Taichiseal Charts: AUD/JPY

Showing posts with label AUD/JPY. Show all posts

25 March 2011

Shorted AUD/JPY at 81.99 on Tuesday. Another trade not working. Now at 82.77, which is where it was before Fukushima events.
Just cut the short AUD/USD of the cross at 1.0218. See daily chart - taken out all topside resistance. Not good.
Looks like we are in for another bout of Risk On.
Mulling my USD/JPY short now. Likely I will leave it. Entire book is very much positioned Risk On so not critical to get rid of this anytime soon.
Question : If Risk On, what happens to Bunds/UST10yr spread? Any ideas?

Market in Risk On mode, which is good for core book.
Strong trends ongoing for open trades (eg long CAD, EUR, etc) so not the time to be reducing direct risks.
However, want to lock in some profits lest Risk On sees any kind of setback. Not difficult to envisage given Japan nuclear, Bahrain, Libya, peripheral EU credits, etc.
Hence, put on another hedge - short AUD/JPY @ 81.99. After a dramatic collapse on Tokyo radiation woes, this has now pulled back (equally dramatically) all the way to overhead resistance zone between 82-83.
As always, my hedges are "trading" (short term) positions vs non-trading (longer term) core.

Had planned to sell this on break of 82.57 (rising wedge).
Low today 81.57, made earlier in the day at height of risk aversion (repatriation talk) in midst of reaction to Tokyo earthquake.
Normally I would have piled into this on first break. Held back for weekly close because I was suffering on overall core book where everything was going wrong. Got "lucky".
This has now bounced and is now at 83.05 (see long tails on weekly and daily charts) ie no sell signal.
Thus, still in stalking mode. Likewise for cutting loss on overall Core Book (which is basically positioned Risk On).
Good illustration for importance of patience and waiting for signal to be solidly crystallized before acting.

Monthly : Nothing special.
Weekly : Possibly in a rising wedge (ie potentially bearish).
Trade : 1. Sell near top of wedge at 84.71 and/or 2. Sell downside break of lower edge of wedge at 82.57. [2 preferred].
Currently at 83.47 [AUD/USD 1.0138 and USD/JPY at 82.33].
eg If AUD/USD stays here and USD/JPY rallies to 83.50, voila - trade entry at top of wedge.

AUD/JPY above triangle top boundary at 78 now.
Stop loss order on short position triggered.
Badly managed trade, because this is where I should be trying to initiate a short instead of stopping out for money reasons.

Market in Risk On mode on stronger than expected ISM.
Took the opportunity to square off short USD/CAD hedge and initiated Risk Off trade proxy in AUD/JPY.
Too impatient to wait for top of triangle at around 78.
This replaces a part of the short S&Ps and long TYs that I squared off on Monday morning.
Brief recap : Reason for trade = Weekly triangle = continuation of down move.

Monthly : Big trend is down. Move from 55.05 to 88.07 was a retracement which is over.
Weekly : Big top formed. Now consolidating in a triangle for eventual continuation down.
Plan : 1. Try to sell near top of weekly triangle near to 78. Small window of opportunity this morning before damp squib of results of BOJ meeting were announced. Missed that. 2. Sell break of bottom of triangle around 74 (very significant line with 5 points of contact).
Last at 76.06.
This is a Risk Off trade ie highly correlated to almost everything else I have on board now. Nice chart pattern.

Triple top both invalidated at same time.
Weekly charts identical.
Fresh round of Risk On after improvement in NFP? (= Buy JPY crosses, Buy Base Metals, Not clear about US Equities. Weak JPY good for Nikkei).

Cut loss in short AUD/JPY position. Daily above 0.8281 starts a series of higher highs and higher lows. Not worth fighting this anymore.

Initial trade : Short at 82.23. Added on at 79.80 based on daily bear flag (red rectangle).
Busted out on upside post NFP = middle of road number, not so bad as to signify economic weakness, not so strong as to stroke accelerated Fed tightening fears = increased risk on.
Now at 81.97. Hanging on to entire position which is averaged in at 81.02. May just be able to ride this storm out yet.

This is actually better than the Copper trade. (Copper is single TL break sell signal).
Monthly : Likely a top has been made although no concrete sell signal yet.
Weekly : Unlike Copper, this has made a double top already so is more reliable as a trade signal. Current rally back to the UpTL is a good opportunity to establish fresh short.
Undecided whether to put anything on here. Already positioned for lower AUD/JPY in other forms.
Last 81.36. Daily showing weakness already. Perhaps if we see this close to 82.00 I will put some on. If not, so be it. My constant weakness is piling on too much risk when the going is good. Got to restrain myself.
If I had seen this yesterday, I would have done this instead of the copper trade.
Addendum 10:04 pm : Additional chart showing what a good risk proxy AUD/JPY is in recent months and indeed, since 2002. Even better than EUR/JPY whose correlation broke down throughout much of 2H09.
Addendum 12:30 am 19Feb10 : Sold AUD/JPY @ 82.23 [-AUD/+USD @ 0.8993; -USD/+JPY @ 91.44]

Updated charts from previous post "3 Favorite Charts".
All gone horribly wrong in a remarkably short period of time. Seriously not quite sure I know what I am doing anymore.
Unlike previous trades to which could be attributed to a "Rosenberg" bias (which I have completely purged), this latest batch is purely based on my own system.
Trading sizes been reduced to absolute minimal and even then none of my calls are right and timing could not be any worse if I tried.
Back to the drawing board.

[Post to document frustration with my own trading].
Established fresh short AUD/JPY last Friday on weekly UpTL break.
2 days later .. RBA rate hike (half anticipated) and BOJ QE (unexpected). AUD/JPY +1.3% today.
Just as well that given the bad run over the past few months, size of new trades have been much reduced. [Gartman : "Do more of that which is working, do less of that which is not"].
Still, chart looks like a sell, especially into this current rally.
The trick is to scale positions "optimally small" so that moves driven by unexpected events such as these become background noise and accepted as part and parcel of the game. Stay in trade until chart outlook changes.