AUTOREFRESH 
AUD/JPY trade idea
By Sean Lee || April 29, 2011 at 02:49 GMT
|| 9 comments || Add comment
Remember that AUD/JPY traded at 75.00 last month and is now 20% higher; surely it’s possible that we get a move back towards more ‘neutral’ levels around 84?
- ASX shares are down whereas Dow Jones is up (thanks Joe) as foreign investment funds book profit on their share trades and take advantage of the high AUD/USD to book even more profits
- Rumours of some big AUD selling later tonight (usually there’s some fire when there’s smoke) although the bank research doesn’t agree with the rumour (no trade idea can be perfect)
- Well informed traders have been booking a lot of profits from AUD longs over the last few days
- Quality research suggesting some large USD/JPY selling later tonight
- Strengthening resistance in the AUD/USD ahead of 1.0950
Given what we know so far, I would suggest looking for an entry level to sell AUD/JPY in the hope of a sharp retracement. There are a lot of ‘ifs’ here; if AUD/USD consolidates below 1.0950, if USD/JPY rallies back towards 82.25ish, then that would put AUD/JPY back towards 90.00 which was the high a few weeks ago. That raises the possibility of a double-top forming on the daily chart so sell that rally with a tight stop looking for a move back towards 84.00. With a risk-reward ratio of 1:12, it sure makes sense to me.
Anywhere from 89.50-.80 would be a good entry area. Nice idea, Sean.
That’s Brilliant!
Hi Sean, well my trade came off yesterday ok. Sold EUR/JPY at 121.64 for 120.66. I intended to buy back again around 120.80 as this seems to be the level of support. I went in this morning at 121.08 for 122.06. Considering another buy at 120.94/120.80.
Hey Sean, I love the idea only problem is that usd/jpy under 80 has BoJ risk so it’s tough to hold that as a swing trade and sleep on it. I’d rather short the aud/usd part and go long usd/jpy on the spikes below 80. Obviously, a lot of us on this board made a lot of money shorting aud/jpy from 88 > 76 and below last year. I’d love to run a version of that trade again, but I’m a bit leery… Cheers,
well done dlys, you’ve been picking the intraday moves really well
Fair point JR but if AUD/USD goes back to 107 and USD/JPY to 8050 then the cross is near 8600 which would seem achievable.
Just trying to gameplan this. If we get a 5-10% correction in risk markets, starting at some point in, say early May, then aud/usd could test 1.025, if not parity, and usd/jpy could breakdown to the 76-78 area, that’s 10+ big figures for aud/jpy. Might as well just run ‘em all, short aud/usd, short aud/jpy and long usd/jpy, scaling in at, say 79, 78, 77 and 76.5, with an eye towards holding them for a double bottom move up to… 94? ok, scaling out 85-88. That struggle from and to the heights, and all of the euro action should, to borrow from Camus, be enough to fill a forex man’s heart… Thanks again for all of your excellent analysis, Sean. I’m off to bed,
The Japanese retail traders seem to concur, Sean.
Not a great deal of longs out there at the moment.
http://twitpic.com/4qte17
If it breaks 86 I think we’ll see 84 within a fairly short period of time.
But I also think there will be a huge amount of people looking to get long somewhere there in the low 80s, unless we have a major event cripple the markets again (just like happened this time last year)
Great call on this one Sean. Are you still in the trade?