Aaand I’m in! Since it didn’t look like USD/JPY will show deeper retracements, I’ve decided to buy the pair at market.
As I’ve mentioned in my trade idea post last week, I’m hoping to enter a long USD/JPY trade after the pair had broken above a descending triangle resistance on the 1-hour time frame. More specifically, I was looking for a retracement back to the broken resistance for a better price to enter. At the time the 100 SMA and an overbought stochastic signal seemed to point to a break-and-retest opportunity.
Looks like the bulls couldn’t wait after all! Right now it looks like the dollar is breaking above the 100 SMA that I’m watching. Since it doesn’t look like the pair won’t be dropping back to the 102.00 levels anytime soon, I’ve decided to enter a long trade.
I used the 1-hour time frame to look for a price to enter. I risked 0.25% of my account when I saw that the pair had not only bounced from a 38.2% Fib on the chart, but it also broke above the 100 SMA and an area of interest on the short time frame.
Fundamentally I’m still betting on continued dollar strength. I believe that, unless there are major anti-risk catalysts, Greenback traders will go back to pricing in a possible Fed rate hike in December. Meanwhile, the BOJ is expected to jawbone or even expand its easing measures further in an effort to establish its commitment (and capability) to boost inflation to its targets.
Position 1: 0.25% at 103.35
Position 2: 0.25% either at new monthly highs or at a dip to the 102.00 area
Stop losses just below the 100.00 mark
Initial profit targets: 107.00 or 109.00, depending on the strength of the uptrend
What do you think? Did I enter a long trade too early? Is the dollar strength exhausted? Or are we seeing the beginning of another bullish run for USD/JPY?
Don’t hesitate to share if you have any tips or similar trades to this one!