Free Profitable Forex Newsletter
Hey! This is Philip with this week's trade idea of the Free Profitable Forex Newsletter!
We've been saying for a while that the preferred direction for USDJPY is down (a bearish bias), although the pair is stuck in a range at the moment.
Well, as you probably have already heard, trading ranges often precede lucrative trading opportunities following the ensuing breakouts that often lead to big price movements.
This could be the case with USDJPY right now. Or, it may not. Nonetheless, by following the pair closely, and looking to position ourselves in the direction with higher chances for profit, we may as well catch a nice portion of this potential move.
JPY's Safe Haven Features Keep It Desirable
The Yen is re-establishing its negative correlation with risky assets and remains one of the top 3 currency choices in times of risk aversion. The Dollar was the number one safe-haven currency in March due to liquidity issues known as dash for cash, but since then, USDJPY declined notably after the Fed killed the USD in late March.
So, the question is, what now?
The Fed is doing a good job at keeping the USD from getting stronger, but risk aversion has not gone away. There is the possibility of further sell-offs of stocks, and thus the JPY could come to the front line as a big winner.
For this trade, we are targetting the 105.00 area in USDJPY. But in a significant deterioration of risk sentiment, it will be no surprise if USDJPY revisits the 100.00 area again.
The 107.00 support already held twice since USDJPY stabilized and the price is now about to make a third attempt.
The shallower bullish price action suggests a bearish break of 107.00 is more probable than it being a base for a stronger move higher. In turn, such a breakout below 107.00 will open the way for a further push lower toward 105.00 as there is very little support on the way down to 105.00.
The recent stabilization of the price action allows us to pick opportunities that are actually tradable. This is a simple trade setup that will be triggered on a clear bearish breakout of 107.00. The obvious area to target lower is 105.00, although depending on the specific circumstances, USDJPY can move further lower.
- Wait for a breakout below 107.00.
- Entry can be initiated on the breakout (if it is powerful);
- or possibly on a retest of 107.00 from the other side.
Stop loss:
- Place the stop above the breakout point.
- USDJPY shouldn't move above 108.00 for trade to remain valid.
Targets:
- the 105.00 area as described above
Note: As of the writing of this message, reports came in that the Bank of Japan is considering removing all limits to its quantitative easing program (QE). Based on this alone, USDJPY has shot higher in minutes. Keep
watching the newsflow on this front as it could push USDJPY further higher if confirmed.
Trade signals from the past week
- April 16 – Long USDCAD from 1.4050, targeting 1.4350 and 1.50
TOTAL: 0 pips in the past week
TOTAL: +2790 pips profit since October 1, 2018
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Thank you!
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Any opinions, news, research, predictions, analyses, prices or other information contained in this newsletter is provided as general market commentary and does not constitute investment advice. FX Trading Revolution will not accept liability for any loss or damage including, without limitation, to any loss of profit which may arise directly or indirectly from use of or reliance on such information.
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