In addition to identifying cycles within my tradeable, I have found that once breakouts occur from consolidation somewhere around 50% give or take are false and either return to build value or reverse and move directionally the opposite way. Maybe your experience is differernt, but the magical people wait to catch you and squeeze you tightly. So another issue to consider when planning.
MACRO-VIEW EURUSD The EURUSD is not at a crossroads IMO. Stucturally, (whether you agree or not) price is seeking 1.6500. A long term study of value on EURO indicates to me that it was really stretched around 1.5500. The ground swell behind being long the EURO is so strong, who knows. What I think will happen from here is either we will continue up to 1.6500 or move back down to 1.35. In either case, I will implement a plan to range trade long term between 1.65 and 1.35. Moves within this structural zone can occur very quickly. I am always ready but will not trade the EURO short until 1.65 is acheived or we move below 1.35. I have not been trading it lately because I did not establish longs on the move through 1.35. Reminds me of Tulip Bulbs. Another way to handle it for me, is to see if it checks back to 1.5000 before hitting 1.6500. If this occurs, I may use the 1.50 as a sort of pivot with little tolerance for being wrong. I would set shorts back down to 1.35 or longs from here up to 1.65. Thing is, something is going to give in the US equity markets. Personally, I think we are headed up for new highs before the end of the year possibly and money will begin to flow to the USD despite interest rate issues. I know this view is way out there, but it is what I am trading this year. Options on the S&P and things like that. What do you think about the EURUSD?
MACRO-VIEW USDJPY I think the Yen is very tradeable RIGHT NOW. It is really a rare opportunity to get to postion properly at 100. You may take some small losses getting your directional bias in place, but it will be well worth it if you can remain disciplined. As of RIGHT NOW, the USDJPY is trading 99.60. From the 100 level, we will move up to 115 or move down to 85. 1500 Ticks in IMO, can be had if you are disciplined. I have postioned long under 100, in anticipation of a recapture of the 100 level and a move up to test the other side. I will cut my losses quickly if the move down continues which is the "consensus view" I would imagine. I don't really know that for sure though. Don't care. This type of trading is difficult, but rewarding. You can always manage the moves using daily action to help lock in profit. In any case, long term trading can be rewarding but very difficult. What makes currencies move directionally? I say, no one has a clue, it is inherent in our mindset and works subconsciously. An unbelievable opportunity to trade the YEN though.
Let's say, just for fun now, that we are long another 20 contracts of Yen. We will start right now, at 99.71. 98.25 will be our first risk threshold. We are looking for a re-capture of value at 100+ level and hope it holds, for a move onto 115. We know we have a very strong possiblility of getting stopped on this one, but the risk/reward is okay long term. Long 20 Contracts of USDJPY @99.71.
I trade both futures and the cash market. If I am short term trading, I will often trade futures. In fact, I prefer trading futures on CME. My broker is RJ O'Brien for futures and options. For longer term trading I trade the cash market most of the time so I do not have to worry about rolling over from/to forward month contract . For this, I use IB.