USD/JPY trading strategy

Current Japanese Yen levels looks overstretched. The last time that the Japanese Yen was floating below the 80.00 level was back in March 17 2011. The Japanese Yen seems to have a wall of support below the 76.00 range when looking at its historical price chart revealing that in April of 1995 it went to a low 80.45 and gradually climbed back up to 145.40 three years later. Going long on this pair delivers a great entry price once the Bank of Japan commences its long overdue intervention.

The Bank of Japan's intervention to weaken their currency may not work since there is a strong southern pull on the US dollar across the board. The pair tested 0.382 fibonacci retracement at 79.89 and failed. Zooming out way back in 1995 when the USD/JPY reached a low 80.00 area, a current lower low is formed at 76.32 in August 2011. Daily charts confirms this trend as a channel going south and a series of lower lows and lower highs since April this year reveals that the slide may continue as low as the 75.00 area. Once the US debt deal has found a stable common ground, a rally is absolutely imminent. For now, shorting this pair is absolutely a good choice, nobody wants to catch a falling knife.


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