Trade Idea: 2011-2-24 02:02
Some things in life just don’t get old. And neither do setups! With that rising trend line on USD/JPY still intact, I’m thinking of doing a repeat of my earlier trade. Hopefully, the ending is the same.
The yen has been rising faster than my homegirl (not really, I wish!) Gwyneth Paltrow’s songs on the music hit charts. And with Stochastic indicating downward momentum, it looks like traders aren’t done selling the pair yet! But I think that bears will start to show some weakness at around 81.80, when the pair meets support at the rising trend line.
If support holds and reversal candlestick patterns form (i.e. dojis, hammers, three inside up, etc.), I think I may just go pull the trigger.
While this trade is mostly based on technicals, I do have some fundamental reasoning as well. For one thing, it seems that speculation has been going around that the Fed could end its quantitative easing (QE) program earlier than expected because of rising global inflation. Of course, until the Fed members actually say so, those are just rumors and wild guesses.
Second, the U.S. has been releasing some really good data. The CB consumer confidence on Tuesday came out with a 70.4 figure, higher than both forecast and the previous reading. Then, the Existing Home Sales report showed that annualized sales reached 5.36 million, much better than initially expected.
And last, the preliminary U.S. GDP report is predicted to rise to 3.3% from 3.2%. The positive expectations could help my trade in the event that I do choose to enter.
So stay tuned to my updates for my decision once price touches that rising trend line! You can follow me on Twitter too!