by Rasool Cunningham
Trading Editor Philadelphia, PA (DYDD)
One of the hardest things for a trader to learn is patience. I’ve grappled with it for a long time. I still grapple with it, but with every successful patient trade it get’s a little easier. Fed day price action is some of the most volatile price action you’ll come across and patience is even that much more important. Here I’ll point out the action that nabbed me 70 pips out of $USDJPY yesterday.
The whole thing is laid out on a five minute $USDJPY chart below. Check it out:
This same lesson can be seen across the markets from currencies, to stocks, to bonds. If you can control yourself Fed day can be one of the most rewarding days for a trader. This same set up lead me to buy $AUDJPY with a slightly different fundamental story as the Aussies aren’t printing much, but their interest rates make it a good trade to sell Yen for Aussie Dollars.
So many times the initial move off of an announcement is not the true move the market will make. Along with this technical analysis is some simple fundamental analysis. The Fed announce a QE taper. The Bank of Japan is in the midst of one of it’s biggest QE’s ever, so, one would look for weakness in the Yen against the dollar as the Fed starts to print less. This is what happened, but it didn’t have to go down like this. For whatever reason the opposite, or sideways action could have happened, so it made sense to wait and see, and let price tell you what to do.
Thanks for reading, and good luck in your trading, and happy hunting traders!