Sforex
Long

BOJ provides enough catalyst for USDJPY to come back its rally ?

FX:USDJPY   U.S. Dollar/Japanese Yen
364 0 2
-Fundamental Analysis:

BOJ has published its Monetary Policy Statement. This is the main points:
- Retains plan for 60 – 70 tln yen annual rise in monetary base
- To extend loan scheme aimed at encouraging banks to lend to growth sectors beyond March 2014 deadline (as expected) – extended by one year
- To double the size of funds provided under loan schemes targeting growth sectors, cheap lending to banks that boost lending (expanded to 7tln yen)
There is no key change in monetary policy , but still has a small change: That is BOJ will expand loan program.
USDJPY             react quickly : rally 50 pips to 102.70
The problem is whether this small change could provide enough catalyst to drive USDJPY             higher or just be a temporary reaction.
Rising of Gold             caused the sharp downtrend of USDollar             , so USDJPY             might be lower.
Japan economy is not good as economists expect : Japan GDP was lower than expect, and purchasing power of Japanese doesn’t rise up despite of tax hike coming in April.
Those problems could weaken Japanese Yen             .
However, we should look at Japan industry production data, CPI             , and Export to get a full picture of Japan economy and Yen. (Japan economy depends on manufacturing activities and export, and BOJ is pursuing 2% inflation target).
Hence, I think it’s too soon to start the BUY order in the being time, but if you want to risk, you could BUY now.

-Technical Analysis:

USDJPY             broke following resistance levels I draw on the chart:
- Upper line of channel.
- 102.40 resistance level .
- 38.2% Fib retracement.
- The neckline of reversed head and shoulder pattern.
- EMA50
There are two levels USDJPY             would test if uptrend is maintained:
- 103
- 103.40
103.40 is a very important level because it’s the level of SMA50 and 23.6% Fib retracement. Thus, 103.40 is a key resistance level , the mark level. If price pierced this level, 104 would be the next target, but it is the future problem.
If traders open LONG position: the first target is 103 ( psychological level), second target is 103.40 key resistance level . Stop loss should be at 101.60

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