USD/JPY: Perfect Bounce Off the 61.8% Fib? – Closed at BE

Trade Closed: 2013-4-5 23:58

USD/JPY 1-hour Chart

Well, whaddaya know! BOJ Governor Haruhiko Kuroda sure knows a thing or two about making first impressions unforgettable. Although market participants anticipated the new BOJ head to sound dovish, they were not ready for the aggressive measures that Kuroda had in mind. According to the central bank’s statement, it would double its monthly bond purchases to 7 trillion JPY. The 2% inflation target is also seen to be achieved by 2015.

My trade was already up by more than 50 pips ahead of the BOJ rate decision so I decided to move my stop to breakeven when price stalled at its previous low. Whew! Boy am I happy that I did!

Trade recap:

Short USD/JPY at 93.49, stopped out at BE: 0 pips

Did you guys trade the yen too? How did you do? Tell me all about it in the comments section below!

Trade Idea: 2013-4-3 3:15

USD/JPY 1-hour Chart

After months of climbing, USD/JPY seems to be finally losing its bullish momentum. As you can see from the hourly chart of the pair, price action has been slowly trending downwards. “Lower highs” and “lower lows” are being made, which seems to suggest that the bears are starting to regain control.

My bearish position is confirmed by the SMAs. The pair is below both the 200 and 100 SMAs, indicating that the bias is to the downside. As an added bonus, Stochastic shows overbought conditions. The last two times the pair was overbought, it sold off quickly! I hope history repeats itself.

I’ve decided to sell at market (93.49) since price just bounced perfectly from the 61.8% Fibonacci retracement level. I’m ultimately aiming for 91.88, which is the 100% Fibonacci extension. Just to be safe, I’ve placed my stop above the most recent swing high and the 200 SMA, at 94.50.

I have to admit that I feel a bit worried for buying the yen ahead of the BOJ rate decision. After all, it will be known-dove Haruhiko Kuroda‘s first rate statement as governor.

But as Forex Gump pointed out in his article, Kuroda has already made a lot of bold statements on how the BOJ would get Japan out of deflation. For instance, he has said that the BOJ would hit its 2% inflation target within two years and that it would diversify its asset purchases to include bonds with longer maturities.

I’m thinking that all these dovish remarks may have set market expectations way too high. Heck, a lot of analysts have long since warned that Kuroda could announce that the BOJ would start its open-ended QE earlier than expected tomorrow!

Although possible, my opinion is that it would be difficult for the BOJ to sound as dovish as markets are expecting them to be. If this turns out to be the case and Kuroda falls short of market expectations, we may actually see the yen rally. Rest assured, I’ll be closely following the rate statement!

To recap:

Sold at market (93.49). Profit target at 91.88. Stop loss at 94.50. Bet 1% of my account. Risk disclosure.



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  • disqus_vsJSot5uvs

    check ur daily . pin bar rejecting 61.8. long, expecting more aggressive easing statements at BOJ.

  • Michael

    Ouch, looks like BOJ met all expectations. I had a limit order for AUD/JPY at 97.5, looking good atm. Did you close or are you waiting for your stop to hit?

    • huck

      I closed at breakeven. Didn’t lose anything! Kinda bummed out though, as the trade was going oh-so-well!

      • Michael

        Good to hear! Definitely would have been very profitable if the market was disappointed.

  • disqus_vsJSot5uvs

    just shows the power of simple price action on daily time frame.

  • Samuel Sum

    how long should I pend if I follow your indication on the abovementioned USDJPY from today onward?

    • huck

      When the BOJ increased their QE program, my initial trade idea was immediately invalidated. If I were still in the trade, I would close and look for a different trade. That’s me though.