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I’m a big fan of going long USD/JPY because of the big divergence between the Bank of Japan’s and the Federal Reserve’s monetary policies. Basically, the Federal Reserve has started to reduce their quantitative easing measures while the BOJ has theirs still kicking in high gear!
But before I jump in though, we do have the FOMC monetary policy decision this week, in which my brotha Forex Gump wrote a quick Q&A guide for the event. He pointed out quite a few possible reaction and anticipation scenarios for this Wednesday, and with volatility as crazy as it has been in the past week, I think I’ll sit out to wait and see what the Fed does.
Regardless of whether or not we do get a Taper from the Fed, and depending on the reaction, I’m still gonna try to get in long for a longer-term position. I’d like to see a nice pull back to the Fib levels (100.00 – 102.00) on the daily chart above, but I’m open to a breakout play to the upside as well.