Today the Japanese Yen futures were on the Sell Short day of the Taylor Trading cycle. Following yesterday’s rally into a new high for 2017, the Yen was a market to keep an eye on today for a trade opportunity.
The Yen has seen a big rally this month. This week, the Yen had a breakout setup on Monday, which led to the two day breakout rally on Tuesday and Wednesday. The Wednesday rally was especially noteworthy as it pushed the Yen up above the previous yearly high. This two day rally made today the Sell Short day of the Taylor Trading cycle and the close near the session high is what we normally look for on the day before a Sell Short day.
On a Taylor Trading SS day we anticipate the market will show a failed rally above the previous day high (our “reference price”) and we look to go short when the market drops back under the reference price. For this trade we would use the Wednesday high of 9064 as our reference price.
The Yen spent much of the night in the lower 90 area, trading around last night’s session open. As New York trading got going, the Yen moved higher along with other “risk off” assets. This rally peaked out around 8:15 AM as the stock market open approached. By the time stocks opened, the Yen fell back under the Wednesday high, triggering our short entry.
The Yen worked lower over the morning as stocks and other risk on assets rose. This selloff stopped at 9014, above the previous 2017 high and the overnight low of 8995, which would have been target / reference prices for the selloff.
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