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Trading Plan: Buying YEN for BoJ meeting

October 30, 2017

Earlier today I release a trade idea on EURJPY, since the morning my market execution trade has gathered me over 50 pips in profit so far, nothing special but it's promising and it also allows me to trade "safer" during the BoJ meeting, which will take place during the upcoming Asian trading session. 

 

In this brief report I will cover my trading plan for the BoJ meeting. The trading plan will consist of the following information,

  • Technical Intel

  • Fundamental Intel

  • Key Trading Levels

  • Trading Plan

And it will be focused only on USDJPY. Like I mentioned above I released a trade idea via my breakout system earlier today on EURJPY and I covered some brief information there about the BoJ meeting, if you like to read it just click here and you will see the post.

 

I will begin with the technicals and the key trading levels on USDJPY's daily chart.

 (click on image to enlarge)

As you can see on today's candle, the JPY has been stronger than the USD, even if you look at the JPY versus other pairs, such as the EUR, you will see Japanese bulls and that is the case in the whole FX market right now. 

 

Technicals suggest that USDJPY will be heading lower in the near-term with the possible target being the 110.000 area. This can be best seen by zooming out of the daily chart and taking a look at the pair for the last 3 years. The upper trend line (yellow and not dotted) is a powerful resistance level which has held on like a charm since April 2014 and it did just now. 

 

You can clearly see that the white key trading level has held on well too, giving the impression of a triple top and it if plays out as one then the 110.000 target area becomes a big reality. 

 

On the lower side of price action we have a strong support zone right at the 112.500 level. Here we have 3 points of support, 

  1. The dotted trendline which has acted as a resistance November 2016

  2. The EMA and DC

  3. And the 30% from recent price action

Mark my words, if this area gets broken easily, we will see strong bearish pressure on this pair, now the only way I see that happening is if two things happen,

 

  1. Bank of Japan has a hawkish meeting tomorrow

  2. More issues with North Korea

Either one of these will do, but since BoJ has provided pretty much nothing special all year long, and this is the before last meeting of the year, perhaps the BoJ crew will give us something interesting to trade and in my honest belief (and comprehensive analysis) I expect a hawkish meeting in less than 12 hours time.

 

Now lets quickly go over the fundamentals,

 

BoJ Governor Haruhiko Kuroda is poised to be re-appointed as the central bank’s chief after his current term expires in April according to the Nikkei, the cabinet is seeking someone who has ‘an appreciation for the current system. (BoJ has not changed its policy stance in years)

 

In September alone, Japanese exports rose by a massive 18 percent year-on-year, which means that the weaker YEN is paying off in the exports department but not in the inflation one. Japan’s economy has been underperforming due to the weak inflation, stagnant wages, and excessive reliance on exports so perhaps the BoJ will pull a few tricks in the upcoming meeting, which will make the YEN stronger temporarily.

 

BOJ’s monetary policy is a combination of negative interest rates and zero base borrowing costs, with deposit rates at —0.1 percent since 2016, whilst they are also buying $790 billion in bonds.

 

It is strongly believed that Japan is in a strong asset bubble which means any big moves by the BoJ could cause the Nikkei to crash, very hard.

 

So as you can read, the fundamentals don't suggest a big moves by the BoJ but I still expect something to come to the far east which will make the JPY strong. 

 

Now for the trading plan for the BoJ meeting.

 

Since I already have a trade on the JPY (Selling EURJPY) I will not look to enter with a market execution trade rather, I will be setting an order on USDJPY. 

 

The key support level is not too far away  (112.50) so I will look to add my sell order below this level but what I would like to do is wait for the UTC+0 daily candle to close before I make my move on this, but since I can't update the post at that time, it will be 3am in Cyprus and I will need my beauty sleep I will be setting my sell order from right now. If something changes, I will leave a comment below but I will update my members in the Traders Chat Room.

 

So here are my pending order details,

 

- Entry: 112.360

- Stop Loss: 113.163 (80.3 pips)

- Take Profit: 110.045 (231.5 pips)

 

Keep in mind, this trading plan is released to the general public, other trading plans are only released in oru traders room, if you want to receive consistent information from me, join PipsMatter!

 

Lets make it rain tomorrow!

 

 

 

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