I was looking at the chart from FXDD metatrader platform. It looked like there were good trades to take. the chart was showing that there was a reversal on GBPJPY by showing a pin bar. So anytime there is a pin bar, that means it is time to go in opposite direction. But I was wrong.

From the chart, you can see where I highlighted and put a thumb down arrow. I thought those bars were pin bars. They are not exactly or the textbook version of a pin bar, but it had some characteristics.  I thought that was a short. So I told myself that if I am still trading, i would short it and put a top loss above the pin bar. To my surprise it went higher. Then at the second fake pin bar, I said that it was a short. I did the mental trades again, and it went higher. It was then i told myself that I should stop trying to short it, and join the trend which was bullish. I couldn’t enter because I wasn’t seeing an enter point. So I stayed out.

Well, tomorrow is Non-farm Payroll. The USA economy is improving. The auto industry is seeing rise in sales. So the economy is bullish. this means that dollar is bullish. That is why GBPJPY is just acting like a beast. I think traders have already factored the bullish NFP. Right now, if you look at the chart above, you see that GBPJPY stopped at a resistance area. It was the former high on 17th Feb 2010. I guess that traders took their profit. Now the currency is falling down gradually to gain momentum to break that resistance line. No one know the outcome of NFP. I don’t know is GBPJPY has began its gradual decent or it is gaining momentum. Tomorrow will tell us.

I looked at the charts of 2008, and I noticed that the news broke out in the weekend meaning that the market was closed at that time. When the market opened, all the 4 currencies I like to watching (EURUSD, GBPUSD, USDJPY, GPBJPY) had a gap in them. Since the news was bad for dollar, all the currencies pairs that were ending in USD had a gap when the currency market open for the week. And all the currencies pairs starting in USD had a gap down.

In relationship to how many pips a pair can move in a day, I can say the biggest gap among the pairs I watch was USDJPY, and the biggest among other pairs was USDCHF. You can see what I am saying from the attached graph.

The USDJPY moved about 70 pips downwards when it opened. That was a lot of movement regarding that it has a daily range of about 100 pips. I am sure the daily range has changed because the financial troubles in the stock market has increased the volality in the foreign exchange (forex) market.

The gap was closed towards the end of the trading day, and that saw the fall of USDJPY. The currency pair hasn’t reached the price 106.63, the opening price of that day yet. But other currencies had either pass their opening price and falling down or they fell down and surpass the opening price of that day.

The unchanged rate was no surprise to the markets which had placed the probability of a rate change at nearly 0% as indicated by the Fed Funds Futures price action.

The Fed led off the statement by saying it sees a “leveling out” in economic activity and indicated that substantial resource slack in commodities is likely to keep inflation down. The Fed did say, however, it expects the economy to remain weak for a time.

.

The economy is recovering, but the fed wants to see recovery in the financial market. The financial market is the back bone of the economy.

The FOMC meeting usually have an effect on the market.

During the American section, GBPJPY looked like was looking bullish on the 4 hr timeframe. It wwas going up, but the FOMC disrupted the bullish trend. After the metting, the 4 hr candle closed was a doji meaning indecision.

At the end of the day, the candle is look bullish to me.

The day candle closed like a pin bar. But it is not a perfect pin bar. There is still an amount of risk if someone trade the pin bar. There is no 100% guarantee in trading. No one knows the future because anything can happen in the next 5 or 20 mins and that would disrupt the market.

Traders were expecting the results to be bad. You can see why I am saying this (look at the charts).

If you look at the first pic, which is a pic of GBPUSD, you would see that there is a candle with 2 long spikes and a small body. This happened because most traders thought that the news wold be bad. So at the moment it came out, they bought the currency. This action made it to go up. But when they later analyse the news, they found out it is positive for the dollar. These traders either closed their positions or the selling force was greater than their force (buying force). This is one of the reasons not to trade on Non-Farm Payroll days and also not to make up your mind before the news come out.

It is funny that the USDJPY didn’t whip saw. It just moved up and continue moving. I believe USDJPY would also go up on Monday. There is no negative news yet to break this up trend now. I may be wrong.