We are at the end of the trading year and unusually we have two trades open, we will be letting them both run over the holiday. They are both in substantial profit and have a positive role so we are paid to hold them. I wrote in the economics blog about GBPUSD you can read about it there, the other existing trade is long USDNOK, we bought 17th September at 8.2 and have been holding ever since, the target remains 8.9, of course we may be letting all of this profit go but that is the risk of this longer term trading. We still see the USdollar in an uptrend and can see no reason that it should end, the NOK is heavily dependent on the price of Oil and oil appears in a strong down trend. The watch list is prtetty empty at the moment with no new trades close at the moment, USDJPY which you can read about below is the only thing we are watching closely for January.
The US dollar has maintained its impressive rise against all currencies, it has lagged somewhat against the yen and this presents a possible opportunity. I have the pair in a clear uptrend from October 2011 with a low at 75.6, since then we have had an impulsive wave higher to 125.8 in June 2015 followed by a significant pullback that appears to have unfolded in 3 waves truncating well above the yellow target box. The pullback did retrace more than 50% of the move higher so it was of a good size, the black trendline defining the pullback was broken in July and retested several times suggesting it is a real break and the pullback is complete. From here we can expect another five wave advance to new highs. I will be looking to buy somewhere between 111 and 110 should it get there.
Economically the trade looks sound, the US economy continues to perform well and the Geo political concerns have never really turned into anything major. The markets are down at the moment and this USDJPY needs them to recover if it is to make significant ground as the pair is highly correlated with the stockmarkets. The green box would be my buying area with a stop below the black trendline assuming a retest will hold.
The trade offers excellent risk reward, has positive roll and could last up to 9 months