The Bank of Japan today conclude’s a two day meeting. Markets are expecting a commitment to a 2% inflation target (up from 1%) and further measures to stimulate the Japanese economy through a weaker Yen. (For a full discussion of BoJ expectations please see Ric’s blog from today). The potential for a weker Yen has some traders adding to longs in AUD/JPY.
The uptrend following the channel break is clearly in place. While more technically based traders may wait for a pull back to the trend line, or a breach of the recent high at 95.03, the potential for a move today is strong enough mtivation for me to join the trend now. Why am I so keen to get long AUD/JPY?
The “Big Picture” tells the story. AUD/JPY has broken from its 4 year trading range. IMO this is signalling a test of the 104 to 107 area, that is 10 to 13 big figures higher!! This is extremely unlikely to occur in hours or days – more like weeks or months. Nonetheless, a powerful, long term trend is a trader’s friend.
That’s why I’m looking at the following trade, with a trailing stop-loss: