Trade Set-Up In Dollar/ Yen

With Hades waiting to greet what’s left of the US Dollar, I’m looking for an entry to short USDJPY.

“The Dollar’s in terminal decline”, so says nearly every forex trader. That worries me, but I’m not looking to fight the trend. I’m looking to get on board, but with a fairly tight control on the trade. This morning USDJPY tested the Y88 mark, but rallied well off the lows.

I’m targeting Y89.15 as an entry point to short the Dollar. That level is a 50% retracement of yesterday’s move; a level often used by forex traders. If I get in I’ll stick my stop loss at Y89.70, just above yesterday’s high. First target will be Y88; after that I’ll run with a trailing stop loss.

What could go wrong? Plenty; this morning’s rally has crossed the small downtrend line, and opening a short here would be in defiance of a rising RSI and with the price above the 21-period moving average (my usual method relies on the price cutting below the 21 MAV and the RSI below 50). With Japanese officials changing their minds more than Little Britain’s Vicky Pollard, there’s a real risk of a sudden reversal, so I’ll be trading in mini-me size.

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