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Aaand I’m in! I didn’t want to miss out on USD/JPY‘s forex volatility this week, so I decided to pick my entry levels and take advantage of the pair’s price action. Here’s what’s up!

Original Trade Idea: Make or Break for USD/JPY

As I mentioned last week, I couldn’t quite pull the trigger on a long USD/JPY trade after seeing a bearish daily chart. My conviction strengthened a bit after yesterday’s candle closed way in the red, showing a possible bounce from the 61.8% Fib and falling trend line on the daily time frame.

USD/JPY: Daily Forex Chart
USD/JPY: Daily Forex Chart

On the fundamental front, I think that the noose is tightening for the BOJ. USD/JPY’s reaction to rumors that the stimulus package would only be as large as 6 trillion JPY reflects how high market expectations are these days.

It’s looking like a “damned if you do, damned if you don’t” situation where the yen would spike higher if the BOJ chooses to do nothing on Friday OR if its package misses the overblown expectations.

I entered at market (104.06) yesterday when I thought that the pair wouldn’t hit my 104.50 order (it eventually did and I’m kicking myself). My second order at 106.00 got triggered a few hours ago after FNN published that Abe’s stimulus package could hit 27 trillion JPY.

I put my stop loss above last week’s highs, top weekly ATR, falling trend line, and 100 SMA. My profit target is at the 100.00 handle. Here’s a summary:

Entry 1: Short at 104.06
Entry 2: Short at 106.00
Stop loss at 108.30
Profit target: 100.00

Right now I’m closely watching the news for any updates on dollar appetite as well as Abe’s stimulus plans. If the Fed fails to hint at a rate hike schedule this week and the BOJ chooses to wait until August to make changes, then my bias has a chance at working.

What do you think about this setup? Do you have any related positions this week? Let me know!



This content is strictly for informational purposes only and does not constitute as investment advice. Trading any financial market involves risk. Please read our Risk Disclosure to make sure you understand the risks involved.