Monday, January 7, 2008
The End of the YEN Carry Trade?
Could the YCT be over? I think so. Why you ask? Here's my answer. Volumes on the forex for the USD/YEN have decreased a lot on the most recent dollar decline-yen rise. Of course I can't see all forex exchanges volume but only the one I use to trade currencies. Volume on forex is not a real dependable indicator do to that fact. Somehow, somewhere and sometime, somebody needs to get smart and consolidate the forex market. Like maybe the http://www.phlx.com/. I use a 4 hour candle stick chart for swing trades in the forex and my most recent trade went like this. On 12/27/2007 I had a sell set up on a candle that hit a high of 114.65 and a low of 113.84. My trading program sold @ 113.77 on the next candle. The trade was stopped out at 108.98 on 01/06/2008 for a 479 PIP profit. The dollar is up as of 1 am CST which should help the stock market later today if this strength should continue overnight.
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I hope it will unwound for good, but it hasn't yet. I'm sick of watching my indicator dictate where the market goes, and this past few weeks, it had matched up perfectly. YCT goes above 109, market has a chance. YCT goes below 109, dead meat on a stick.
The actual unwinding of the YCT started when the USD/YEN dropped below 114. I think this was the third and final leg of the trade.
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