Tuesday, October 5, 2010
10/05/2010 PM Update
Apologies for a lack of posting lately, I've been fairly busy.
To recap today's earlier action, the BoJ (Bank of Japan; their version of the USA's Federal Reserve) cut rates, sending the JPY pairs soaring. Specific to EURJPY, it skyrocketed over 100 pips over the course of the day following the announcement. The only unfortunate element of this move was the sudden nature of the buy signal.
As you can see in the included graph pic, the market reaction to the release occurred in 3 large 5m candle spikes, each of a magnitude of 25-50 pips. It is harder to play these candles on moving averages when the next open candle above the MA is 30-50 pips away. What this effectively does is increase the downside risk by however far away PA is away from the MA. In this case, PA actually did retreat back to the 100 EMA, rebounding upwards to new highs.
After the rebound, PA has continued upwards, for a total move above the 100 EMA of >100 pips.
At the moment, PA has broken the 100 EMA, with a test and rebound back down. I'm currently short below the 100 EMA @ "115.024." My downside is relatively low (compared to the previous spike yesterday), and rests at about 10-15 pips. I'm going to take profit when (if) PA gets near the 300 EMA, as there is likely to be either resistance or a rebound off of this MA.
Good luck to everyone trading, and I'll include more regular updates along with the next installment in the trading 101 series later on today!