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After a month of sideways action, USD/JPY traders finally wake up to push the pair lower ahead of today’s FOMC monetary policy decision. With the meeting going as expected, I decided to lock in some profits, so here’s a quick update.

USD/JPY Downtrend Pullback

USD/JPY 4-Hour Forex Chart
USD/JPY 4-Hour Forex Chart

At the beginning of August, I decided to short USD/JPY to play the broad negative U.S. dollar bias after the pair bounced off of a strong move lower. I scaled into my short with a half position at the Fibonacci retracement area of the bounce with only 0.50% risk, then another 0.50% risk at market (106.40) as the pair retested the falling highs pattern.

Since then, it’s kind of been a snooze fest as traders were away during the month of August and we lacked major catalysts, but we finally saw weakness in September, likely on traders sizing up short USD positions ahead of today’s Fed meeting. And as expected, the Fed promised to keep rates low until inflation picks up, which could take years.

Given that USD didn’t move much further lower after today’s event, my thought is that the market sees no surprise, and chances are good that a bounce / profit taking could be in the works over the next few sessions with no major news/data points ahead.

With that in mind, I decided to close down half of my position at market (105.03) to lock in at profit, and roll my stop down to 106.60 to give the remaining position room to breathe. 

This adjustment locked in a +0.20% gain, and because my position size is lower now, my max profit is around 1.70% at 101.75.  

So, a no-risk trade for now with a locked in gain, and if the market bounces higher to retest the consolidation triangle and a bearish reversal pattern forms, I will look to add back to my short position if the fundamental themes still make sense to do so.

That’s it for now.  Stay tuned and 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.

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.