Well that pullback was way quicker than I imagined! USD/JPY barely looked back before climbing higher, failing to reach my entry area around the Fibs.
I planned on going long USD/JPY on a correction to the retracement levels near the 101.00 major psychological level, thinking that dollar bulls might want to book profits from the recent sharp climb. As it turns out, buyers couldn’t even wait for a test of the 38.2% Fib before reestablishing their long positions and pushing price past the swing high.
In hindsight, I probably should’ve hopped in with a small position when I saw that bullish divergence materializing. What can I say, sometimes it helps to be patient but sometimes it hurts!
It’s also worth noting that volatility is starting to pick up once more now that the summer months are over, which means that trends like these could continue to strengthen. Besides, data from the U.S. economy beat expectations yesterday, reinforcing Fed rate hike expectations before the end of this year. In contrast, Japan just printed a downbeat preliminary industrial production reading, reminding traders that the BOJ is ready to increase stimulus.
No trade on this one for now but I’ll keep my eyes peeled for any opportunities to catch the climb or any other potential long USD plays. As always, remember to never risk more than 1% of a trading account on any single trade. Adjust position sizes accordingly. Create your own ideas and don’t simply follow what I do.