For fun I figured I’d throw out exactly what I’m looking at on a “per pair” basis.
I don’t generally make “intraday calls” but as it stands, let’s give it a go and you guys can beat me up over it later.
USD/CAD – short it….right here right now.
USD/CHF – short it …right here right now.
USD/JPY – short it…right here right now.
AUD/JPY – short it …right here right now.
I’ve got a pile more, but “assume” you get my drift.
JPY a “buy” here, and USD a “sell”.
Take it for what it’s worth ladies….and don’t go bet the farm.
Have a look at both EUR/USD as well GBP/USD but with “super small positions” – (I’ll debate a trade on these dogs later as well).
You get rich – thank me…….you lose your house? Talk to you later.
Breaking Down the USD Weakness Play
The JPY Reversal Setup That Everyone’s Missing
Look, while everyone and their grandmother is still betting against the yen because of that “carry trade mentality,” smart money is already positioning for the reversal. The Bank of Japan’s intervention threats aren’t just noise anymore – they’re telegraphing policy shifts that most retail traders are completely ignoring. When USD/JPY hit those extended levels above 150, institutional players started scaling out of their long dollar positions. The momentum is shifting, and if you’re still thinking “yen weakness forever,” you’re about to get schooled by the market.
The technical picture on JPY crosses is screaming oversold conditions across the board. AUD/JPY specifically has been my favorite short setup because the Aussie’s got its own problems with China’s economic slowdown hitting commodity demand. You’re getting a double-whammy trade here – yen strength plus Aussie weakness. That’s the kind of confluence that makes money in this business. Don’t overthink it.
Why USD Strength is Running on Empty
The dollar’s recent run has been built on interest rate differentials that are about to get crushed. Fed officials are already hinting at pause scenarios, and the market’s pricing in rate cuts by mid-2024. Meanwhile, you’ve got persistent inflation data that’s not cooperating with the Fed’s narrative, creating this perfect storm for dollar weakness. USD/CAD is particularly vulnerable here because the Bank of Canada has been more hawkish than expected, and oil prices are providing tailwinds for the loonie.
USD/CHF is another gimme trade if you understand central bank dynamics. The Swiss National Bank has been deliberately weakening the franc for years, but they’re reaching the limits of their intervention capacity. Global uncertainty is driving safe-haven flows back to CHF, and the SNB can’t fight that tide forever. When this trade moves, it moves fast – so position accordingly.
The EUR and GBP Wildcards
Here’s where it gets interesting – and why I’m only talking small positions on EUR/USD and GBP/USD. The European Central Bank is caught between a rock and a hard place with inflation still elevated but growth concerns mounting. Christine Lagarde’s playing this balancing act, but the ECB’s going to have to choose a side soon. If they prioritize growth over inflation control, the euro gets hammered. If they stay hawkish, you might see some strength against a weakening dollar.
Sterling’s even trickier because UK politics and economics are still a complete mess. The Bank of England’s trying to thread the needle between controlling inflation and not destroying what’s left of the UK economy. Brexit aftershocks are still rippling through trade relationships, and the new government’s fiscal policies are anyone’s guess. That’s why these are “watch and wait” positions – the setup could go either way depending on which crisis hits first.
Risk Management for This Macro Play
Listen up, because this is where most traders blow themselves up. This isn’t a “set it and forget it” trade setup. Currency markets can reverse faster than you can blink, especially when central banks start coordinating interventions. Keep your position sizes reasonable – I’m talking 1-2% risk per trade maximum. If you’re leveraging up because you think this is easy money, you’re going to learn an expensive lesson.
Set your stops tight on the JPY longs because volatility in these pairs can spike without warning. Use 50-pip stops on the majors and maybe 75 pips on the crosses. Take profits in stages – don’t be greedy and try to ride the entire move. Scale out at key technical levels and let smaller positions run for the bigger picture play.
Most importantly, watch the bond markets and commodity prices for confirmation signals. If US Treasury yields start collapsing or oil prices spike, these currency moves could accelerate quickly. Stay flexible, stay disciplined, and don’t let emotions drive your trading decisions. The market doesn’t care about your mortgage payment.
how abt gbp/jpy? looks good to short too?
Careful with that thing!
It’s literally a bomb in your hand with a mind of it’s own. GBP/JPY will blow your face off without a moments notice so……..
Inch in….grab a contract……wait til this evening…..grab another etc…..
Intraday moves can be well over 100 pips – and have no bearing on direction so…..CAREFUL!
I’m almost ALWAYS EARLY PEOPLE So………..
PROCEED WITH CAUTION!
you have lovely teeth today, i am poised to do what you say :)))
Be sure to protect yourself Elena….as well consider that I will often “stagger my orders” and trade in small sizes over time.
24 hours is a blip forex wise….so we don’t expect to pick a point in time, and watch it “rain money”.
Thank you for the compliments – I think I need a cleaning though!
haha.. no follow through on the selling… hopefully more to come soon
I know you’re joking…..please tell me you’re joking.
I’ll get worked up about it sometime late tomorrow afternoon at best
There is no such thing as “perfect entry” – in fact…not even close.
If you don’t consider 50 – 100 pip moves in your trading as “normal” – you need a larger account to even get into the game.
Robert, I am trading dynamic levels (only on GBP/JPY), watch carefully 154.26, it can bounce from there temporary (I consider it daily dynamic pivot), otherwise you are a bit late for today’s entry, good entry was 155.4 and 154.9. I don’t want to share my chart and how I got to those levels, but they are on the chart…
Great stuff Mr T.
Don’t worry about hitting it “on the mark” Robert, as this pair can easily skid a couple hundred pips in a heartbeat.
Lots of room to the downside is / when she goes.
Go go go ….
The yen pairs are certainly a bitch to trade with massive stimulus from japan…
They are “big movers” regardless of the BOJ’s efforts, and here especially with the concerns over Syria.
You need to be very careful with them in general, and really watch your position size / and ability to handle volatility.
Trade em small – and wide – that’s the best suggestion I can give.
Yeah.. lots of dip buyers for yen pairs… i thought usdjpy was a riskoff pair and with today selling and news it should fall, but apparently it is not
Pull a chart of the Nikkei on a 4 hour chart and have a look ( from a technical perspective ) at the downward sloping trendline from 16,020
We’ve juuuust bumped into it ( as I draw it ) here today so…..things can hang around at this level for even a day or two ( as you’ll see congestion areas at “other levels” hit previously ).
It sounds to me like you’re looking for things to happen “just like that”?
Just that “things like that”……… rarely happen.
Nah. I am not expecting it to go down immediately, but trying to understand how thd yen pairs move.
I love em, and trade em often.
Best bet….pull em all up on you screens etc, and start staring at them. In particular watch / see their ATR ( average true range ) compared to others.
Big moves……
Kong! Nice calls past few weeks. You are rocking. Euro weaker than Aussie recently so eur/jpy better short than aud/jpy?
NfX!
The Yen pairs all go “when they go” but both you and Andrew raise a good point, as to AUD lookin stronger.
Let’s watch’em here during Asia session and see how things look.
I’ve seen Nikkei respect the downtrend line pretty well “technically” so….would we be lookin at ” Nikkei” break out here? Fundies don’t really sugggest that, with the “looming threat of war” so…..
Just another trade.
Kong, I’m with you on USD/CAD and GBP/USD, at least in the very short term, but not on the USD/JPY or or other long yen trades (at least not yet, though maybe soon). Judging by my charts, Japan is winning the race to zero. Aussie sure looks like is wants higher (which doesn’t seem too unreasonable after the brutal beating it’s taken and the piled up shorts who’ll need to book profits at some point). Best, Andrew
Long Yen’s a toughy for sure – I’m nimble like a gorilla here.
Today’s action (and most every day it seems these days) yet again – waffle, waffle, chop , chop.
Nikkei would need to blow thru current level around 14,000 for me to get all worked up so…..we’ll see what tonight looks like.
Thanx for sharing your thoughts, and checkin in with your trades.
On war, I’m going to stop speculating after what happened over the weekend, which I must admit surprised me. As far as I can tell, the entire U.S. govt. has gone “full retard.” http://www.youtube.com/watch?v=oAKG-kbKeIo
Im with you there, mind you – U.S has “been” full retard for some time now anyway….
He he he…..the gong show continues – you’ve got it.
I was confident nothing was going to happen – but didn’t expect the Congress bit.
What a mess……..and “once again” markets are caught wondering. Brilliant.
The clip……that scene – seriously…one of my all time favs.
RDJ was hilarious in that movie.
Hey Doc…..
Target for the DXY in the 79.50 range-ish? or do you think that is too deep? IF we get a launch then this will reverse on a dime…
Bah.. Nikkei is relentless man…. the power of BOJ?
It appears that way! – although I’ve still got my eye on that trendling – still acting as solid resistance. 14,000 area and holding!
gbp/jpy… should have listen to you kong… this just keep going up regardless of anything….
Well Robert – it really does depend on your account / position size, ability to handle volatility, and knowledge of a specific pair.
I treat GBP/JPY with the utmost repsect – as it’s been a ball ripper in the past.
Now…..if you’d been trading “small small small” you could easily be in a position now to either “add” to your position ( if you feel it’s still just a “timing” thing and not a macro fundamental change ) or cut your losses and just move on.
Hi Everyone,
1. I’m curious because I noticed that talking about specific trades and price levels brings a lot more people & comments than other topics. I wonder why?
2. Is the Kongdicator still over the horizon or is it getting closer to us?
3. Kong, is there some way you “quantify” fundies? That is beyond me. It also seems that yesterday’s bullish news is often replaced by today’s bearish news. Sometimes in the same day and same batch of reports. Mostly, you use TA when talking about specifics and fundies when macro. Simple as that?
Good luck all.
1. I put out a “trade alert” yesterday, and now see the results yes. A good “half the readers who’ve contributed to the readers poll, are flat out just looking for actionable real time trade ideas. This is a complete mine field from my perspective, as all traders approach trade entry/management different but….I figured I’d fly one. No death threats yet!
2. Kongdiction is on it’s way, as is the full members service / backend type area – YES….I’m still werkin through some of the web elements / payment gateway etc…
3.I’ve come to understand this part of trading ( or at least MY trading ) as the area where a bit of “creativity/knack/flair/artistry/” may come into play. I don’t know “how” to explain “how” I see / line alot of this stuff up – short of doing my best to look at things as “broad” as I can – and work down from the top. This coupled with the short term tech ( taking reasonable care of entries etc ) has proven a successful combination.
I can get back to the fly fishing metaphor a million times over. You can put a rod in a guys hand, and take him down to your favorite spot….
He can bang away at it all day……and not catch a bloody thing.
Thanks Kong. Appreciate your insights and fast reply.
In the past, I subscribed to a service by a trader that provided real-time entries and exits. I’m totally confident that he pulls tons of cash out of the market on a consistent basis and has supported himself for many years in the markets with his methods. Yet, I found that I could not make any consistent money trying to follow him. I have theories about why that was the case, but the “why” really doesn’t matter to me. It’s like trying to find the holy grail, which simply doesn’t exist. I’ve given up that dead-end long ago. I’ve realized that I create my profits and my losses inside my head and that no one can help me beyond the person who helped me understand that fact and how the game is played (which amazingly few understand). Maybe others are different and could blindly follow signals from someone, but I doubt if there’s few, if any, that can. Whenever someone asks about what to do in a trade or whether it’s too late to get in, it’s clear that person has no plan (or worse refuses to follow it) and is therefore doomed to continue paying the winning traders. Trading is like groundhog’s day, unfortunately. Just my opinion and I could be wrong 🙂
Very well said Andrew…..and yes – it will almost always come down to the individual ( and his/her mistakes and decisions ).
My interest lies in the “psychology of it all” more than anything, but I’m not sure of an effective way to “package that up” and make something of it. I’m seeing that there at least two separate readers here at the blog – the short termers, and those that want broader knowledge / understanding.
I can talk psychology of trading all day long, as opposed to the “pains” of short term technical chit chat.
We’ll see – I’ve considered breaking things down and “splitting it” – as to “possibly” help out both!
USD is going down, equities going up, yen going down? wouldn’t pairs like aud/usd, gbp/usd, eur/usd going up pull their respective yen crosses up as well as equities?
Volatility in one pair can’t be compared to “change in direction” of another – and certainly not “all tied up neatly with a bow – and happening at the exact same time”.
Yesterday’s intraday call on further USD weakness has been realized across the board, but JPY continued to drop overnight. This may quickly change as suggested MANY TIMES prior – staggering your orders over time keeps you from “hitting an exact entry level” which is IMPOSSILBE in forex.
This is an extremely difficult environment to trade – with attempt to apply standard “usual” correlations.
I still see things as USD down as well US Equities down. Nikkei at resistance and JPY to trade opposite. Just not happening “On the turn of a dime”.