In my opinion, the Yen will continue strengthening going forward. This won’t be the first time it as done so and surprised investors. Looking back in time since the Abe came to power and the consequent launching of Abenomics, the Yen weakened considerably. In fact when Abe came in, the Yen was trading at 98 against the Euro and it appreciated until late 2014 when there was a realization that negative interest rates and quantitative easing was not a solution to the chronic deflation. It then resorted to policy change with yield curve control its main tool of controlling and resuscitating inflation towards the world wide 2% target.
Looking at the charts and looking left, price action is bouncing around the previous support turned resistance. If you are wondering where, look back at 2015 lows where price action bounced off and broke below last year. As a matter of fact, price action is resisting this territory and forming a series of inverted hammers with bullish momentum waning as indicated by the stochastics. Since price is reversing from significant Fibonacci levels with a clear sell signal printed by stochastics, let’s be ambitious and target the next probable support at 110-113 zones for a clean 1000 pips dip and trade as follows:
Stop Loss: 124
Take Profit: 113-this area is the 2016 lows and support zone.
Remember, the trick to staying profitable is to trade less, good money management and a sizable risk reward ratio. Place this one trade and wait or trade intraday time frames and look for shorts ONLY.
Have a good trading day.