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With the BOJ statement coming up in a few, I’m keeping close tabs on USD/JPY’s uptrend today. Will I get the chance to hop in another pullback play? Here’s what I’m looking at.

USD/JPY Trade Setup

I’ve also got my eyes locked on another yen short opportunity with Guppy, but it looks like the pair broke below the support zone I was watching so I’m turning my attention to USD/JPY instead. Fundamentals are looking much better for the U.S. dollar anyway, as the FOMC recently hiked interest rates and kept the door open for three more rate increases next year.

The pair’s ascending trend line is still intact so I’m hoping for another opportunity to profit from a bounce off support like I recently did with this quick long USD/JPY trade. I pulled up the Fibs on the latest swing low and high once more then noticed that the 61.8% retracement level lines up with the trend line and is near the 116.00 area of interest.

USD/JPY 1-hour Forex Chart
USD/JPY 1-hour Forex Chart

But with the BOJ decision and presser set to rock the markets in this trading session, I’m inclined to see how price action unfolds first before diving in. After all, the Japanese central bank is expected to sit on its hands for the time being since the yen’s depreciation and the widening spread between U.S. and Japanese bond yields are providing some support for growth and inflation.

If BOJ Governor Kuroda doles out a few more dovish remarks than usual, USD/JPY might not even make it to the trend line and could resume its climb from here, possibly taking out the previous highs at 118.65. This could put the pair on track towards testing the 120.00 major psychological mark so I’ll probably try to jump in on a break of the swing high if my fingers are fast enough. Here’s my plan:

Long USD/JPY at 116.25 or at 118.75, stop loss at 115.25, profit target at 119.75 for either a 3.5-to-1 or 1-to-1 trade. I’ll risk 0.50% of my account on this setup if I do decide to go long.

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.

Risk Disclosure
Pipcrawler’s Q3 2016 Blog Trading Performance

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