Greek Tragedy – Currency Markets Volatile

We are mostly trading currencies these days. The reason is that the currency markets are truly huge and the manipulations are not as hard to avoid. It is sad, but alas, true, that most markets are manipulated these days. We little guys just need to understand that and don’t get caught with our pants down in a manipulative move. Of all markets the currencies seem to handle manipulation the best, at least from my perspective.

Originally the currency markets were conceived as a “beauty contest.” Take two currencies, and buy the “prettiest’ while selling the other. Things have changed a bit – today it’s more of an “ugliest contest.” You take two currencies and sell the ugliest. Same concept – just reverse analysis.

And we all know about the emotional part of trading. Markets move on emotion. Take this week for example. Greece is going to default – no Greece is not going to default. Greece is going to leave the Euro – no Greece does not want to leave the Euro. It goes on ad nauseum.

In spite of it all, last evening I found a good potential trade in the USDJPY. What the hell Greece has to do with the dollar-yen pair is beyond me, but the markets were very volatile. And when the markets get volatile, they almost always over do it.

Now when the dollar-yen pair, USDJPY, moves down, it catches my attention. Why? Well, the dollar is not a pretty currency, in my opinion. BUT, compared to the Japanese yen it looks pretty good. As ugly as the dollar may be it makes the yen look like a real hag. So I go long the dollar, when there has been a big move to the downside – like we have seen lately.

Figure 1 USDJPY 4000 Ticks/Bar 7-1-15

Yesterday evening I bought the USDJPY pair at 122.487, set a sell/stop at 122.350 and got a good nights sleep. This morning, just after 9 AM I closed the trade at 123.216 for a nice profit of 729 pips. See Figure 1.

By 10:30 the market had retreated all the way back to 122.860 (that’s about 490 pips) – remember the 50% retracement rule?

I had a support line at 122.872 and would have loved to long again near there, but a Dr.s appointment at noon kept me out of the market for the rest of the day.

My trading method is called “Trading between the lines (TBL).” Without my method this trade would have been easy to spot so let’s just take a look at what TBL is all about.

Figure 2 USDJPY 4000 Ticks/Bar 7-1-15

The chart in Figure 2 above shows about two weeks of data for the USDJPY pair. Each bar on the chart represents 4000 ticks and the white bars are the first bar of the day.

The horizontal lines are placed there by my system of trading and are available for at least a week at a time. Looking at this chart from left to right it should be easy to see how price oscillates up and down and generally turns in the area of one of those horizontal lines. Those lines are a roadmap to guide my trading.

Learn how to create those lines by getting my book, “See the Music of the Market.


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See the Music of the Market

The unique trading method that is Trading Between the Lines