Thanks to the PBoC’s moves today, a sweet forex trade setup popped up on USD/JPY. Who can resist a bargain like this?
If you’ve read Pip Diddy’s Asian session recap, then you should know that the PBoC once again devalued the yuan in the markets…after saying that yesterday’s devaluation was a “one-time adjustment.” This is why people have trust issues, people!
Luckily for me, the PBoC’s aggressiveness turned out to be positive for risk and bearish for the low-yielding dollar. I don’t think the bearishness would last for long though, especially since we’re only a couple of weeks away from a possible September interest rate hike by the Fed.
If USD/JPY’s uptrend getting knocked down a few pips is not enough for you, then you should take a look at the 1-hour time frame. The pair just bounced from the 124.50 area, which lines up nicely with a rising trend line and the 200 SMA. Not only that, but Stochastic has also just reached the oversold territory. Talk about a bargain!
I risked 0.5% of my account at around 124.58 and placed my stop loss 75 pips away. I figured the pair would have invalidated the support levels I’m watching if they reach those levels. I’m initially putting my profit targets near the previous highs but I might adjust them depending on the strength of the moves during the next couple of hours.
What do you think? Is this a steal or what? 🙂