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USD/JPY Breakout Opportunity on Invervention

USD/JPY Breakout Opportunity on Invervention

2011-08-22 22:13:00
Christopher Vecchio, CFA, Senior Strategist
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After remaining range bound for over a week, the USD/JPY slid below another key psychological level on Friday, below 76.000. Now, with the all-time low set at 75.936 for the time being, Japanese governmental officials made the rounds over the weekend and at the start of trading this week by further suggesting that they are “watching” the markets once more. As such, various strategies are outlined below as to best capture any dramatic upside moves in Yen-crosses.

Please note that the trade recommendations contained here within are advised only under the pretext of an intervention to weaken the Yen, as broader macroeconomic trends are dictating further market uncertainty and thus capital flows into the safe haven currencies in the near-term, and any appreciation of currencies against the Yen, in the author’s opinion, are likely to be short-lived.

USD/JPY Hourly Chart: July 28 to August 22, 2011

USDJPY_Breakout_Opportunity_on_Invervention_body_Picture_4.png, USD/JPY Breakout Opportunity on Invervention

Charts created using Strategy Trader– Prepared by Christopher Vecchio

Suggested Strategy

  • Long: Place an entry at 77.575 [38.0 Fibo]
  • Stop: Set the stop to 76.948 [23.6, 63-pip risk]
  • Target 1 (Reward/Risk Ratio): 78.081 [50.0 Fibo] (113/63, 1.81)
  • Target 2: 78.587 [61.8 Fibo] (164/63, 2.61)
  • Target 3: 79.214 [76.4 Fibo] (227/63, 3.61)
  • Timeframe: 12-hours following intervention

Pivot Table: Yen Crosses

USDJPY_Breakout_Opportunity_on_Invervention_body_Picture_1.png, USD/JPY Breakout Opportunity on Invervention

Written by Christopher Vecchio, Currency Analyst

To contact the author of this report, please send inquiries to: cvecchio@dailyfx.com

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

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