While I’m still a long-term dollar bull, I think there’s a forex trade opportunity in selling USD/JPY these days. What do you think?
If I’m strictly trading on technicals, I would have shorted this pair like there’s no tomorrow. On the 4-hour chart we can see that USD/JPY is having trouble getting past the 121.00 handle, a level that has been an area of interest since March 2015.
Oh, and let’s not forget the convenient 61.8% Fib retracement line around the area! The cherries on top of the sundae are the overbought signals and the long wicks on the last candles showing how difficult it is to break above the level.
Unfortunately, I don’t have enough fundamental basis for a downward move as big as I’m expecting. On one hand diminishing expectations of a September rate hike is weighing on the dollar and overall risk appetite is fueling demand for the comdolls.
On the other hand, the demand for dollar-denominated U.S. equities has risen along with risk appetite and the yen hasn’t shown much strength following today’s Japanese data dump. Unless there’s a new catalyst for another dollar selloff, I’m not too keen on pulling the trigger just yet.
What do you think? Should I enter the trade with a small position and adjust as I go along or wait for more confirmation before I enter a short trade? Should I even short the dollar these days?
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