I need to make a decision over my dollar shorts in the face of market strength

I find myself in an interesting position. I'm a dollar bull by nature, have been these last few years. As you know I turned short term bearish on USDJPY after the March FOMC meeting and started scaling into shorts last week after watching month after month of bad data. This wasn't a 5 second decision but something I've been watching and commentating on for the best part of 6 months

The problem I have now is that I'm seeing the market going against the underlying picture and now upside levels that I expected to hold are now breaking. Ordinarily I would be watching for these breaks for signs to go long. Now I'm thinking about throwing the towel in as the moves are too strong. I'm in one of those situations where the fundamentals don't align with the price. It's as plain as the nose on my face that the US economy isn't going the right way, and none of the excuses being given wash that fact out.

So it's decision time for me. 121.50/70 marks the last level I've been looking at for the topside of the recent range and that will count for nothing if the FOMC minutes are hawkish.

The way I see it is that I've got three choices;

  1. Bail out if the topside goes tonight
  2. Wait it out and see what the next round of US data brings tomorrow (It's manufacturing which has been one of the main indicators that's sliding)
  3. Bail now and decide whether to go long or short tomorrow on the data

After the minutes will the economy be in any better shape?

I don't fade any market moves or trends just for the sake of it but there always comes that time when you're offside and thinking "am I doing the right thing?" 99% of the time I would advise others in the same boat of the "if in doubt, get out" rule but while it might seem like the most sensible option, I hate losing money, and still feel strongly about my reasoning. It's a hard call to make when tomorrow I could either be back in the game or at least given better levels to get out with.

Confidence is one of the key battles in trading psychology and usually not a problem for me. I have my plan and I implement it. But, sometimes the battle you face when going against the market seems insurmountable

How do you folks deal with it?

Me vs the market