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Daily Observations: August 28, 2013

Daily Observations: August 28, 2013

Christopher Vecchio, CFA, Senior Strategist

Current Positions:

- Long USDJPY from net 97.95, Stop at 96.90, Target 1 at 98.20, Target 2 at 99.20, Target 3 at 99.80

Closed Positions:

- Closed Short GBPUSD (1/2) from 1.5535 at 1.5430 (Target 2) for +105-pips

- Stopped Short GBPUSD (1/2) from 1.5535 at 1.5490 (Target 1) for +40-pips

Net gain on Short GBPUSD from 1.5535 is +72.5-pips.

The past two days have been nothing short of exciting, and both positive and negative developments have transpired on the trading side for me. Let's start with the negative.

Negative: I couldn't have been more wrong about the Yen to start the week. I was looking to go long both AUDJPY and USDJPY - both were crushed yesterday. That said, the data that I'm looking for to stoke another decline in the JPY has yet to hit the wires. The July CPI report arrives on Thursday.

Positive: Proper risk-management and identification of entry levels. The JPY soared yesterday but my long entry orders in USDJPY were far enough beneath price (at the time) that I'm only sitting ~35-pips out (at the time this report was written).

Similarly, by waiting for AUDJPY to breach intraday swing highs (was looking to get long at 89.30), I wasn't sucked into a losing position (the market topped at 89.27). Had I been long, I would have hit my stop almost immediately and would have been out -70-pips.

Lastly, the GBPUSD short was triggered on Monday and was exited today for a gain of +72.5-pips. The Carney commentary provoked the final push into my second target at 1.5430, triggering a close and moving up my stop to my previous target (1.5490). Accordingly, on the rebound higher, the remaining half of the trade was stopped out.

Overall, I'm in the same boat with my colleauge David Song - US Dollar strength could be developing amid a technical breakout.

Are you new to FX or curious about your trading IQ?

I also host a weekly Live Trading Q&A in DailyFX Plus, on Tuesdays at 06:00 EDT / 10:00 GMT, in which I delve deeper into my positions and thought processes behind my analyses.

--- Written by Christopher Vecchio, Currency Analyst

To contact Christopher Vecchio, e-mail

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.