FX Trade Alert: One Step Ahead in Dollar Yen

[indeed-social-media sm_list=’fb,tw,li,goo,xg’ sm_template=’ism_template_3′ sm_list_align=’horizontal’ sm_display_counts=’false’ sm_display_full_name=’true’ sm_disable_mobile=1 ]

USDJPY Technical Stories

Many currency pairs were locked inside a tight range in the past several days. The tight range is inappropriate for medium-term strategies, which is why we chose to site on the fence. Our AUDUSD long trade has provided us with positive interest at the rollover, which is why we were more than willing to absorb the range of the currency pair. We have noted the correlation between AUDUSD and global indices and are holding onto the trade into Friday’s Non-Farm Payrolls (NFP).

Based on the Fed remarks for a rate hike this year, an upbeat figure from the NFP may trigger a rally across USD pairs and crosses as it strengthens the possibility for a rate hike. The market will dismiss our stance that the Fed is unlikely to act until the Spanish elections. This will probably trigger a mixed reaction in AUDUSD but we believe our long trade will hold. We will consider shifting the stop to minimize the market exposure ahead of the NFP.

We have been discussing the Japanese yen (JPY) for quite some time, entertaining the possibility of the Bank of Japan (BOJ) expanding its Quantitative Easing (QE) program at the end of the October. We suspect the NFP might be the trigger USDJPY technical pattern we have been observing for several weeks.

USDJPY Daily Chart

Please click on the chart to enlarge:

USDJPY Daily Chart 01/10/15

USDJPY Daily Chart 01/10/15

USDJPY Trading Strategy

Initially we were expecting a breakout that will affirm the pattern, which did not appear. The risk of entering the long trade is the Non-Farm Payrolls that has the tendency to invalidate numerous technical patterns. The support level was able to sustain USDJPY on multiple occasions as the price is being wedged between the support and resistance.

The location of the stop is very challenging. If a substantial amount of stops are begin accumulated below the support the market will attempt to take out the stops before reversing higher. We cannot place a stop above the chart’s demands us due to the Non-Farm Payrolls. We are layering the protective stop below the support with the rest of the crowd. A firm break above the resistance may kick into play numerous algorithms that may sustain the gains and prevent a steep correction.

There is a fair risk to this trade alert but we are comfortable taking it as this may be are last opportunity to join the anticipated rally in JPY pairs and crosses. We are opting for the maximal objective of the breakout in light of the BOJ.

USDJPY Trade Alert Details

USDJPY long at market price (119.91)
Take profit: 123.90
Protective stop: 118.94
Risk Ratio (RR):  1 : 4 (approx.)
Estimated duration: 7 days

Note: The reason why we are giving the trade 7 days is because of the breakout takes places as a result of the NFP we don’t see it contained until our target is met.

02/10/15 UPDATE: USDJPY is trading at 120.17 at the time of this writing.

Please click on the chart to enlarge:

USDJPY Daily Chart 02/10/15

USDJPY Daily Chart 02/10/15

We are closing 10% of the long trade at market price ahead of the Non Farm Payrolls.

02/10/15 UPDATE: Despite the current recovery USDJPY triggered the protective stop order of the long trade.

Please click on the chart to enlarge:

USDJPY Daily Chart II 02/10/15

USDJPY Daily Chart II 02/10/15

We were counting on a bullish breakout which unfortunately did not materialize.

FX Trade Alert: One Step Ahead in Dollar Yen

As USDJPY long trade is closed this page can  now be accessed by all traders. Open trades are restricted to members only. We have been providing trade alerts in the Forex market since May 2014.
FX Trade Alert: One Step Ahead in Dollar Yen

MEMBERSHIP PLANS INTRADAY STRATEGIES OUR TRADE ALERTS
FX Trade Alert: One Step Ahead in Dollar Yen

performance4 edit1

FX Trade Alert: One Step Ahead in Dollar Yen