I was very reluctant to close my Yen pair longs. It is just so obvious that UJ will break 100 one day. But I have to admit that the market is saying that day is not today, or at least not yet. Things may still turn around with the US GDP data later today. The market loves to inflict the maximum punishment on the greatest number of participants, so from that perspective one could foresee that the next move in UJ and EJ will be lower. Although I was holding the longs with conviction, this time I applied the experience of past instances and let the market action override my ‘opinion’. The price action in EURJPY is clearly s-t bearish. My system indicated a short earlier today at 129.25. In the USDJPY the system indicated a short at 98.80. I took the UJ short and took the EJ short after a bit of a wait, to see if UJ also turns short.
I must admit that for a few minutes I was sorely tempted to hedge, since I am sure that the market will turn around some day. But the lessons of the past few debacles were fresh: December (Japanese elections), March (Italian elections) and late March (Cyprus). It is NEVER advantageous to deny the market reality and try to avoid it by hedging. Always better to go with the flow. I therefore took the hit and have reversed my positions.
As I write this UJ has broken through previous support at 98.55 and EJ is testing 128.00 level again. Based on past market behaviour I expect these pairs will go lower still. The hounds have smelled blood and they will now aim for the bigger stops that are below 98.00 and below 127.80.
I must say, it feels good to be on the right side of the market, as opposed to stressing when I am holding the opposite position!