Hey, guys! As part of my new year’s resolution to be more active in my discretionary trades, I’m sharing this potential retracement setup that I spotted.
As you can see, USD/JPY is currently testing its falling trend line resistance on the 1-hour time frame.
I’m not too worried over an upside breakout, though, mostly because I see last week’s high, the top weekly ATR, and the 200 SMA hanging around just above the level. Talk about the signs lining up!
I also think that USD/JPY still has room for a bit more bullish momentum. After all, Trump’s presser a few hours ago didn’t cause chaos for the dollar, and traders remain optimistic as U.S. and Chinese repss wrap up their first official meeting since the 90-day trade truce started in December.
At the end of the day, however, I don’t expect to see big changes to Uncle Sam’s situation.The government will still be partially shut down and, unless the trade reps provide something juicy for the markets, optimism over this week’s meetings will probably wind down anyway.
Oh, and let’s not forget that FOMC’s meeting minutes AND a couple of FOMC member speeches are scheduled this week!
We know from the December announcement that members are not feeling as confident in their tightening schedule as before, so we might see more of the same dollar-bearish vibes that we got last month. Unless Powell and his friends double down on their “we’re watching the markets” and “we can adjust quickly and flexibly” message this week?
Anyway, I’ve got my eye on a short around the 109.50 level for now, with a 100-pip stop to 110.50. If the pair ends up retesting its 107.00 lows, then I could still get a 2:1 r:r from the deal. Not bad, huh?
What do think of the setup? Is this something you would want to trade for yourself?
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