Spotted an SMA crossover on 1-hour chart! Is it time for a new forex trend for USD/JPY?
If you’ve seen my watchlist this week, then you’ll know that I was initially planning on taking either a EUR/USD or GBP/USD trade. But a bulk of the pairs’ moves happened early in the week. Looks like I waited too long!
Good thing USD/JPY showed a possible trade for me. You see, the pair’s 100 SMA just crossed below the 200 SMA. Not only that, but USD/JPY is also finding it hard to break above the 123.50 minor psychological level, as it lines nicely with an unbroken falling trend line and the 50% Fib retracement area on the 1-hour chart.
Will this mean more losses for the dollar? I think so! Well, at least in the short term. I’m still pro dollar in the long-term especially with last week’s NFP and this week’s retail sales numbers coming in better than investors had expected.
In the meantime though, I’m counting on possible profit-taking and a bit of risk appetite ahead of next week’s FOMC meeting to push this pair lower. It also doesn’t hurt that just this week BOJ’s Kuroda had said that it’s hard to see the yen falling any further. Probably not a market mover in the long term, but it could be enough to ward off the some of the dollar bulls for now.
I risked 0.50% of my account on a short at 123.50 with a 100-pip stop loss, which is just above the SMAs, Fibs, and the major 124.00 area. My initial target is also 100 pips away but I’ll watch the moves in case I have to adjust.
What do you think of this plan? Are we seeing a short-term reversal for USD/JPY or is this just a fakeout?