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.