Reversal Across The Board – USD And JPY Back In Demand

It’s a funny thing really.

You can make light of a particular currency pair’s price level (such as AUD/JPY yesterday afternoon), as well point out its general connection / relationship / correlation with “risk appetite”, and BAM!

Perhaps it’s a touch too early to say, but I’m seeing reversal’s in just about every single pair I track with respect to a reversal in “risk appetite” – with both USD as well JPY showing strength here overnight.

Did I need to wake up and check SP futures? or perhaps tune into my local financial news this morning to get an idea of where U.S stocks may be headed here today? Nope.

Obviously I’m short AUD/JPY from yesterday, and will be adding a couple more long JPY ideas here today. The long USD’s I’ve got will be added to as well.

I can’t imagine another “triple digit gain” here in the U.S today, as this counter trend rally peters out.



40 Responses

  1. Franky February 12, 2014 / 7:13 am

    It’s about time…, but I think it was mainly caused by ECB guy with negative interest rate statement, otherwise USD would be still struggling down there.

    • Forex Kong February 12, 2014 / 7:23 am

      I started making moves / preparing mid afternoon yesterday, based on general observations across the currency markets.

      I don’t see USD struggling in the face of rising interest rates and tapering of QE so the ECB “chatter” really just added a little fuel to the fire.

      • JSkogs February 12, 2014 / 9:05 am

        Awesome Kong. Adding to my yen longs and usd longs today as well. Should be a nice trade.

        • Forex Kong February 12, 2014 / 9:18 am

          Pretty much perfect “right here right now” on most long JPY entries, but man…..

          For anyone “else” reading who may not have the insight / experience / knowledge / trading ability as JSkoGs you’ve got to step back a minute and consider….

          This is the most difficult / tretcherous / unforgiving / manipulated / bullshit market I’ve traded! It’s a meatgrinder out there!

          You’ve got to make sure you’ve got your money management under control and don’t get caught looking for home runs. I don’t “always trade the same” as I’ve seen market dynamics over a considerable period of time, and have “learned” when to step on the gas, and when to hit the breaks.

          Smaller orders “over time” is at least one strategy to keep you in the game, and not have you leaning to hard to one side at any given time.

          Bang on Jskogs – and Belize was great.

    • Franky February 13, 2014 / 3:26 am

      USD reversal reversed, 80.50 support breaking…. 🙁

      • Forex Kong February 13, 2014 / 6:18 am

        I am completely at odds with USD action over the past few days, especially considering that ECB talks have been about “negative interest rates” and should be “negative for EUR”. Tapering full steam ahead in the U.S as well so……”whatever” is going on – it’s totally upside down.

      • Forex Kong February 13, 2014 / 6:21 am

        I’m going to let today play out with respect to the usual “thursday morning data” and then re evaluate.

        Nikkei down big again over night, but even there as well – no “mirrored move” in the safe haven play for JPY / Yen.

        Very strange. Very strange indeed.

      • Franky February 13, 2014 / 6:33 am

        now I’m not sure about fundamentals:
        more tapering = USD up because less money printing …or…
        more tapering = USD down because more red numbers from US

        • Forex Kong February 13, 2014 / 7:03 am

          In an old school traditional sense, tapering and tightening “should” suggest a turn in the economy with rising interest rates that is generally seen as “good” for the currency.

          We “know” for a fact this isn’t the case in the U.S, as the economy is setting up for a considerable downturn BUT – this is what “tapering” is meant to suggest.

          Perhaps the markets ( like myself ) are totally disregarding the idea of “tapering” knowing full well it’s not only impossible , but ridiculous and just stepping on the gas in a further flight “from” a rapidly devaluing dollar.

          Frankly I hadn’t given the market credit for being that smart, and have been trading under the assumption that further tapering, produces tighter lending, lower stock prices and a stronger currency.

          It’s just a day mind you but……a really odd overnight move in that the indices traded much lower…but oddly – no bigger moves seen into the safe haven currencies.

  2. Careydina February 12, 2014 / 8:38 am

    Hi Kong,

    How is your view on gbp/usd today?

    • Forex Kong February 12, 2014 / 9:22 am

      The “pop” in GBP/USD on more talk of rising interest rates ( then not ) and strength in general make it a tough one.

      If I’d not such a small position ( which I am doubling today / tomorrow ) I would likely have already ditched it.

      I’m doubling down on it for “one more go” – but with caution, short of seeing USD really move up here….I could easily take a small loss.

      • Careydina February 12, 2014 / 9:34 am

        I currently hold few positions shorted-gbp/usd hehe… boring… it kept moving up…

      • Careydina February 12, 2014 / 9:35 am

        yep. I’ve shorted aud/jpy too. As well as gbp/usd. Pounds has been very strong!

  3. Careydina February 12, 2014 / 8:45 am

    gbp/jpy is crazy as usual heehee

  4. David February 12, 2014 / 10:16 am

    GBP is ripping higher today against everything, I cashed out my long GBP/CHF and GBP/AUD’s I’ve been building, but now taking a stab at a short GBP/JPY.

    • Forex Kong February 12, 2014 / 10:40 am

      Ya that’s the trade as I see it – hitting GBP/JPY right around here.

      • Forex Kong February 12, 2014 / 10:42 am

        I’m doubling down on a “rouge wave” hitting me hard on GBP/USD ( again pleased that I’ve been trading so small ) and will also pick up your short, and perhaps a couple other GBP related pairs.

      • Careydina February 12, 2014 / 10:55 am

        The UK recovery has gained momentum and inflation has returned to the 2% target. This made GBP move up!

        • Forex Kong February 12, 2014 / 11:18 am

          Yes GBP looks to be taking on a new role bigger picture.

          When I consider “a solid currency” moving forward. GBP certainly comes to mind.

      • Careydina February 12, 2014 / 11:27 am

        ANother 2 release from the US later.. 🙂

  5. David February 12, 2014 / 11:22 am

    GBP is my favorite play this year, long against the CHF, CAD, NZD and AUD. If you go back to the monthly charts, you’ll see that it broke some pretty nice barriers and is on the up and up against the CAD and AUD. The GBP/NZD cross is a laggard but I see 2.10-2.20 eventually. With that said, having a big move in a day in this type of market, it’s best to cash the chips and reload on dips later on the long side, I’ll be doing this all year.

    • Forex Kong February 12, 2014 / 12:14 pm

      You’ve got it man – bang on the money.

      I like/love GBP moving forward here in a fundamental sense so, that paves the way for some more aggressive trading.

  6. Careydina February 12, 2014 / 11:25 am

    Ya man… GBPvsUSD or JPY are crazy, GBP/JPY is even worse. So I choose to stay out on this pair haha but yet I like to watch on them as its too excited. 😛

    When USD is up pounds will also like a waterfall. So… trade wise.

  7. Farhan Nasir (@FaniNasir) February 12, 2014 / 7:06 pm

    bad data for aussie ,, right on ,, Took a AUD/JPY 80 pips+ gonna cash em out and will wait for further shorts ..

    • Forex Kong February 12, 2014 / 7:10 pm

      Great news – and yes…..some nice timing on this one.

      I’m in holding as I expect much lower as risk comes off.

  8. Anonymous February 12, 2014 / 7:17 pm

    great call on aud/jpy yesterday, takes a real trader to stick to your guns! Well done sir

    • Forex Kong February 12, 2014 / 7:39 pm

      Thanks alot.

      I can’t post every move or I’d be here typing all day long, but these days I try to let readers know “most” of what I’m up to.

      Stick around…lots of great trades on the horizon.

  9. schmederling February 12, 2014 / 8:40 pm

    Hey Folks – I have a daily positive fire in Gold which with confirmation today…. we should easily blow past the $1300 level in Asian/London trading or the NY boys will run with it…. Digger pulled back today which one would think is expect while other think otherwise….. looks like normal action to be… I was a buyer today in both GDX & NUGT…. 🙂 that for the opportunity!!

    Unless this fire is reversed then I would expect gold to rally over the next 2-3 months here or until March Fed meeting at the very least….. Getting a little killed with my Tesla short position although I had taken some meat off the kitchen table…. but I have these shorts in longer dated options so I am not too worried just yet…… I have also reloaded on NG – as I am expecting price to now continue higher…. further weather coming into play will help…. also break-even for producers is still $6.00 so that’s my top area for now…..

    Cheers Schmed,

  10. David February 12, 2014 / 8:49 pm

    Hey schmed,

    NFLX looks real good short here too (should go down with Tesla, these “momentum” stocks usually like to follow one another); I’m playing some Puts on that one for a dip under 400 by next Friday.

    Careful on that TSLA with their earnings next week, though I’m sure you’ll be handsomely rewarded afterwards, but you never know.

    Once again Kong, timing couldn’t be any better on that AUD/JPY short, that’s paying off real good now and I’m closing half my position.

    • schmederling February 12, 2014 / 9:07 pm

      Thanks David – I’ll have a look into NFLX tonight….. I’ll heed to warning on Tesla…. I have lot’s of time in the trade but never the less always to have a 2nd or 3rd look…. but I think earning might just surprise – generally all earning across the board have not been anything to write home about…. so we will see….

      Cheers Schmed,

      • Forex Kong February 12, 2014 / 9:18 pm

        I just pulled a NFLX chart to have a look as I don’t track it / trade it but….

        Man! That thing is ridiculous! A total momentum stock clearly running out of gas here.

        Can only be a matter of time… the “hot air” comes out of these high flyers fast n hard.

    • Forex Kong February 12, 2014 / 9:09 pm

      A nice lil trade there indeed – glad you ( and hopefully others ) caught it.

  11. David February 12, 2014 / 8:57 pm

    Not sure if anyone caught that AUD/NZD ride I made a big post about around 2 weeks ago when it was under 1.05 to go long as the monthly chart just looked borderline ridiculously oversold. That thing exploded to the upside almost hitting 1.10. It looks like another good opportunity to start dipping a toe back in as it looks to be testing old resistance that can now be support on the daily chart around the 1.0760 level. With this I’d play it small with a target of 1.10, and would slowly add even if it goes under 1.05 again as I like this for a longer-term play that I’ll happily hold for the really big payoff.

    • Forex Kong February 12, 2014 / 9:08 pm

      Interesting David, as I shorted it around 1.09 a couple days ago and “just now” see it finally give way.

      Perhaps this is a great example for readers when considering “time frame” as – we can both make the right trade!

      A ride “anywhere lower” here suits me just fine as I’m already a consider ways into profit.

      1.05 as a long would be a nice little gift, as when viewing those last two monthly candles – it looks like a pretty stiff turn lower.

      • Forex Kong February 12, 2014 / 9:13 pm

        Comparatively I still see NZD as being “stronger” than AUD here near term…and am curious.

        Aside from the straight up “huge area of support” around 1.05 do you see fundamentals favoring AUD looking out longer term?

        Perhaps I’m missing something but….NZD has been a real horse now for several months running.

  12. David February 12, 2014 / 9:44 pm

    With AUD/NZD, I just think the move to the downside has been made for the most part (not saying it won’t go lower, but looking out longer-term, I believe we are near lows for the next couple of years, so playing long “feels” safer to me as I’d like to build a position and constantly trade in and out of it on the long side). With that said, since we did go up pretty fast recently, I did nibble on some shorts over 1.09 but cashed them out just above 1.08, as I was more looking for a high probability corrective pullback). Now that I’m out of both sides of that trade, I feel it’s safe to nibble long again and will see it as “a gift” to get more cheaper in the next few days/weeks.

    But to answer your question as far as fundamentals are concerned, I look at the rate differentials (which is a big factor in the pricing of this cross), it seems that AUD is a little less likely to receive further cuts and NZD is a little less likely to see increases at this stage (compare this to just a few weeks ago; the tide is ever so slowly beginning to shift). Things have overshot on the downside (just like they overshot on the upside a couple years ago when this cross was over 1.30, at which point the “experts” were calling for 1.40, just like they’re calling breaks to new lows under 1.04 now).

    Once the consensus turns and you start hearing the “experts” talk about this cross favoring AUD more, there’s no doubt in my mind we’ll have already blasted passed 1.12, at which point I’ll have been “early to the party”.

    • Forex Kong February 12, 2014 / 9:59 pm


      I was working with the assumption that “indeed” NZD would be raising sooner “or” AUD might possibly still have a cut left.

      I love getting to the party early, and appreciate getting “turned on to this pair”.

      • Kalahari February 13, 2014 / 5:33 am

        I’m currently living down here in NZ and one of the reasons the currency has been so strong relative to AUD is the prices of soft commodities relative to iron ore and other minerals.. Dairy – they call it white gold here – has seen sky high prices and China can’t seem to get enough of the stuff for their growing middle class
        Bit scary to think nearly the whole economy is based on a few commodities with one main buyer. Wouldn’t like to think what would happen if China ever had to pull the plug.

        • Forex Kong February 13, 2014 / 6:22 am

          Great input Kalahari – great hearing this kind of info from someone “actually” there.

          “White gold” – wow……I would never have imagined.

          Thanks man.

  13. schmederling February 12, 2014 / 10:23 pm

    David – I just took a look at Netflix – just at a quick glance there was a good gap up left from $334 on the daily TF – if anything I would expect this gap to be filled at the very least….. I am liking it….. will give it a good consideration with a put option trade – I hate covering….. looking at this from an option standpoint….. I’ll entertain the 405$ strike exp March 22nd….

    Thanks again for pointing this out – has me very interested to say the least……. even a move to close this gap will produce a great ROI…. 🙂

    Cheers Schmed,

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