Trade of the week: short USD/JPY
The rebound in USD/JPY has taken it back to ¥149.00, but it remains in a downtrend over a one-year view. The bounce has neared the 200-day moving average, but a new leg lower could be at hand.
(Partial video transcript)
This week's trading opportunity
Chris Beauchamp: Hello and welcome to "Trade of the week" on the Monday 21st July. Let's go first to what we're actually going to do this week. We're going to short USD/JPY, which is, I think, interesting because you've seen this very steady rally in USD/JPY, but you've seen it top out really over the past week or so.
We’re up to just below ¥149.00, which is roughly in line with where we saw resistance come through on the 12th May as well. So remember, this comes off a continuation of really being short US dollar all the way through the year. It has had a very strong rally. You have had short term uptrend off those post-tariff lows. But we are going to look at going short at USD/JPY for this week.
Previous weeks' trading outcomes
Let's go back to last week's trade very briefly because that was closed out because we were short AUD/USD, if you look at this, with our target as $0.65. And Axel, being a bit of a technical whiz as you know, we did go short this one, at around $0.6580 with the target of $0.65, which it duly delivered by Thursday. So a very quick one-and-done on that one, delivering on our trade there. So we closed that one out.
Then, let's go back even further to the previous week - the 7th of July. That's also short EUR/GBP, which is still in effect because our stop is up here above these previous highs. Because his rationale was you've seen momentum beginning to weaken across the board here, which might argue at least for a short term pullback. So if you're looking at these "Trades of the week", looking at short EUR/GBP for the time being, it is moving in that direction this week. So, one to watch particularly as you've got the European Central Bank (ECB) meeting on Thursday, expecting to leave rates unchanged.
This week's trade in summary
But this week's "Trade of the week", as I say, we're going short USD/JPY with probably an initial target down towards maybe ¥146.00, which were the lows on the 10th July. And put our stop above these previous highs. Don't put it right on the highs, give it a bit of room to breathe. So actually, give it to ¥149.50 is our stop.
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