Swing Trading and Market Timing Knowledgebase

By: John Crane, swing trading guru

Japanese Yen Trade

Figure # 6.19 - May 13 (G) was not only the swing trade date projected from the (E) to (F) Reaction swing, it was also a Breakout bar from the new Reaction swing that had just formed at the end of the cycle. This was the first reaction after the Swing Trading Strategy TC pattern, therefore the trend was reaching maturity and susceptible to a swing pattern failure.

Day one – May 13 – Breakout bar – The June Japanese yen dropped to a new contract low of .8731, after the two-day rally failed to continue. The close of .8740 was below the previous pivot low.
Day two – May 14 - The Japanese yen traded to a new low of .8712, but managed to close at .8761. The closing price was higher than the opening price and above the previous day’s closing price.
Day three – May 17 - An early session rally failed to penetrate the pivot high and pulled back at the close. The day finished below the previous day’s closing price, but remained above the contract low.
Day four – May 19 – So far the futures market had not given a clear signal of the next direction. After the third day, I would typically move the protective stop to just above the high of day three. That would put the protective stop at .8855. If the trend was going to continue lower it should continue lower from here.
Day five – May 19 - The Yen traded above the high of day three. This price action was enough to end any hopes of a continuation of the downward trend and corroborated the trend shift from bearish to bullish.

The futures market timing continued to rally over the next several days with only one slight pullback. As usual, the failed swing pattern was followed by a strong price move in the opposite direction.

japanese yen trade chart
Figure # 6.19 – June 2004 Japanese yen

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**THE RISK OF LOSS IN TRADING CAN BE SUBSTANTIAL. YOU SHOULD, THEREFORE, CAREFULLY CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR FINANCIAL CONDITION. HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN INHERENT LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT ACTUALLY BEEN EXECUTED, THE RESULTS MAY HAVE UNDER OR OVER-COMPENSATED FOR THE IMPACT IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT.NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES.