Time for me to get my forex trading feet wet again! Check out this day quick trade setup I spotted on USD/JPY’s 1-hour time frame.
As Big Pippin pointed out in his Daily Chart Art, USD/JPY is on a nice rising channel on the 1-hour time frame. And, when I saw that the BOJ monetary policy statement had dragged the pair to its mid-channel support, I began to plot my trading plan.
You see, although a bit of profit-taking could take its toll on the dollar, I don’t believe that the dollar bulls have given up their idea that the Fed is set to hike its interest rates by as early as mid-2015. In fact, they might even use today’s FOMC meeting minutes to renew their buying interest!
This is why I saw today’s yen strength as an opportunity to buy the dollar at a lower price. It also helped that the technical analysis looked pretty good. Aside from a mid-channel support near the 120.00 psychological level, there’s also a 50% Fib level and an oversold Stochastic signal to support a long trade.
This is why I risked 0.50% of my account on a long trade at 119.93 with my stop losses and profit targets 50 pips away. I figured a 1:1 risk ratio isn’t too bad for a quick trade. I’m planning to close manually and cut my losses if the FOMC minutes turned out to be bearish for the dollar after all. I’m also considering averaging up and making it a longer-term trade if USD/JPY strengthens more than I anticipated.
What do you think of this plan? Anyone out there trading USD/JPY (or even just the dollar) too?
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