I’m seeing a pretty decent pullback on USD/JPY, and I think this is my chance to hop in the ongoing uptrend. Take a look at this setup!
Long USD/JPY Trade
In my watchlist blog post last week, I was hoping to catch a major correction on USD/JPY but it seemed that the pair wasn’t looking back from its climb. Price just busted through the Fib levels I drew and went on to rally close to the 114.00 major psychological mark before sliding lower on Friday and at the start of this week.
As it turns out, president-elect Trump’s Twitter tantrum over the weekend and a bit of profit-taking from those dollar rallies caused USD/JPY to slide back to the 112.00 area on Monday. U.S. bond yields continue to rise, helping the Greenback retain its appeal against its other forex rivals like the yen.
I’m seeing a short-term rising trend line on the 1-hour chart and I took the dip to the 112.00 area as my opportunity to hop in the uptrend. Stochastic is indicating oversold conditions and is turning higher, suggesting that bulls are ready to charge once more. I’ve got a wide stop below the 110.00 major psychological level and area of interest and I’ll aim for the previous highs for a simple 1:1 trade.
Economic data from Japan came in stronger than expected earlier today, with household spending down 0.4% on a year-over-year basis versus the projected 1.0% slump and retail sales dipping by 0.1% instead of falling by 1.5%. U.S. preliminary GDP data is due today and a small upgrade from 2.9% to 3.0% is eyed, possibly lending more support to the dollar. CB consumer confidence data and speeches from a couple of FOMC members are also lined up.
I’ll be on the lookout for any major hits or misses from these numbers that might warrant an early exit from this long position. For now, here’s what I have:
Long USD/JPY at 111.85, stop loss at 109.85, profit target at 113.85. I’ve risked 0.5% of my account on this setup and I’m going for a 1:1 R:R.
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.