We have been keeping an eye on that beautiful triangle formed by USD/JPY on the daily chart, which finally broke after FED’s decision on having 2 instead of 4 rate hikes this year. USD/JPY hit a new 52 week low of 110.65.
Our trade suggestions is on the short side at these prices
Stop loss in the invalidation line around 114.50 levels (Unlikely to be hit due to weakness).
For traders already holding short positions, we advise the stop loss to be adjusted to 114.5.
The reason behind a 114.5 stop loss:
We believe that the breach of the triangle marks the beginning of the 5th wave down for USDJPY, towards our lower target at 108.00-106.00 levels. If this turns out to be an impulsive wave (most likely) then, a retracement of wave 2 should not invade wave 1 top, thus if USDJPY is to touch our target around 108-106 levels, any short position should not invalidate 114.5.
This week will be rich in economic data concerning USD, thus up to Friday when GDP (QOQ, Q4) is released, it is very likely that we experience high volatility.
Use tight stops for intraday trading.