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  • Long USDJPY 0 comments
    Sep 18, 2012 1:11 AM

    Background - Last time I recommended this trade, it did not work out. This time we have a failed break of USDJPY under the May 2012 lows.

    Fundamental view - The US federal reserve has recently announced a fresh round of quantitative easing. As a result, risk assets have moved higher. Yen, a traditional safe haven is weak across the board.

    Technical View - USDJPY has failed to maintain the break below the May 2012 lows. This has been followed by a bullish reversal and the 50 day moving average has been taken out without any hesitation.

    static.cdn-seekingalpha.com/uploads/2012/9/18/1004836-13479444508411312-Basis-Point_origin.png

    As ever, the intraday chart is more revealing. The 15 min chart below shows a big spike down and complete reversal after the announcement of QE by the fed. Since then USDJPY is in a steady uptrend.

    static.cdn-seekingalpha.com/uploads/2012/9/18/1004836-13479446183729167-Basis-Point_origin.png

    This gives a low risk entry to get long USDJPY with an initial target of 80.6 yen.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Additional disclosure: I am long USDJPY.

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