I'm looking at a return to 108, possibly sub-108 to somewhere towards the base of the original move up (107.50ish); similar to the sharp corrections we've had on the previous two tops above 105 & 108 coming off of March low.

I went in short on that pop today @ 109.62, which was the 61.8% -- and I was expecting it to get there (albeit not so quickly).

I use an 20EMA/80EMA system to track the support and resistance of trends. My weekly chart predicted the stall at 110, as it hit the 80EMA at that point. Normal trend behavior (minus surprising major fundamental news) is for a re-test of the 20EMA which should remain strong support. Then possibly bounce once or twice between the 80 and 20 attempting to consummate the reversal. The second try is often the break of the 80 if there is strong buying interest.

So, theoretically, we could see a sub-107 bottom, but I doubt it with such strong dip buying. I am targeting only 108 at this point.

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Daily close is technically USD positive. Quite possible for it to push higher than 110.27 (the highest price recently) and then go back down.

Daily chart thows clear divergence in MACD, in addition, other indicators are pointing down. So, I reshorted at 109.431 after price hesitated around 109.43. Stop loss just above yesterday's hight at 109.801. Ideal stop loss should be at 110.38, but my tiny account doesn't alow me to have that large stop. Target 107.90 or 108.26.

Edit: I worked hard in the past 10 hours, trying to optimize my short entry level. I scalped a few pips from the short of 109.43 and then re-shorted at 109.57 before 109.83 was visited, which was just a fraction of a pip away from my s/l of 109.85.

The up moves were impulsive and down moves are with hesitation. For this reason I closed my short with a few pips of gain.

Took profit @ 109.20 and 109.40 after the break of 109.80. Waiting to see if we actually fall into a triangle or not.

Edit: If the 20EMA holds as support on the 4hr/8hr charts, I am leaning towards a long position, but waiting for a break of 110.

We got the break back over 110. And we end the week with a hanging man and sitting just over the 80EMA on the weeklies. I still read "sell" when I look at this chart. Looks precarious. I am in short @ 110.55 but hedging for a break through 110.80.

Anyone else think we are due for a fall soon?

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Haven't posted here in a while as I've been swamped with reports.

Took a long USDJPY position on the pull back to the former resistance level around 108.55. Took profit on the first lot (as my rules are to have a first target equal to risk) and now the stop on my second half is guaranteed to net 120 points. This may be a tight stop and post-weekend directionlessness may knock me out; but I can always reestablish a position.

Besides, it looks like the yen's advance is loosing strength in the crosses, so a rebound there could add fuel to a USDJPY advance since there is little to know positive event risk expected from the US side.

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John Kicklighter is the author of Dynamic Carry Trade Basket, Watch What The Fed Watches, and Forex Trading Weekly Forecast on DailyFX.com

USDJPY H1

Sounds like you did well. I was stuck long up at 110 from the false breakout but held it since I was certain we've go back through 110 at some point. Got out after the rally stalled. So I was playing little short hedges all week and did okay in the end.

I am not at all certain about the short @ 110.55. For now, I am only targeting a modest pullback towards 110 with orders in place for a continuation (in either direction).

I can see the Yen crosses correcting, but why would we see a rebound if the reasons behind the carry sell off haven't changed? I would think that if the Yen gives back it's gains, the USD would also lose its recent strength. It would mean money moving back into the other currencies, yes?

Hey Firewalker,

There are long-term and short-term considerations for the health of the carry trade (just like fundamental and technical analysis). For the long-term, credit conditions are still very bad, writedowns are being subsidized by forced auction rate debt buy backs and the return on carry is shrinking. However, these are all lingering threats and the the market will start to lose its attention and fear of these fundamentals if nothing evolves out of it.

On the short-term we have seen Japanese GDP tumble - a strong fundamental factor. (at the same time rates are still looking up for the US, so there is no counterpoint there to strongly correlate the US dollar and yen). We have also seen risk appetite improve in other areas like equities, emerging markets, more risky debt, etc. This has been accompanied by a pull back in general volatility across the financial markets.

So given the stale feeling of long-term concerns, the improvement in short-term conditions and the relative 'oversold condition of most yen crosses, there is a reasonable argument for the carry group to rebound.

What do you think? Watching any of the yen crosses. I have been watching CHFJPY and NZDJPY (the later for a good place to short).

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John Kicklighter is the author of Dynamic Carry Trade Basket, Watch What The Fed Watches, and Forex Trading Weekly Forecast on DailyFX.com

Basically, I think we are cycling down into September 15, with some support at 107.40.

For the crosses, there is still more downside to come with the euro and pound, so overall, a nice bear market prevails.

Regarding the USD and carry trade, I think the wild card continues to be the potential of a another major banking collapse in the next few months. The economy needs to turn to the upside SOON to keep the weakest of the banks solvent. And it is looking like the lower credit --> lower consumption vicious circle has a strong hold on us now. Someone is going to bite the dust.

It looks like this pair is beginning a correction off of 110.60. A look at the weekly chart shows clearly we are at the top of the fifth wave up from 95. The only question at this point for me is when/if the top is in. Everyone is getting really bullish USD, which is making me think this may indeed be close to the end of wave 5 of 5 ....

I trade USDJPY exclusively. My style is actually short term in and out trades 20-50 pips targets. And I am a part-timer, so it is easier to keep up on the fundamentals of just the US (mostly).

Good strategy with the time you have to dedicate to it.

It's always interesting to meet someone who only trades one pair. How often would you say you find trades?

I used to do something similar with financial futures, commodities and options. Personally, I found that my limited options led me to force trades at times. Do you find this or are you more disciplined than I was?

I'm looking for a possible pull back to 109 (short-term rising trend) or 108.60 for a potential place to jump back long. I see you would disagree Terton. What are you guys looking for in USDJPY?

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John Kicklighter is the author of Dynamic Carry Trade Basket, Watch What The Fed Watches, and Forex Trading Weekly Forecast on DailyFX.com

Well, I find myself at times scalping 5-10pips a couple times and calling it a day. Other times, I can bag a 20-30 pip trade and call it a day. There is usually enough momentum to get something. I tell myself that 20pips a day = 100pips a week, which adds up. It is always great to get in on a large move, but I don't predicate my entire trading plan on it. Slow and steady wins the race, as they say.

John,

Where are you looking at going short on NZDJPY?

I've been watching this since the break of the triangle 7 Aug. Price came back up and hit 79 which I missed an entry and is now close to this. I will look at a short enrty 78.60, SL 79.30.

GL

This is a pretty sound strategy. It is a general rule of thumb that the longer your forecast, the lower the probability that it will actually follow. If you are just looking for 10-30 points you can monitor the market through the whole trade and the probabilities of making your target are vastly higher (compared to someone with a 200 point target - the longer the distance, the longer it takes and the more likely that the trend can fall apart).

What do you do about stops? Set it equal to the target? Sounds like the nearby targets probably has you working without stops.

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John Kicklighter is the author of Dynamic Carry Trade Basket, Watch What The Fed Watches, and Forex Trading Weekly Forecast on DailyFX.com