Follow up on the Dow and Yen pairs
I have mentioned before in this blog about watching the dow chart in order to trade the GBPJPY and the EURJPY currency pairs. This method works great, it really shows how the market, US stock market and the forex market, is feeling about risk aversion at any given time. As soon as I turn on my computer at 5am NYT, I am checking the dow futures chart. This gives me an idea of where the yens pairs are going: up or down. If dow futures up, then yen pairs most likely will go up. Now, today was the interest rate decision, the Fed again cut the rate by .25%. All morning long the dow was heading up and I continued to buy GBPJPY for about +110 pips. I closed my trades prior to the news coming out, too risky. After the news, the dow came back to close below 0 for the day. I am thinking that this was partly due to profit taking as this was the end of the month, and amazingly the US stock market has made a nice retrace back up for the past month and a half. So now I am wondering: will the Dow continue up, marking its low in March as THE LOW, or will the market consolidate or possibly head back down? Of course, I do not care that much which way it goes, as a forex trader, but it helps to have an overview to put some direction to the yen pairs. Lately I have been trading the yen pairs exclusively, partly due to being able to use the dow futures as an added indicator. Let’s see how May pans out. Good trading.