Monday, January 15, 2007

Journal Entry: Quite a tight USD/JPY trade

Jan. 15 2007 (USD/JPY trade)

Trade: Long 5 lots of USD/JPY @ 120.55.

Stop: 120.08 (based on the 120.08 low created on Jan. 11 ).

Target: 121.49 (2:1 profit-loss ratio).

Result: 2 lots closed on Jan. 15 @ 120.47 (-8 pips). Remaining 3 lots closed on Jan. 18 @ 120.80 (+25 pips)

Comments: Unclear signals shown on the hourlies. Will be scaling out my positions gradually. Due to indecisiveness shown ahead of the BoJ meeting on Jan. 18, prices traded narrowly for 2 days without any clear direction. Scaled out 2 lots on Jan. 15 as I wasn't comfortable with my position.

Remaining 3 lots were sold on Jan. 18 after the BoJ decided to keep i/r at 0.25%. However, prices rallied only a few pips to 120.80 which is quite baffling as markets were split over whether BoJ would raise i/r anot. I expected prices to break the 121.00 resistance barrier. Might be going short USD/JPY now. Market speculates that BoJ have a 68% chance of raising i/r in the Feb. 20 meeting.

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