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Forex Analysis: Taking partial profit on USDJPY at 80.50

Forex Analysis: Taking partial profit on USDJPY at 80.50

David Rodriguez, Head of Product

I've been stopped out of my US Dollar (ticker: USDOLLAR) long against the Euro as markets chop, and as such I might soon take partial profits on my USDJPY long.

The Dow Jones FXCM Dollar Index broke above the key 10000 mark, and that has clearly favored my USDJPY long position. Yet the Euro was surprisingly resilient, and the chop higher stopped me out of my EURUSD short position.

Market conditions have been frustratingly choppy, and this does not seem like the kind of market where it is wise to chase price. Our SSI-based "Tidal Shift" strategy has once again gone short AUDUSD and NZDUSD.

It's tempting to sell into the AUDUSD and NZDUSD declines, but volatility is so low right now that I would at best look to sell bounces--especially as the AUDUSD has maintained its series of higher lows and higher highs dating back to the beginning of October. Only a break below $1.0350 would violate that trend.

In the interim I remain long USDJPY with an average price of approximately 79, but I will take part of the position off if/when we test 80.50. It just doesn't feel like a great market to press bets, and I'll trade accordingly.

--- Written by David Rodriguez, Quantitative Strategist for DailyFX.com To receive the Speculative Sentiment Index and other reports from this author via e-mail, sign up to David’s e-mail distribution list via this link.

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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