Trading for a 5th Wave decline in USDJPY
Investor sentiment remains fragile after the gyrations of the last two trading days and while this continues JPY will retain its traditional risk-off status. There are no important data releases in the US today, leaving the field open for Federal Open Market Committee members to opine on monetary policy. USDJPY has closely matched intra-day movements in the S&P 500 during this period of volatility and futures are suggesting a modestly higher opening on Wall Street.
The dollar’s decline from its 110.10 peak at the start of this month is still a developing 5-wave Elliott Wave sequence (refer daily chart below) and resistance at 106.70/107.00 (107.50 max) should now contain strength, giving-way to a 5th Wave sell-off toward the 104.40 level (being a Fibonacci 61.8% retracement of the prior 100.85 – 110.10 advance).
Entry: Until 105.90 is broken, will try to sell USDJPY around 106.70 today
Stop: 107.06 initially, trailing stop to break-even and better once
Target: 50% at 104.90 and 50% at 104.55
Time horizon: Allow a few days for targets to be met
USDJPY daily chart (click on chart to expand)
-- Edited by Adam Courtenay
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