The Japanese yen moved quite substantially this year, but now the big move is being corrected. Is it a buying or selling opportunity?
In our opinion the following forex trading positions are justified - summary:
- EUR/USD: short (a stop-loss at 1.1236; initial downside target at 1.0708)
- GBP/USD: short (a stop-loss at 1.3579; initial downside target at 1.2519)
- USD/JPY: none
- USD/CAD: none
- USD/CHF: none
- AUD/USD: none
In today’s alert we’ll focus on the long-term chart of the Japanese yen, which is about to flash an important trading signal. Let’s take a closer look (charts courtesy of http://stockcharts.com).
The Japanese yen has just invalidated a breakout above important resistance level. Invalidations tend to be strong signals, which makes the outlook bearish. The move above 70 in the RSI indicator and then back below it has bearish implications as well.
However, the above is not enough to justify opening a position in the USD/JPY currency pair – some kind of confirmation is required to push the risk to reward ratio to more favorable levels.
Once yen breaks below the rising support line, the sell signal will be confirmed and we will consider opening speculative forex positions, but it too early to do so now in our opinion.
The Japanese opportunity is most likely in the making, but it’s not present yet – we will continue to monitor the situation and report to you accordingly.
We will discuss other currency pairs in tomorrow’s alert.
Thank you.
Nadia Simmons
Forex & Oil Trading Strategist
Przemyslaw Radomski, CFA
Founder, Editor-in-chief, Gold & Silver Fund Manager
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