I have just bought Dollar/Yen as a medium term trade basis (time horizon between a week and a month)
I believe that the big volume on yesterday’s sell-off was a selling climax. Also the sell-off bounced off the support of the rising 144 day moving average almost to the tick at 101.52 before rallying today. I also expect the support of the 14 month uptrend (currently around 101.36) to continue to hold.
Ultimately I see this as just another retreat towards the lows of a trading range and expect there to be a rally back towards into the 103/104 region in due course. I am expecting a hawkish tone from the Fed tonight which could begin to drive the move back higher once more.
I have placed a larger stop than normal at 100.96 (100 pips) which gives a bit of room under the key March low at 101.17, as I believe that the resistance of last Friday’s high at 104.12 will be retested in due course.