It looks like the flight to safety trade is in full effect today, with the Japanese Yen crosses and US Dollar leading the way, especially against the commodity currencies (AUD, CAD, and NZD). The US equity markets are down today but hopes are that the “September Effect” is not upon the equities markets. The September Effect says that historically this month has been the worst month for US stocks.
Because of the correlations between the equities and currency markets, this could mean gains for the Japanese Yen and US Dollar. It looks like AUD/USD was not able to close above resistance at .845 and we could be in for a double-top reversal at that level.
So keep your eyes on the US stock market, because if the September Effect does take hold, then it could be a wild ride for the commodity currencies.
none
Just wanted to post a quick update on this trade that triggered yesterday. We actually closed out a portion at 1.6175, for a 175 pip gain. This pair is the biggest loser of the day so far (-1.04%), so it appears that other traders may have recognized the H&S pattern as well. The reason we closed a portion was because of the doji that occurred on the 5-minute chart, and the stochastic cross that occurred as well. See chart (click to enlarge)
While this trade started out as a pattern on the daily chart, we chose to drop down to the 5-minute chart to manage the trade as our first profit target was hit. Our trailing stop for the rest of the position is now at 1.6275, which is just above the most recent area of resistance, and also represents a 75 pip gain. So basically this is now a risk free trade!
To learn how you can spot trades such as this one, check out our inexpensive currency course!
To get started with a live, free practice account, click here.
none
