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Yen - Count on yen for a trade setup


If you want to see an interesting technical pattern, look no further than Yen. Yen is a beauty. The patterns that it creates are truly amaxing and so strictly technical. This is perhaps because Japanese are more technical analysts. Technical analysis has always played a role in their trading.

The present situation of the USDYEN is what I would like to call as Elegant trade. The trade makes sense for the sheer elegance of the pattern. For the simplicity of the trade setup.

USD has not been able to move above 119 for the fourth time. A trade setup begins to dawn. The USD is now supported by a trendline which supports it at approximately 118.40. The break below this TL would be a wake up call. But I do not see it as a sole reason to go short*. It is more likely the prices stay range bound (around 118.20) inspite of the break and consequently may be in for some extended range duration.

Lets contradict. The Aud has shown some weakness and it is more likely to persist for sometime. This may put Yen under pressure. As mentioned earlier, 120 has become a prime spot for the Option barrier. It is probable that a try at 120 is made before any downdraft sets in.

Conclusion: The dice loaded on the downside, but surprise can develop. More precisely perhaps as a spike above 120. The break out from the range will make for a nice tradable move. The sustained stop above 120 and 122 is still a good trade to implement.

* (but in the context of other aspects put together, makes sense)
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