Day three - potential USD/JPY trade

USD/JPY has pushed up to test the 103 level and is working in the intended direction.

Source: Bloomberg

Following on from my potential trade idea yesterday, the hourly chart now shows the pair is overbought so we may see upside in Asia capped at this figure. However, I would not be expecting strong downside today given the good housing numbers seen in the US overnight and the potential for neutral-to-hawkish Fed minutes (04:00 AEST).

The 20-day moving average on the pair is now firmly trending higher and, while USD/JPY is testing the top Bollinger band, this is a reflection of the better underlying trend.

I continue to hold a long bias here and would even look to add to potential longs on a close through key resistance at 103.09 (the 50% retracement of the January sell-off and subsequent July 30 high). I would look to move stops to 101.90 given the move in the pair over the last two days.

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