The headline figure from the October Empire State Manufacturing Survey destroyed the consensus forecast, adding to the Japanese yen’s downward momentum. Following the news release, a scalp trade on the EUR/JPY currency pair yielded at least 55 pips [depending on exit strategy]. An hour after the New York open, the U.S. dollar resumed its recent soft tone, lifting the EUR/USD pair by some 90 pips.

Curt Wehrley
FX Bootcamp’s Quantitative Analyst

[Click on the graph above for a larger version]

One of your most important indicators for trading the Forex market is the clock. Knowing how to trade — using technical and fundamental analysis, managing risk, adopting a trader’s mindset — is critical, but your effectiveness as a trader is limited until you know when to trade. The above graph [click on the graph to view a larger version] is a visual answer to the question, “When does the EUR/JPY tend to move?”

The small black squares on the graph represent the average range (high minus low) for the 15-minute candle which opens at the time of day designated by the scale at the bottom of the graph. The gray bars, which stretch above and below the black squares, represent what statisticians refer to as the 95% confidence interval for the true mean of the range for candles at that time of day. For an example of how to interpret those gray bars, look to the one labeled “U.S. equity market open.” The average range of the 15-minute candle which opens at 13:30 GMT, based on EUR/JPY price data from June 15 through August 14, has been about 32 pips. Recent data suggests the range of that candle has been statistically different from the average range (24 pips) of the previous 15-minute candle, but not statistically different from the average range (31 pips) of the next 15-minute candle. In simpler terms, the EUR/JPY has recently seen a significant surge in volatility during the 15 minutes after the U.S. equity market open at 13:30 GMT, as compared to the volatility during the prior 15 minutes.

This graph does not in any way predict the direction that the EUR/JPY moves at given time. It only shows how big the 15-minute candles have tended to be at different times in the day.

Times shown at the bottom of the graph are GMT. To convert GMT to your local time, go here.

Curt Wehrley
FX Bootcamp’s Quantitative Analyst

Related post: EUR/JPY volatility by time of day in 1Q09

Rising risk appetite has been the dominant theme over much of the Q2 corporate earnings season. For the EUR/JPY currency pair, that has translated into an up day on 3 of every 4 trading days over the prior four weeks, and another up day was in the making at today’s New York open. The release of an awful US retail sales report changed that in a hurry. During the three hours after news, the yen managed to recoup its losses against the euro. A short trade setup, discussed some 30 minutes in advance, ultimately produced a profit of up to 100 pips for those traders who waited patiently for the post-news retracement on the euro yen.

Curt Wehrley
FX Bootcamp’s Quantitative Analyst

Today’s London session was kind of tacky other than the quite obvious British Pound weakness throughout the night. While the GBP/USD short paid nice dividends from the pre-London entry, in this video I focus more on a completely different trade on the EUR/JPY. However, we did use the GBP weakness in the form of EUR/GBP breaking resistance to give us our confirmation on the EUR/JPY long. This trade plan shows how price action will often respect previous area’s of resistance as support, in the form of role reversal. This entry was pretty much entirely predicated by this. Ultimately the trade only reached around a 40 pip profit, but it was a relatively painless wait for +15 or so, enough to protect break even, and enjoy a risk free trade.

FXBootcamp London Currency Coach-
Christian Stephens

Today’s London session was extremely tedious and difficult. Quite a few of us experienced +15-25 pip trades come back to stop us out at break even or just slightly in profit. Essentially we had zilch for follow through during these 3 hours. However, there was one highly probable area of support showing up for the Japanese Yen pairings around 4:30am NY time, right in the thick of London’s market. In this video I demonstrate how we substantiated this support on multiple time frames, which means more traders are seeing the same thing, and subsequently built a trade plan after some short term higher low confirmation, to long the Yen pairs. Specifically in this video, the Eur/Jpy. Now the risk on this trade was just around 11-13 pips, while the conservative first target was only 36-40 pips away around the 132 region, 3-1 reward vs. risk ratio which is not terrible. The steady higher low’s on this trade allowed the confidence to stay in the long and keep moving ones profit stop under these lows. Now while this trade was a successful 40 pip trade or so, as luck would have it some positive JP Morgan news came out during the London lunch, and whammo a 40 pip trade was 125 pip trade in a blink. Had this news gone against we simply would have been plucked 20 pips positive or so due to a lower low. So while we have absolutely no way to know if a pair is going to reverse or not, this trade setup shows you how one can enter into a high probability setup, and should go a long way in helping some of you to leave some profit on the table if charts warrant it.

What was a yucky London, ultimately was a great London lunch finish.

FXBootcamp London Currency Coach-
Christian Stephens

Risk appetite was in full swing today after Intel reported upbeat Q2 earnings and Q3 outlook just prior to today’s Sydney open. Although the EUR/JPY was mostly stalled during today’s London session, the pair extended its gains during the New York session. Traders who went long at the M4 pivot point at the US equity market open, then closed the trade when the currency pair reached its 4-hour 200 ema minutes prior to the London close, were rewarded with a profit exceeding 100 pips.

Curt Wehrley
FX Bootcamp’s Quantitative Analyst

Today’s New York trading session was devoid of major US news events, and lower than normal volatility in the currency markets was the rule. However, there were opportunities to profit. For example, a classic range trade on the EUR/JPY produced a 60-pip profit before today’s London close.

Curt Wehrley
FX Bootcamp’s Quantitative Analyst

Record lows in US housing starts prompted a brief derailing of the recent increase in risk appetite seen in the currency markets. News scalp trades on the EUR/JPY and GBP/JPY produced 30 pips and 50 pips, respectively.

Curt Wehrley
FX Bootcamp’s Quantitative Analyst

Today’s New York session traders certainly weren’t given a cold shoulder by the currency markets. The greater part of a right shoulder – the third and final piece of a head and shoulders pattern – was formed on the charts for the EUR/JPY currency pair during today’s Asian and European sessions. The subsequent drop on the euro yen finished the shoulder and completed an M3 to M1 move. Up to 200 pips in profit was the reward for traders who took the shot.

Curt Wehrley
FX Bootcamp’s Quantitative Analyst

During the previous two London sessions, and all of the currency market hours in between, “sell the yen” was the ticket for traders. Although the first quarter US GDP headline figure was worse than forecast, the underlying data left the door open for New York traders to take up where London left off. A 110-pip long trade on the EUR/JPY followed a bounce from support at the opening bell for American stock exchanges.

Curt Wehrley
FX Bootcamp’s Quantitative Analyst