Trade of the week: long USD/JPY
With USD/JPY looking to have resumed its ascent, we would like to go long the cross with a stop loss below the early November low at ¥151.30 and an upside target marginally below the ¥160.00 mark.
(Partial video transcript)
Previous trading outcomes
Axel Rudolph: Hello and welcome to this week's "Trade of the week" on Monday the 11th of November, 2024. About a month ago we went short cotton futures and you can see here, New York cotton futures prices did actually dip down to 71.23. But our target area is much lower still. So that trade is still open. We have the same stop loss as before above these highs here, that were made back in September, for example.
And what we also did is about a couple of weeks ago, we went, basically long Arabica coffee futures and, it looks now as if we've made quite a nice profit on this one. But unfortunately, we did just get stopped out because we had our stop just modestly below this low here from the 7th of October, at 240.70.
Now, had it just been an intraday move below that low, then we wouldn't have been stopped out. But because it was also close below that low, it stopped us out, which is unfortunate because after that we had this nice rally which we anticipated. But these things happen and you just have to manage your risk. So it's far more important to do that than wanting to always get the big winner and therefore not using a stop loss because in case it goes horribly wrong, you can lose, obviously, a huge amount of money if you don't have a stop loss in place. So I'd rather lose 2% of our capital on these trades when they go wrong, but make 3 or 4 or 5% when they go right.
And then, last week, we looked at crude oil. And here on the front month WTI crude oil futures contract, we went short. And we are still short. And you can see the price of crude oil continues to fall and is heading down towards our target area, around the 67 zone here. So that one, we can now lower our stop loss to our entry level, making it theoretically a free trade. So the entry level was at 71.50.
This week's trading opportunity
And then this brings me to this week's "Trade of the week". And what I would like to do is to jump on the bandwagon here. And that is a USD/JPY long trade, because you can see here we just dipped down slightly on Friday and are still above the 200-day simple moving average (SMA). So for me, we're still in an uptrend as long as we stay above the 5th of November lows here. And therefore I'd like to go long USD/JPY, thinking the US dollar is going to rally further against the Japanese yen.
This week's "Trade of the week" is to go long USD/JPY at around current levels, with a stop loss at ¥151.30 and an upside target just below the psychological ¥160.00 mark.
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