I think right now we’re looking at a market that’s going to bounce around between maybe 154.50 and 158 Yen.
USD/JPY
The US dollar has drifted a little bit lower against the Japanese Yen during trading here on Monday, but really, I look at this as consolidation more than anything else. After all, the pair did rally quite nicely since July, although we’ve had a couple of sideways areas, and I think maybe that’s what we’re getting into.
That being said, if we do drop towards the 155 Yen level, I’m perfectly fine buying think the interest rate differential keeps it somewhat afloat here. And of course, the Japanese Yen is backed by the Bank of Japan, which, although it did tighten rates recently, can only do so much. Eventually, that debt load becomes a major problem.
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Predictable Range
I think right now we’re looking at a market that’s going to bounce around between maybe 154.50 and 158 Yen. I do believe that it’s still got some upward momentum, unless of course we get some type of systematic issue out there, possibly from the silver market at this rate.
But ultimately, this is a market that I still favor buying dips and collecting swap. I don’t know that we’re going to see a massive move anytime soon. We may spend the better part of a few weeks going sideways, but it’s a somewhat predictable range, and this time of year, when you have a significant lack of volume and liquidity at times, a predictable range is a nice thing. And that’s something that you can take advantage of as a retail trader, as it’s easy for you to get in and out of positions. This is one of my favorite charts at the moment for exactly that type of range-bound trading.
Potential signal: Buy USD/JPY on a dip, close to the 166 yen level if you can. I would have a stop loss at 154, and aim for 157.50 above.
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