Hi, Friends, not only did USD/JPY crack “par” (100.00), it kept on going. A former colleague (Neal Kimberley of Reuters) points out that while the U.S. government might under normal circumstances complain about the Abe government’s policies – which seem designed to weaken the Yen – it is constrained now. With China’s economy slowing, and Japan’s exports growing (they’ll grow still faster as the Yen weakens), the latter seems likely to replace China as the largest overseas buyer of Treasury securities. As the Fed begins to “taper”, finding willing buyers of T-notes and bonds will become Â increasingly urgent.
So, the pair has made it through 100; what’s next? Stochastics are very overbought on the daily chart, but that happens in strong uptrends, and is more typically a sign of strength than of imminent weakness. Given that the uptrend is still new, I’d expect continued upside, with a pullback to 98 or so offering a decent risk/reward for new longs. Â Those already long don’t seem to have many reasons not to remain that way, but I’d have a tough time starting a position here, even though I think that we’ll see higher levels.
If I had a bad case of “I’m missing the move-itis” I might take a small placeholder position, just to get some skin in the game and start paying closer attention. An alternative would be to switch to an hourly chart; in that timeframe, a move back to the 50% retracement Â level at 99.91 looks buyable, and there is confluence with the daily chart at 99.13. A position started at the latter level would obviously provide greater comfort, but the market never offers guarantees, and this move seems pretty strong at present. Traders always have to balance the risk of a poor entry against the opportunity cost of missing a substantial move. As Todd points out throughout his courses, if a potential entry level doesn’t feel comfortable, there will always be other trade set-ups. It’s harder to make lost money back again.
Here’s hoping that everything is going well; best of luck!
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