I’ve had a reasonably good handle on USD/JPY over the last two weeks and I know I’m trading a market well when I’m willing to flip from long to short and back again. Many of the bank macro analysts are turning bullish again on USD/JPY but I don’t sense this yet from the price action. The big risk is still to the downside in my opinion, with the market avoiding over-positioning post SNB.
For now the bulls are in control and support should be solid initially near 118.30. If this breaks then we can start considering a sell-small-rallies strategy. Initial highs at 118.85 provide the first line of resistance but a break above there could see an acceleration towards 119.50.
The latter is my preferred scenario for a good short entry level. I’m looking to start establishing a short position on any silly exhaustive spike or when a solid hourly top forms. In the meantime, trading the swings makes the most sense.