The US dollar has maintained its impressive rise against all currencies, it has lagged somewhat against the yen and this presents a possible opportunity. I have the pair in a clear uptrend from October 2011 with a low at 75.6, since then we have had an impulsive wave higher to 125.8 in June 2015 followed by a significant pullback that appears to have unfolded in 3 waves truncating well above the yellow target box. The pullback did retrace more than 50% of the move higher so it was of a good size, the black trendline defining the pullback was broken in July and retested several times suggesting it is a real break and the pullback is complete. From here we can expect another five wave advance to new highs. I will be looking to buy somewhere between 111 and 110 should it get there.
Economically the trade looks sound, the US economy continues to perform well and the Geo political concerns have never really turned into anything major. The markets are down at the moment and this USDJPY needs them to recover if it is to make significant ground as the pair is highly correlated with the stockmarkets. The green box would be my buying area with a stop below the black trendline assuming a retest will hold.
The trade offers excellent risk reward, has positive roll and could last up to 9 months
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