Remember that “breakout” that we identified last week? Well, it turned out to be a fakeout after all! And with the latest developments in the U.S., I’m thinking the stars (or at least the fundamental signs) are lining up in favor of more dollar gains.
As you can see on the chart below, USD/JPY bounced from from the 108.50 support that we’ve been watching for a couple of weeks now. In fact, it’s already testing the 110.50 psychological handle to see if the bulls still have enough muscle in their hustle to push the pair higher.
Things are looking up for the dollar, too. Trump and his team are busy working on the tax reform – one of the reasons why the dollar rose sharply higher after the elections – and many are saying that this is one election promise that has a legit chance of happening.
Meanwhile, the impact of hurricanes Harvey and Irma are turning out to be less catastrophic than market players had initially feared. The cherry on top is North Korea looking like it’s backing off from more aggressive, provocative exercises despite the UN recently imposing new sanctions on DPRK.
If current trends persist, then it would be easier to extend the dollar’s uptrend up until the Fed prints its policy decision next week.
This is why I risked 0.25% at market to jump on the uptrend while it lasts. I’m aiming for that very attractive previous resistance near 114.50 but I’ll revisit my techs and fundies analyses once USD/JPY hits the 111.50 trend line resistance level.
Here are the deets:
Long at market (110.53) with my stops below 108.50. My ultimate PT is at 114.50 but I’ll either add or close my position if/when the pair hits the trend line resistance near 111.50.
What do you think? Will the dollar’s uptrend against the yen continue? Or will dollar bears jump in again at the earliest opportunity?
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