Monday, September 11, 2006

THT Big Weekend Edition Part One

Currencies Market Overview

The currency complex hit the skids last week as many of the markets topped out on resistance and headed lower. Of course the USD did the opposite and broke through the top side of the larger triangle formation that had contained the market for the last few months.

While it remains to be seen if this current move in the currencies is a full blown reversal or merely a short term adjustment we should have a better idea as the week progresses. Personally I think it might be a change in trend as DMI has already swung over for many of the markets. As such I'll be looking to get on board with the new trend as soon as the markets show us resistance/support.

Japanese Yen

Not too much has changed for the Yen since this time last week. We did see the market make a brief rally last week; however it was short lived as rates fell off to the 8665 – 8670 region before the weekend. Did you count all the hits here? Did you notice that the majority of them are recent? This makes for a pretty strong support zone!

Given the strength of the line I consider shorting the market from here, but opted to stick with 'Plan A' and sell the market on a break of the contract lows. This will allow us to enter the market on a break through stronger support, as well as making it break two support zones to prove itself (8665 AND the contract lows). Hopefully this will translate into a more predictable fill as well as allowing us to keep the trade relatively tight by using the strong resistance at 8665 to cover the trade in the event of a reversal.

The only "problem" spot in the trade is the RSI hooked early. I would have preferred to have seen the hook occur at the trendline test, but it happened near the 50% level instead. As you know this is almost as good, as the 50% level represents a neutral market, much like the 50% level on a Fib retracement; therefore it might be enough to send the market lower from here.

SELL December Japanese Yen from 8617
Exit Order: 8665
Approximate Risk Exposure: $600 per contract
Profit Target: 8427
Approximate Potential Profit: $2375 per contract
RRR: 3 1/2:1
Degree of Risk: Moderate to HIGH

Click here to see the yen chart:

To see the rest of the trades in all the other markets, go to

Archives of older trades can be viewed at