Potential signal:
- The USD/JPY pair is a buy right here, right now.
- I would have a stop just under 160, and a target as high as 224 – adding along the way.
- The US dollar continues to threaten the Japanese yen in general, despite the fact that traders are worried about potential Bank of Japan intervention. This is a market that could go much, much higher.
USD/JPY
The US dollar pulled back against the Japanese yen during early trading on Friday, but then turned around to show signs of life as it looks like we are, in fact, trying to continue the overall uptrend. Ultimately, I suspect this is a market that remains very noisy and perhaps even a little bit nervous. This is mainly because we have the potential for the Bank of Japan to get involved, and if that ends up being the case, they could very well start shorting the pair in order to boost the value of the yen.
Top Regulated Brokers
They did intervene at the basic area where we are now in late April, but as we have made a fresh high, the question now is whether or not they are willing to fight everything. The Federal Reserve is likely to raise interest rates between now and the end of the year, and quite frankly, I think the signal here is pretty straightforward.
Bank of Japan Intervention and Long-Term Trends
If you believe that the risk-to-reward situation represents a nice buying opportunity, you get long of this pair pretty much anywhere in this general vicinity. After all, we are breaking a high from the 1986 swing high that was so important.
Now that we are breaking to the upside, I do think that we could see a massive, longer-term buy-and-hold type of investment. Intervention, of course, could blow out your stop loss, but sooner or later, the market will get what it wants, and it wants a stronger US dollar, at least in Japanese yen terms.
I'm perfectly comfortable with this risk because I might get stopped out a couple of times, but eventually, unless something changes from a fundamental standpoint, this could be a massive trade.
Begin trading our daily forecasts and analysis. Here is a list of Forex brokers in Japan to work with.