In February, the trade in USD/JPY has been to buy any 40-50 pip pullback.
Today, after storming to 81.66 at the open, the pair is down to 80.42.
The break of the 200 dma was probably the start of a long-term rally so if you can swallow a 200-300 pip loss it’s undoubtedly a good time to buy USD/JPY.
The problem is, most traders aren’t interested in taking that kind of risk and it’s not entirely clear that the pair won’t go back and re-test the 200 dma, which is all the way down at 78.00. That would also mark a test of the old 76-78 range.
Those who don’t want to miss the next leg higher should consider buying at 79.50, which is the Oct. high and the 38.2% retracement of the February rally.
