Month 7, Day 135 and 136 - 36-month forex trading challenge - new strategy.

It's been a very interesting couple of days in the forex market and not for good reason. Rising tension between Iran and the USA sent bids into JPY and CAD at the end of last week, and offers into AUD and NZD.

JPY is regarded as a safe haven in times of trouble, and concerns over a possible reduction in the supply of oil benefited CAD.

Today (Monday), while the tension remains, bids are back in AUD and NZD possibly on the back of a Chinese trade delegation scheduled to visit Washington on 13 January to agree phase one of a trade deal.

It's a real mixed bag, which makes trading on the news very difficult indeed. This is one of the reasons I don't trade the news. Instead, I observe price action, as at the end of the day, price is the only truth. The consensus of opinion from all of the participants all over the world are processed to arrive at one price.

On the 10am close I entered a long position in AUDJPY (T29L) using a new strategy I'm calling BACKBONE.

Price has traded down to the 200 SMA on the 240 chart above, which corresponds to the rising daily trend line. Price rejected the 200 SMA on an S candle signal, and a buy signal was also in place from my MAG. 7 signal (AUDUSD is bullish and USDJPY is bullish, which means a bullish consensus for AUDJPY).

[Note, there are two entry lines on the chart, as I made a mistake calculating risk and entered too small a position. I corrected this by adding a second position to bring my risk on the trade to 2% of opening capital.]

What's also interesting is the situation on the daily chart (see below).

Bids at the daily 200 SMA are in place and the 50 SMA is crossing above the 200 SMA. All in all, this looks to be a high-probability place to buy, and I'm in.

If I listened only to the news I might have been tempted to pass on this trade. JPY as a safe haven could still prove popular with traders, which could have generated a bias to the short side. As I said above, price is the only truth and I've entered a long position (T29L). If things go against me I can always get out, but for the moment this trade is in profit.

It's been a busy morning and I'm also short on USDCHF (T74S).

A YX signal showed up on the 240 chart and with all SMA signals (weekly, daily and 240) pointing south, and with IG sentiment showing that over 70% of retail traders are long, this added further motivation to my entry signal to get short.

This trade is not yet in profit, but I have my exit rules to follow if things don't begin to go my way soon.

It would be nice to get a good start to the year. I'm still very motivated and looking forward to all of the trading opportunities 2020 will present.

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[Please note, the information presented is general educational material and does not constitute trading advice.
Trading foreign exchange (forex) on margin carries a high level of risk and may not be suitable for you or your circumstances.
Before trading forex you should investigate all of the risks, including the possibility that you could lose more than your initial investment.
It’s important to consider your investment objectives, level of experience and risk appetite. If in doubt seek advice from an independent financial advisor.]