USD/JPY Limit Buy at 91.07
October 27, 2009 - 5:22 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.
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.
As Japan relies mostly on international exports, a strong domestic currency has significant impact on companies bottom line.
Looking at the 4hour chart, USD/JPY reached a 92.30 high where supply took the pair slightly lower below the 92.00 level. Momentum looks firm and higher prices to the 93.00 level are possible.
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 (91.97), 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 91.97 level, the pair finds resistance at 92.32, 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 @ 91.07 Targets: T1 91.27 – T2 94.50 Risk: 90.40
* 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.
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