USD/JPY – How High?

Two weeks ago, USD/JPY cracked a down trend that began in 2007 – the blue line on the chart from the Tracker platform below:

USD/JPY Monthly – 1997 to 2012

On of the challenges traders face is in opening the mind to possibilities. The chart above illustrates just how significant moves can be once a long term trend changes.

Of course, USD/JPY has not yet established an up-trend – the move need more confirmation. Even if an up-trend is established, it can reverse at any time. However, traders that expect the varying monetary conditions of Japan and the US, (laid out in an earlier blog post here: http://blog.cmcmarkets.com.au/2012/02/15/breaking-usdjpy/ ) could see a sustained move upward could be asking “how high?”.

The Fibonacci retracement levels on the chart are an eye-opener. Even the most modest retracement would see levels higher than 87. A standard 61.8% retracement of the “long wave” down move would see 105!!!

While markets rarely move in a straight line, aligning with a major trend can be highly profitable. Current indications are that playing USD/JPY from the long side may be the way to go for months, or even years.

About michaelmccarthycmc

Chief Market Strategist - CMC Markets and Stockbroking Regular on ABC, BBC, Bloomberg, Channel TEN, CNBC, SBS and SKY
This entry was posted in Forex, Market, Trading and tagged , , , , , , . Bookmark the permalink.

3 Responses to USD/JPY – How High?

  1. DV4 says:

    Totally agree Michael, i don’t think there is much to stop it till the range around 87.00 – 94.00, and that is still 600-1300 pips away, maybe enter long again after a small pullback of the large up move.. possibly only a 23.6 – 38% retrace because the recent move was clearly impulsive…

    • michaelmccarthycmc says:

      Thanks for your comments DV – traders still need to find signals that suit their trading strategy, but there could be substantial moves over time

  2. Pingback: USD/JPY – Stay Aligned | CMC Markets Blog

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