The fall in USD/JPY (96.70 at time of writing) shows no sign of letting up and EUR/JPY has fallen to 133.30, which was a series of previous highs which should now offer some minor support. Below here, and we look set for a big fall to the major trendline at 130.65.

Dealers report heavy selling of USD/JPY which the bids at 97.50 have not quite been able to soak up, 42 the low so far. Corporate offers have been lowered so expect stiff resistance at 98.10/20 on any rally.

Monday, June 15th - Eurozone employment declined by the most on record in the first quarter of 2009...

There were said to be some big option barriers at this level last week and I’m not sure whether they are still active or not but I am hearing of large stops above 99.00. Not much in the way of decent support in USD/JPY until around 97.40. There are not a lot of reasons to be long JPY in the current environment apart from risk-aversion so these stops may get triggered sooner rather than later.

Important technical support at .8490 held firm overnight despite a marginal break below. Stubborn longs should now consider reducing or scrapping their positions on a clean break below .8475 as there is daylight until .8200/50 and market chatter is that there are some big stops on the .84 handle. That said, there is obviously some decent buying interest around so we may be seeing a pause in the downtrend.

Russia has full confidence in the dollar and there is no immediate plans to switch to a new reserve currency, says Russian Finance Minister Alexei Kudrin.

A day after his warm endorsement of US Treasuries. Japanese finance minister Yosano is meeting with Treasury Secretary Geithner. So far the only headline is that they’ve agreed on the need for stiff sanctions on North Korea. Any further comments are likely to be dollar bullish as Yosano is unlikely to change his tune this quickly. USD/JPY trades at 98.25. Dealers note good US buying of EUR/USD on the dip below 1.4000. It trades now at 1.4020 in very thin conditions.

Finally, hedge funds had a good month! According to Eurekahedge reports, May is the “best month in nine years.”  The Singapore-based data provider’s Eurekahedge showed that Hedge Fund Index rose 5.2% last month, based on preliminary figures, its best since February of 2000. The index is now up 9.2% on the year. Asian hedge funds were the best performers in May, rising 9%, followed by emerging markets funds a 8.5%, a record for the strategy.  Event-driven funds also did well, with a 7.2% return in May, as did long/short equity, which jumped 6.7%. There is more good news for hedge funds. According to Eureka, hedge funds actually received new money in May, the first time in 10 months that the industry has seen a net inflow.  Total $3.2 billion came into the industry last month against $1.7 billion in redemptions.

Hi Darrell,

Sorry I was not able to get back to you yesterday, it was just one of those days!

<really enjoying what looks to be an unbeatable way of trading!>

Our trading is solid :) but not unbeatable. Or rather, not easy. Because of our position sizing and risk/reward always being in our favor (the least it is 2:1 on a given trade) our losses are always going to be smaller than our profits which means we recover from our draw downs quicker than they happen.

Because of our position size as well we can withstand a string of losses and have a very minimal draw down (if you are not using the correct position size start NOW!) and because we let portions of our profits run our gains from a signal pair can make up for losses from several pairs on a given trade. Sometimes newer members to the group wonder how we can have a target price of a few hundred pips thinking that is way too much, little do they realize that 1st order is us taking profits quickly and we are letting the 2nd trade order go much further if the market allows.

<Got so say, i really appreciate the amount of hard work you must have put in over the years. It's nice to finally meet a genuine good guy! I hope I can repay you one day.>

Thank you for that. Yesterday Greg told me that from the way I take care of the group that I am going to be a good father. Hearing that type of stuff from you all makes all the hard work worthwhile for me. Trading Forex is a passion so the hard work comes easy and the group brings meaning through the friendships and community which is rewarding.

<I'm still just a little confused on one aspect of the system. I know how we adjust the SL to lock in profits and understand that aspect perfectly, just wondering if I'm missing something.

Once we have TP on the first trade and adjust the SL on the second, at what point do we take profit on the final half of the trade? If the 2nd trade progresses by say 2000 pips do we keep moving the SL to continue to lock in profits or just let it ride?>

We do not take profits  on the final half (order 2) until it is stopped out or we receive a new ZLC. We simply do not have any way of knowing when he trend will end in order to take those profits and it is safe to assume that most traders would be taken profits after just several hundred pip well before the trend has become close to ending. The current AUD/USD drop in positions are a good way to illustrate this.

It is only the most recent trade (4th on the chart above) with the stop at break even (entry) which if stopped out is not going to be taking additional profits however the prior three trades have all systematically continued to lock in further gains as the market trend continued and at technical sound points (areas where the market resumed out of a pullback). I am sure there could be a better way for us to handle this and maximize the full potential of our gains but so far this is the best I have come up with.

<I know we exit when we have a ZLC in the other direction but surely we will have lost most of the profits by then?>

The ZLC is always an exit since we can only be long when it is positive and short when it is negative as the true trend is giving us the direction of the trend and we do not trade against the trend. However, it is rare we have an exit from a ZLC on a Drop In trade without being stopped out first from a stop that has been moved to lock in profits.

Much peace, Jordan

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Cable is at 1.6410, up from a North American close Wednesday around 1.6350. The pairing is benefitting from a generally weaker greenback, strong risk appetite, and hope in certain quarters that the UK recession may have ended in March. On the last part, I hope they’re right, but am certainly not convinced. Technical supports 1.6395.00 and 1.6345/50, resistances at 1.6430/35 and 1.6450/55.

Did you watch Part 1 of the brand new video Forex training I posted about earlier that reveals 30+ year trading veteran Bill Poulos’s recent Forex discovery? It’s already shaking things up and breaking old paradigms in the Forex trading community. See what one trader had to say: “I have been trading the Forex markets for 3 years, and I can honestly say this is probably one of the most interesting videos I have seen. Bill, you have a gift of being able to explain a method that every one can understand, look forward to your next video…” -but wait until you see the next video… * PART 2 is ready now! It’s called… * “Flexible Forex” F.R.E.E.D.O.M. In Action See it here: http://www.myforexdiscovery.com/y/?i=773362&u=2&l=f60 In the first video, you saw you a high level overview of how all the turmoil in the world right now is creating possibly the best profit potential we’ve ever seen in the Forex markets… -and then you saw the flexible method Bill discovered that lets you trade as little or as much as you want… WHENEVER you want. In Part 2, he “zooms in” and shows you, step-by-step, how he quickly and easily spots trade setups… * In all 6 major Forex pairs * In any timeframe Part of his discovery is the completely uncommon way he uses 4 indicators… I’m not aware of anyone using them this way, and that’s why it’s so powerful. You’ll also learn: * Why you want to place your stop orders where you DON’T expect the market to go… * How to get into a “F.R.E.E. trade” situation ASAP with all your Forex trades… * How to handle losing trades like a pro… * The kind of market you MUST avoid at all costs… * His “super simple” risk management rules that even an 8th grader could understand and was inspired by EINSTEIN… * A “hands-on” overview of some excellent broker-supplied charting and trading software that makes Forex trading easier than ever… * …and a TON more. Go here to see this video now: http://www.myforexdiscovery.com/y/?i=773362&u=2&l=f60 Make sure you take notes on these videos, because he will likely be pulling them offline next week. Good Trading, p.s. If you missed Part 1, you can see it here: http://www.myforexdiscovery.com/y/?i=773362&u=2&l=f59

China remains a net importer of steel in May, importing 53.46 million tonnes of iron ore, slightly down from April’s record 57 mio tonnes. This markes the 3rd month in a row that imports have exceeded outflows for China, a country that has been a net steel exporter since 2005.

EUR/USD continues its slide, nearing 1.3930, the 61.8% rtetracement of the 1.3800/1.4145 rally. A break suggests price could dip back to the key support level at 1.3800.

Oil is giving back some of its gains after proving more resilient than the other commodity markets this afternoon. Crude is at 70.60 at writing.

BHP Billiton has agreed to a 58% price cut for the coal it sells to major steel makers. This is pretty much in line with the expected cut of 60% analysts had forecast. The deal signals a looming price cut in other main steel making ingredient, Iron ore. The 58% cut in price equates to a benchmark of $128 per tonne, down from $300 per tonne.

Sources report talk of sell orders lying in wait up at 1.3970/80 in EUR/USD.

Both the Kospi and the Australian All Ords were up almost 1% but have now fallen into negative territory. The Nikkei is down 0.25% and Taiwan is down almost 6% in 2 days. Add in to the mix some selling flows out of Tokyo in EUR/JPY and the market has been caught a bit by surprise. As I said earlier in my EUR/JPY technical analysis, there is a mild uptrend and technical stops are now to be expected below 135.95.

This was the 13th straight month of falls.

2-year notes yielded about 95 bp before the employment report last week. They yield an astounding 1.41% this afternoon. The back up in the short-end of the yield curve should help insulate the dollar in the near-term. USD/JPY is finding support on dips to the 98.20 area.