As we step into the first trading week of October 2023, there are a few pivotal observations I’d like to share regarding the USD/JPY, commonly referred to as the “gopher”. This pair, a mainstay among the most traded currency pairs globally, continues to be influenced by the interest rate differentials between the Federal Reserve and the Bank of Japan.
Given the meticulous analysis of the current market structure on the M60 timeframe, a bullish disposition towards the USD/JPY emerges. A myriad of technical indicators and signals provide compelling evidence to support this stance. From the bullish alignment within the Acceleration Zone, showcased by the Medium Sea Green EMAs, to the blue hues of the Global Heiken Ashi Smoothed (HAS) candles, the momentum is undeniable. Moreover, with the Dynamic Adaptive ATR (Average True Range) Trailing Stop (DAATS) comfortably stationed below the candles, and the Global Time Bars for M60, M240, and M1440 all illuminating in blue, the scene is almost set for an auspicious trade.
However, a word of caution: the Global ADX (Average Directional Index) currently reads 18.76, falling slightly short of the desired 20 threshold. Also, the GMACD’s signals point towards a sideways movement with both main and major trends indicating a downward trajectory. Such discrepancies underscore the importance of a data-driven, systematic approach to trading, one that I’ve always advocated for.
Regarding risk management, it is essential to iterate that a maximum of 2% risk per trade is just an upper limit. After thorough research and analysis, I’ve surmised that an optimal risk per trade lies at a modest 0.2%. Employing this risk with the calculated initial stop loss allows for precise position sizing, ensuring a trade is never overleveraged. Such a prudent approach provides a bulwark against a series of potential drawdowns, ensuring the sustenance of one’s capital.
To shed some light on the nitty-gritty: for the upcoming trade, the initial stop loss has been gauged at 77.4 pips (or 774 points in the realm of a 5-digit broker). As the trade unfolds, trailing stops will be instrumental. Whether one opts for an aggressive, moderate, or conservative trailing stop, they must strike the delicate balance between protecting accrued profits and allowing room for potential price appreciation.
In conclusion, as the new trading week beckons, armed with this analysis and a judicious strategy, I’m optimistic about the potential opportunities the USD/JPY pair might present. Nonetheless, the world of forex is replete with uncertainties, and it’s paramount to approach every trade with discipline, diligence, and an unwavering commitment to sound risk management principles. Happy trading!
About the Author: Dr. Glen Brown is a distinguished figure in the world of finance and accounting, bringing over a quarter-century of seasoned expertise to the table. Serving as the President & CEO of both the Global Accountancy Institute, Inc. and Global Financial Engineering, Inc., he stands at the helm of entities that seamlessly integrate accountancy, finance, investments, trading, and technology. This amalgamation places them as paramount contenders in the realm of global multi-asset class professional proprietary trading.
Boasting a Doctor of Philosophy (Ph.D.) in Investments and Finance, Dr. Brown’s prowess isn’t limited to just one niche. His vast domains of proficiency encompass financial and management accounting, strategic management, finance, investments, and risk management. But Dr. Brown isn’t merely an executive powerhouse; he’s also an educator and innovator. He wears multiple hats: Chief Financial Engineer, Head of Trading & Investments, Chief Data Scientist, and Senior Lecturer, proving his undying commitment to both the pragmatic and theoretical aspects of finance.
Underlying his monumental achievements and leadership is a profound guiding philosophy: “We must consume ourselves in order to transform ourselves for our rebirth. We are blessed with subtlety, creative imaginations, and outstanding potential to attain spiritual enlightenment, transformation, and regeneration.” This ethos is the fuel behind Dr. Brown’s relentless quest for innovation, personal evolution, and his chase for unparalleled excellence in the financial sphere.
Dr. Glen Brown, through his exceptional experience twined with his distinct philosophical compass, continues to sculpt a culture of novelty and triumph at both Global Accountancy Institute, Inc. and Global Financial Engineering, Inc., presenting avant-garde answers to intricate financial conundrums.
Risk Disclaimer
The information provided in this document is for informational purposes only and should not be construed as investment advice, endorsement, or an offer or solicitation to buy or sell securities. The views and opinions expressed are based on the author’s analysis and interpretation of the market data available at the time of writing and are subject to change without notice.
Trading and investing in financial markets involve substantial risk. As such, you should carefully consider if trading or investing is suitable for you in light of your financial condition. Past performance is not indicative of future results, and no representation or warranty is made regarding the accuracy or completeness of the information provided.
Neither the author nor any affiliated party shall be liable for any direct, indirect, incidental, or consequential damages or losses arising out of or in connection with the use of this information. It is the responsibility of the reader to consult with a qualified professional regarding their individual financial situation.
Always remember that leverage can amplify both profits and losses, and you can lose more than your initial investment. Before making any trading or investment decisions, it is essential to understand the risks involved and seek advice from a licensed financial advisor if necessary.