USD/JPY fell during the Monday session as the 78.00 level acted as a massive resistance barrier to the pair. The pair has been decidedly bearish as of late, and unless the Bank of Japan is intervening, this pair is either sideways or down in direction. The pair can’t be bought until we break above the all-important 80.00 level, and as that being the case – we only sell rallies at this point.
There have been several interventions by the Bank of Japan lately, and every time it happens, the market will simply fade those moves. The whole pair is set up as such: to sell any pops in price. The trend has been viciously to the downside since the financial crisis of 2008, and should continue to have massive headwinds to any serious attempt to the upside.
The pair has a definite trading range form the 76 handle up to the 80 handle, and we will continue to trade it as such. The higher we get, the more interested we are in selling this pair as the moves simply do not have the strength to continue above that 80 level. If we ever do, we would become buyers, but that seems to be very far down the road.
We like selling rallies, especially ones that are over 50 pips as it gives us a decent amount of room from which to trade. However, we are not keen to hang onto trades for too long as the 76 level has seen a couple of interventions recently, and we do not want to be on the wrong side of a central bank intervention. There are few things that can wipe your account out quicker than that mistake. Because of this, we sell, but are willing to take 50 – 100 pips at a time, and then wait for another thrust higher form which to sell again. Someday we will be proven wrong as this pair finally gets traction to the upside, but until then – we are willing to continue with this strategy as it has served us so well.