot at 0.7232 TRIGGERED
AVERAGE Entry 0.7133
Stop for ALL at 0.7430