Trend traders huddle up! If you think that the Greenback will gain some pips from today’s FOMC statement, then this USD/JPY uptrend setup is for you!
In my USD/JPY trade idea post last week I pointed out the possibility of an SMA crossover on the 1-hour time frame signaling a start of an uptrend. Well, it looks like it worked! The question is, will the uptrend continue this week?
A look at the pair’s chart reveals that it’s currently hanging at the 120.50 minor psychological handle, which also lines up with a rising trend line AND a 200 SMA support.
Fundamentally it doesn’t look like the dollar bulls are ready to hand over their reins just yet. In fact, the dollar has been gaining more pips from its counterparts all week despite worse-than-expected reports printed from Uncle Sam.
Let’s see if the bulls continue to hustle their muscle in a couple of hours. The FOMC statement will be released in a few hours and market players are expecting no changes from the central bank. There won’t be any release of economic projections and press conferences either, so there’s a possibility that volatility will be all over the charts if the Fed does surprise the markets with a rate hike.
As Forex Gump mentioned in one of his posts, look out for a couple of possibilities including hints on the Fed’s interest rate biases for the rest of the year. If Janet Yellen and her gang fail to raise their rates but hint at a rate hike this December, then the dollar’s losses will likely be limited.
Entering at market with a teeny tiny position would be a good idea if you’re one of them dollar bulls. A stop just below the 200 SMA could work out if you don’t think the pair will be moving much and you aim for the pair’s previous highs. If you think that volatility will see a spike though, then you could also wait for the actual FOMC statement before you enter any position. Just make sure you manage your risk and prepare for different scenarios.
What do you think? Will USD/JPY’s uptrend remain intact today?