USDJPY - keep buying the dips, more expected the week of 06 June
This pair has made parabolic gains in 2022 and there seems to be nothing that can stop it. As the weekly chart shows, we did have a retracement recently, but note that the gains made by the bears in 3 weeks were recovered by the bulls in just a week. Price is now on the verge of breaking the 21 year high at 131.347.
Checking out the fundamentals, I realized that Japan is keeping interest rates around 0-0.10% while the USA is above 1% and in the process of regular rate increases. Some analysts are projecting as much as a total of 3% increase in 2022. Something will probably change here but as long as the difference is so wide, we can expect the USDJPY to keep rising.
There is also the phenomenon of ‘mean reversion’. Price does have the tendency to come back to its mean (see how far above the 20 EMA, price currently is). This huge gap has to close although it may take several months or longer to bridge it to a reasonable extent. This does mean that we should expect pullbacks from time to time.
In view of the above, my bias is strongly bullish and my approach will be to keep buying the dips as they occur. I cannot see any reason for any other action.
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Always use sound money and risk management and stay patient in all your trades.
Checking out the fundamentals, I realized that Japan is keeping interest rates around 0-0.10% while the USA is above 1% and in the process of regular rate increases. Some analysts are projecting as much as a total of 3% increase in 2022. Something will probably change here but as long as the difference is so wide, we can expect the USDJPY to keep rising.
There is also the phenomenon of ‘mean reversion’. Price does have the tendency to come back to its mean (see how far above the 20 EMA, price currently is). This huge gap has to close although it may take several months or longer to bridge it to a reasonable extent. This does mean that we should expect pullbacks from time to time.
In view of the above, my bias is strongly bullish and my approach will be to keep buying the dips as they occur. I cannot see any reason for any other action.
If you like my analysis, please give it a “thumbs up” and follow me to get immediate notifications.
Always use sound money and risk management and stay patient in all your trades.
Trade closed: target reached:
Awesome trade. I added 3 more positions along the way and closed all today in profit.