Trade Update: Make or Break for USD/JPY

Aaand I’m in! I didn’t want to miss out on USD/JPY’s forex volatility this week, so I decided to pick my entry levels and take advantage of the pair’s price action. Here’s what’s up!

Original Trade Idea: Make or Break for USD/JPY

As I mentioned last week, I couldn’t quite pull the trigger on a long USD/JPY trade after seeing a bearish daily chart. My conviction strengthened a bit after yesterday’s candle closed way in the red, showing a possible bounce from the 61.8% Fib and falling trend line on the daily time frame.

USD/JPY: Daily Forex Chart

USD/JPY: Daily Forex Chart

On the fundamental front, I think that the noose is tightening for the BOJ. USD/JPY’s reaction to rumors that the stimulus package would only be as large as 6 trillion JPY reflects how high market expectations are these days. It’s looking like a “damned if you do, damned if you don’t” situation where the yen would spike higher if the BOJ chooses to do nothing on Friday OR if its package misses the overblown expectations.

I entered at market (104.06) yesterday when I thought that the pair wouldn’t hit my 104.50 order (it eventually did and I’m kicking myself). My second order at 106.00 got triggered a few hours ago after FNN published that Abe’s stimulus package could hit 27 trillion JPY. I put my stop loss above last week’s highs, top weekly ATR, falling trend line, and 100 SMA. My profit target is at the 100.00 handle. Here’s a summary:

Entry 1: Short at 104.06
Entry 2: Short at 106.00
Stop loss at 108.30
Profit target: 100.00

Right now I’m closely watching the news for any updates on dollar appetite as well as Abe’s stimulus plans. If the Fed fails to hint at a rate hike schedule this week and the BOJ chooses to wait until August to make changes, then my bias has a chance at working.

What do you think about this setup? Do you have any related positions this week? Let me know!

XOXO,

Huck

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  • Rebecca Calkins

    I’m a bit shocked. I thought there would be a lot of interest and opinions on this event and your choices. I just started trading in virtual and only know enough to get myself into trouble at this point, so I really don’t know if your approach is good or not, but I am watching it with interest to see how it goes. I hope your right and you get your 100 pips. : )

    • Thanks for reading my blog, Rebecca! Yeah, USD/JPY is catching lots of interest these days, especially with all the rumors in the days leading up to the decision.

      I currently have two positions on the pair with my stops locked in for a bit of profit. Fingers crossed that it would reach 100.00! How about you? Are you planning on trading any pair this coming week? 🙂

  • Bertusch

    Congratulations on this trade. I’m shorting it as well on almost the same entries and planning to long it if we see a reversal candle on the 100.5, 100 mark.

    • Thanks, Bertusch!

      Looks like the pair did reverse around the 100.00 mark. Were you able to put on your long orders? 🙂

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