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USD/JPY Trading Strategy for the week 10-14 Feb 2014

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USD/JPY Chart 10-14 Feb 2014
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The US dollar holds steady, potential for an upside test

After a brief pause we are back with another strategy session and the pair we have picked is the USD/JPY. We have keenly awaited today's testimony by Janet Yellen to know more about the views of the FED under her new leadership. What we got was more of the same and that was enough to attract some US dollar bulls.

The chart says it all as after a brief period of hesitation following the release of prepared remarks the US dollar has been sold against the Japanese Yen. That marked a low around 102.15 and subsequently has resulted in a rally to test the daily highs around 102.65-70 area.

After the test has failed the USD/JPY binary options forex pair has subsided and is currently trading in a tight range between 102.60 and 102.70. We are keenly awaiting the Asian session for some fresh impetus.

Meanwhile the main trigger that will surely present new opportunities is the Retail Sales report on Thursday. However we have a full day ahead tomorrow so it will be interesting to see how the pair reacts to a sustained hourly close above 102.80.

In our view this will be a good opportunity to buy daily calls for the 12th of February, so we shall be keeping a close eye on that level. As you have probably noticed on our chart next important resistance is set at 102.93 and subsequently 103.43. If we see an hourly close above 103 we will purchase an hourly call option to reiterate our play.

However we should still be mindful of the downside risks to this pair. The correction lower that has started a couple of weeks ago may not be finished just yet as the full force of the move could reawaken any time. The first important support level is marked around 102.00.

If we manage to see a close below this level, we would abandon any bets to the call side and purchase daily put options for the 12th of February. An hourly close below will also result in buying an hourly put option. That said, watch out for Chinese data overnight - if its bad it could hamper the US dollar's push to the upside.

Daily updates will be published in the comments below.

Comments

Eurjpy's picture

yesterday after Janet Yellen spoke the eurusd went down as I expected

Eurjpy
Lockery's picture

I bet you are an experienced FX trader?

Lockery
Lockery's picture

Very smart trading mate, Congrats!

Lockery
Eurjpy's picture

yes, he is :) I am following him in last two months

Eurjpy
Lockery's picture

And you are on profit?

Lockery
Eurjpy's picture

always in the money mate :D no seriously he is good

Eurjpy

Disclaimer: The article is written for informative purposes only and it is not financial advice. The author does not have any position in the currency pairs mentioned, and no plans to initiate a position. He wrote the article himself and expressed his own opinions. He has no business nor personal relationships with any mentioned government entities or stocks. Readers should not treat any opinion expressed by the author as a specific inducement to make a particular trade or follow a particular strategy, but only as an expression of his opinion.

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