USDJPY has been on the rise after the US Presidential Elections. FOMC Meeting last week injected more bullishness in USDJPY. In this post we are going to discuss a recent USDJPY buy trade that started with a stop loss of 20 pips and ended up with a profit of 400 pips. Did you read the post on how to trade with the Bill Williams Awesome Oscillator? Take a look at the following screenshot.
In the above screenshot you can see big bullish candles being made by USDJPY. These big bullish candles are a signal that USDJPY will continue with its upward march in the next year as well. Right now USDJPY is hovering around 118.000 level. This is precisely what the Bank of Japan also wants: a weak yen. So the chances are Bank of Japan is not going to intervene and let this uptrend continue as long as it can. This uptrend is being driven by the US Dollar which is getting stronger and stronger as a result of US Presidential Elections results. This is being dubbed as the Trump Rally in the financial media. Meet Jarret Davis the #2 ranked forex trader in the world by Barclays.
The red arrow in the above screenshot shows the entry. If you have been reading our blog, you should by now know our candlestick trading strategy. We use H4 candles to make the entry decision. Profit target is determined by studying the daily and the weekly charts. We always use pending orders for entry and exit. We used a 20 pip stop loss for the entry and fixed the profit target as 400 pips after studying the daily and the weekly charts. Read this post on European Central making EURO fall by using Quantitative Easing. Central banks are the key players in the market. They have some levels in their mind which the currency should not cross. If the currency tries to cross those levels, central banks then intervene heavily in the market and drive the currency away from those levels.
As said above, Bank of Japan (BOJ) right now is happy with USDJPY upward march. This is what they want. USD getting strong and Yen getting weak. So they will not intervene. Just keep this in mind BOJ has a reputation of intervening heavily in the market when Yen tries to get too strong. This you should understand. So whenever you see the Monetary Policy Statement scheduled by BOJ, just assume that BOJ will intervene heavily. Algorithmic trading is on the rise. Did you know that British Pound Flash Crash was caused by a rogue algorithm?
If you have been trading for a while, you should know this that quantitative trading is on the rise. Traditional technical analysis is being augmented with statistical analysis. In the next few years, you will see a massive shift towards algorithmic trading. Position yourself by learning R. Read this post that introduces you the powerful statistical and machine learning language R. You can use R to do the daily market analysis and determine the direction in which the market is going to move. If you get an accuracy of 80% this can help a lot in improving your trading strategy.