After a choppy couple of months for USD/JPY, my short position finally closed for a profit at my adjusted stop as the Greenback rallied last week. Here’s a quick review and a few thoughts on USD/JPY going forward.
USD/JPY Downtrend Pullback
Last week, I adjusted the stop down to 105.70 in my short position on USD/JPY after a weak move lower in the Greenback following the Fed meeting, and ahead of more Fed speak and PMI data from the U.S.
Since then, the Greenback actually made a pretty strong comeback against the majors as broad risk sentiment soured last week on rising pandemic fears, as well as fears of renewed lockdown policies across the globe. This move was broad enough to even push USD higher against the Japanese yen, which is normally the safe haven king among the majors currencies. USD/JPY rallied last week from just above the 104.00 lows to hit my closing orders at 105.70, shutting my remaining position for a decent profit.
Total: +73 pips avg. / +0.48% gain on 1.00% max risk
Not a bad return-on-risk overall, but after being up by 1.36% (or 136% return-on-risk) when it traded around 104.00, I think I held on for a bit too long, especially given that the expected catalysts for a bearish dollar move turned out to be duds for further gains.
Looking forward, it looks like the bounce higher in USD/JPY may be running out of steam and it could be a great time to short at a better prices. But with the end of the month/quarter ahead and a new round of economic updates to shake things up, I think I’ll wait for the upcoming U.S. jobs data before taking a bias on the U.S. dollar and broad risk sentiment once again.
Stay tuned for that 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.
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