Stay off the Yen Bandwagon

Boom & Bust subscribers have gained about 40% since last July betting against the yen. I have to say, we got in at the perfect time! We bought our investment (betting on the yen’s decline) just 4% higher than the ultimate low price it made in 2012.

That means we’ve captured every bit of the yen’s massive drop against the dollar, from ¥76 to ¥94.

I hope you had the opportunity to join us for this investment! But if you didn’t, I have to warn you… today is NOT the day to jump on the bandwagon. Let me explain…

This chart of the USD/JPY shows we’ve hit our “first target.” Don’t be surprised to see this uptrend continue, but right now there’s a good chance we’ll see a pullback first.

See larger image

I know this for two reasons…

First, ¥94 is a 38.2% Fibonacci retracement… and that’s the first place to expect a pullback in the current trend.

Second, when the USD/JPY chart bottomed it showed a widely-recognized inverse head-and-shoulders pattern. Once the “neckline” of the pattern was broken, the USD/JPY moved strongly higher.

This pattern is very useful because it allows you to set a price target. After doing the calculations I realized the price target dictated by the inverse head-and-shoulders pattern is the same as the price target shown by the 38.2% Fibonacci retracement (about ¥94).

That means we have double “confirmation” of a potential price resistance level, suggesting the current advance in the USD/JPY may stall out.

Don’t get me wrong… the yen will continue to weaken over the long haul. And you’ll have plenty of opportunity to jump on the bandwagon as it continues on down the hill. But if you’re just getting tuned in to this trade… you’re better off waiting to join us.

Wait until USD/JPY is firmly above ¥95, confirming its strength. Or be patient for a pullback to ¥90 so you can get in at a better price.

If you haven’t done so already read the Survive & Prosper issue on “Yen … You’re No Jack Kennedy.”

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Categories: Markets

About Author

Adam O'Dell has one purpose in mind: to find and bring to subscribers investment opportunities that return the maximum profit with the minimum risk. Adam has worked as a Prop Trader for a spot Forex firm. While there, he learned the fundamentals of trading in the world’s largest market. He excelled at trading the volatile currency markets by seeking out low-risk entry points for trades with high profit potential. An MBA graduate and Affiliate Member of the Market Technicians Association, Adam is a lifelong student of the markets. He is editor of our hugely successful trading service, Cycle 9 Alert.