Looks like the dollar is overbought and will drift back down to below 96.

I'm new to currency and only have a very, very small trade on; looking for inputs from more experienced traders.

Hello Iflyjetzzz.

I am expecting/hoping for a test of 101.50 - 102 before I will look for opportunities to go short USD/JPY. This area is the confluence of:-

1) the double bottoms of 1999 and 2005 (which was finally broken during the Bear Stearns weekend, to much fanfare)
2) It's the 61.8% fib retrace of the August 08 - December 08 down-move
3) It's the classical upswing target from the recent double-bottom on the daily chart.

At the least, I would put any stop above that zone, as it should prove heavy resistance.

Good luck with the fun and sleep-depriving world of FX trading

Clarence, thanks for the advice on the trade.
I sold the dollar at 98.28 and 98.31. I covered at 98.21 and 98.28. Profit of $2.5k minus commissions (interactive brokers charged me $2.50/trade; $10 total).

Not bad for holding open positions ~24 hours, but I'm not sure if it's my cup of tea. It takes a lot of work and I can see that there's decent downside risk.

Are there any currency pairs that you trade in and out to pick up a quick 10 pips?
Any good reading material to make me a better trader? A friend who trades currencies professionally was the one that guided me through this trade. He lost 1/2 a pip; I guess that I've got more patience than him. (I got my short in at a basis of 10 pips higher because I waited for a better entry point).

Update - good thing I closed them out when I did. I would've gotten stopped out at 98.71; currently at 98.92.
Looks like you're correct that the dollar's moving higher against the yen, as it broke through resistance.

Hi Ifly,

I am not a particularly good short-term trader, so am hesitant to give advice about trading 10-pip moves...however, I did have the privilege of working with a guy who scalped FX with a lot of success...and he concentrated on the EUR/USD and EUR/JPY pairs. I unfortunately lost contact with him when our old office was disbanded.

In the public realm, a respectable FX scalper who does offer training in his methods is LinuxTroll. He often frequents the Forex Factory forums (which I find a rather soul-destroying place).

This is his scalping thread on FF:
http://www.forexfactory.com/showthread.p....

And I see he now has his own website, where he sells an E-book, discusses his proprietary indicators, and charges for one-on-one sessions:-
http://www.cyrox.com/method.html

FWIW, Reuters TA says that there is resistance at the 8 DMA (98.16) with more stalls likely. Couple that with the JPY.gov to see JPY weaken...... and I think those shorting USDJPY might get hurt.

What is the economic reasoning? Both economies are ZIRP. Any move is random.

I'd actually go LONG dollar vs yen, as Japan's economy is getting NUKED as we speak. You're basically long the nikkei at that point.

Japan has been very friendly, dumping over $100B into IMF and obsequiously buying Treasuries. I think we owe it to MITI to get the yen/usd > 100, at the very least.

Otherwise, where will all those stockpiled cars go???

Wow. Too bad I closed out my position before the Fed announced QE.

ClarenceBeeks, ZenThunder, Iflyjetzzz, and others.

I'm thinking of going long USDJPY through the futures after the massive ramp in JPY.

Knowing my limitations, I would be very interested in your insights into this. My rationale is that the ocean ran away following the quake of the QE announcement, but will come roaring back as a Tsunami. In other words, I think that JPY.gov will try to devalue their currency against USD (even with China playing their reindeer games to muck this up).

Given the sentiment on TF is that the USD will reign supreme once again (crabs vs AIDS), I'm wondering what those who regularly have skin in the game, think.

Thanks in Advance.

I find USD/JPY really difficult to trade right now, it's a bit schizo... I always ask myself before entering a trade, at which price in the future would this trade be absolutely wrong, and I need to get out? And with USD/JPY right now (near the middle of the range of the last 3 months or so), I don't know where that 'I am wrong' price would be...certainly not too close to here.

That's why I am hoping for a shooting star/rollover around 101/102, as that would be a clear bearish sign at the confluence of major resistance, and gives a nice 'I am wrong' point, in case the price subsequently blasts through it. And if it does blast through it, you can play the bullish momentum game, with a stop on the other side.

As you see, I am a pure technician, and don't use fundamentals in my trading. When you can use lots of leverage, then you have to focus on price, as early isn't wrong, early is dead

That said....USD/JPY is getting close to the low of the past 20 years, so you have to ask yourself how much more money is left to be deleveraged from those 20 years of carry trading? IMO, not much more, which would predict that we are close to a bottom on USD/JPY. Of course, central banks increasing money supply towards the range extremes can always upset that applecart...

Thanks Clarence. I appreciate your insights. That's how I'm leaning (JPY should weaken back towards 78 /79) but CBs are scary, no?

Clarencebeeks wrote..

I am hoping for a shooting star/rollover around 101/102

The high was 101.45, which satisfies the double bottom projection. Maybe it's time to take a look at shorting this pair again, as there could be a H&S forming, with the right shoulder being formed as we speak.

Here are some charts:

COT data also suggest Yen strength:

http://www.dailyfx.com/story/charting_ce....

The OANDA open positions also currently show most USD/JPY speculators are underwater longs, suggestive of imminent Yen strength.

Finally, the current TF bear-suicide-fest suggests an imminent top in equities, which are often correlated with USD/JPY.

I am looking to go short on a break below today's low (whenever it forms), looking to add to this position on breaks below 95.62 and 93.60 (the left neckline). With a stop over today's high (the right shoulder), the risk:reward should be good, as we are trading with the longer-term trend.

This short play is starting to look promising, and now there is a test of support-hopefully-turned-resistance:

ADP numbers certainly gave my short a good scare, but the pattern still looks good for now. Looking to add more shorts if today's low is taken out.

Jamie Saettele over at dailyfx has picked up on the H&S too now:

http://www.dailyfx.com/story/dailyfx_rep....

Nasty spike up has taken me out, but the H&S look is still there - so hopefully there will be another opportunity to go short this thing. Maybe a move through the low of the day will be the trigger.

As a famous Scotsman once said,

"if at first you don't succeed,
pull your foreskin o'er your heid"

Scots-English translation:
o'er = over
heid = head

This somewhat sloppy H&S still looks good value to trigger a test of the lows from the turn of the year.

Price was rejected by the 200 DMA today, and has maaaybe set up a H&S on the low timeframes. The treasury auction results should be decisive for this pair:

That H&S was great once it triggered, but now price is being held at a support trendline (see attached). If it breaks, it'll be a great opportunity to be short again.

When I said "great opportunity to be short again", what I meant to say was, "great opportunity to have the Roppongi Tower inserted in my rectum". Crazy volatility (volatility is always crazy when it goes against you, eh?)

Two insertions of the Roppongi tower in one week for us USD/JPY shorts, but still I come back for more.