USD/JPY Limit Buy at 90.78
October 26, 2009 - 5:08 am by Forex District · Leave a Comment
The pair continues to be aided by short covering as traders believe the USD/JPY moves overextended themselves to the downside. However, a Chinese report saying Beijing should increase its Euro and Yen holdings in its foreign reserves prompted some investors to sell the pair.
The Japanese government has become more outspoken against further Yen strength, stoking speculation of market intervention if moves become 
one sided. USD/JPY appears to have found a floor for now and traders are expected to support the pair.
Toyota and Honda have expressed their view on the Japanese Yen and noted that if the currency remained or continued to stay at these levels, they would have no choice but to take production overseas.
As Japan relies mostly on international exports, a strong domestic currency has significant impact on a company’s bottom line.
Looking at the 4hour chart, USD/JPY found supply just above the 92.00 level prompting a retracement to a 91.57 low. The major resistance previously noted at 92.00, negated a bigger rally to the 93.00 level for now.
Although prices are expected to head higher from here, one cannot rule out further downside bias before demand builds up again. Preferred strategy looks to buy on dips.
Below current levels (91.77), USD/JPY will encounter initial support at 91.32, followed by 90.80 (61.8% Fib move from 90.09 to 91.91) and 90.47.
Above the 91.77 level, the pair finds resistance at 92.20, 92.54 and 93.00.
Despite recent bullish calls, some currency traders still look for a decline to January lows at the 87.15, on Dollar weakness and speculation of renewed risk aversion. However, USD/JPY may retest the rise above 92.00 before eventually heading lower. Below the January low, they are looking at the 80.00 as a point where the Government would have no choice but to intervene.
TREND
Near Term: Neutral
Medium Term: Neutral
Long Term: Neutral
Trading levels in play:
Limit Buy @ 90.78 Targets: T1 90.98 – T2 91.90 Risk: 89.30
* After 15 pips profit move stop to entry, take profit at will. Trade is canceled if it rebounds near entry and moves higher by 20 pips. Will follow up with comments if outlook changes.
DISCLAIMER: Trading off-exchange currencies on margin carries a high level of risk, and may not be suitable for all investors. Before deciding to trade the foreign exchange, you should carefully consider your investment objectives, level of experience, and risk appetite. Before making your investment decisions please acknowledge that the information provided herein should not be taken without your own individual assessment and extensive investigation, it should not be preempted as your own trading strategies, investment advice and/or trading portfolio. The views, forecasts and strategies may not prove to be accurate and may not be appropriate for you. Additionally, the views, forecasts and strategies provided by the author are not necessarily those of Gorbe Investments Corp., ForexDistrict, its owners, employees or other affiliates and/or contributors. Gorbe Investments Corp., ForexDistrict and the technical analysts will not be responsible for any loss incurred as a result of any information provided in this section. As such, Gorbe Investments Corp., ForexDistrict and the technical analysts do not provide investment advice, trading signals and/or any other professional advice such as legal, accounting, financial, etc… ForexDistrict provides this section only for general information; please contact an expert professional if any of these advices are needed.
