Anybody who could recall our previous call –
“Sell USD/JPY at 118 and at rallies with stop loss around 126 and target around 98”.
Will easily be able to relate to this extension, those who are not can check out the prior call here –
Our call in USD/JPY longer term is playing out pretty well we are already about 700 pips in the money.
However, there were some views we were wrong about, we didn’t think BOJ to further ease, which they did. But we expected that further easing won’t work.
China hasn’t deteriorated as fast as we think and unlikely to do so since fiscal stimulus has arrived.
However, additional support is coming from weaker Dollar, which according to us, would play major part in weakness of the pair. Moreover, recent weakness in Dollar, despite easing from European Central Bank (ECB) and Bank of Japan (ECB) may be showing the limits of one sided USD move fuelled just by divergence.
It is important to note even with this longer term outlook, USD/JPY may move up in the short run and we will be generating, short term, medium term and intraday calls which may differ from the outlook but will not cross the stop loss mentioned.
With above view, we are extending our downside target with revised stop loss.
Trade idea –
Sell USD/JPY at current rate @ 111.4 with target around 90 and stop loss around 120. Those who entered in prior call, it’s recommended to hold. Interim targets, 114 and 111.2 reached. Next in lines are 110, 108.5, 103.5, 98 and final 90
