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Thursday, January 12, 2017

USDJPY & “FINGERPRINTS”

“Rainbow of possibilities & opportunities in USDJPY.”


Ok, I got everything figured out … it wasn’t the Ruskies after all … my bad for being a “putz” … shouldn’t happen again, but hey, I’m a trader so anything is possible.

I want to focus today’s attention on trading “fingerprints”; specifically, those patterns in USDJPY that happen so often you need to be aware of them no matter which volatility algorithm you use to trade. Just like many years ago, when I traded Yen & Swiss franc futures, the #1 “fingerprint” of USDJPY is its propensity to either double bottom or double top before changing short term trend. If you scroll back on the M1 or the M5, you can clearly see it.

This sets interesting, very short term scenarios, for either failing or busting through to new levels; from my perspective, especially using the scalper’s algorithm, each “success” in catapulting to a new level [short or long side] sees the market most times “spiking” on the M1, which is a “red flag” for liquidation coming up just ahead. Similarly, a failure almost always sees me protect my very short term profit, and it’s on to the next trade. This repeated pattern of consistent double tops & double bottoms in price on the M1 happens each and every day, and is something I most definitely watch and profit from as the markets fluctuate throughout the day.


The other prominent “fingerprint” in USDJPY [and also in the other U.S. dollar pairs like USDCAD, USDCHF, GBPUSD& EURUSD], and which is “built into” the algorithm, is the consistent & predictable 3 to usually about 5 M1 candlesticks in a row that go counter trend to a moving market, and which can be traded successfully if you wait for them. The manual has the signals; no need for me to be redundant here.

What you will find over the course of the day, is that if all 3 algorithm lines have positive slope [i.e. rising from left to right], and you get 3, 4, or maybe even 5 M1 red down candlesticks, when the flowing candlestick turns green you can buy. On the reverse side, if all 3 algorithm lines have negative slope [i.e. going down from left to right], and you get 3, 4, or maybe even 5 M1 green up candlesticks, when the flowing candlestick turns red you can sell.

Take any day, and unless there is a tight range or unusual “chop” going on [which is by definition low intraday volatility], what you will see is about a 70/30 or 80/20 win/loss ratio; and if you use the “free trade” concept for winners, what started out as a scalp go very well turn into a 20 – 30+ PIP winner. And what I mean by “free trade” is simply choosing an exit point that allows you some room from a very quick PIP winner.

These last couple of days, gold has started to trade better, but price action is still somewhat “disjointed” in terms of the bid/offer from the LP bank. At the moment, gold is inverse correlating pretty well with USDJPY; a couple of times in these last days USDJPY has gotten pretty wild as bids and offers jump 5-10 PIPS at a whack; however, gold has an approximate 150% - 200% higher markup to trade than USDJPY. Even with a fast moving market, USDJPY is still the better trade with a whole lot less slippage than gold.

Even with today’s somewhat subdued trading action starting in New York this morning in gold & USDJPY and continuing as I write, don’t think for a second volatility is going away; with Trump’s inauguration next week and his first 100 days ahead, wild and wooly times are ahead in gold & USDJPY. Perfect time to get acquainted with either the regular volatility algorithm or the scalper’s algorithm and start making money.

It’s that time of day … beach beckons … I’m soooo outta here … until tomorrow mi amigos.

Have a great day everybody!
-vegas
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