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Monday, 17 September 2012

USD-JPY: 17 September 2012, Monday, 7.37am

USD-JPY: 17 September 2012, Monday, 7.37am

In my previous preview on USDJPY, i mentioned of the possibility of Bank of Japan (BOJ) intervening the Yen FX markets. See link below.


Thus far, nothing has happened yet. However, i believe the intervention is near. Remember that Central Bankers have political pressure to maintain the stability of their country's currency. Japan is a mainly export-oriented country. Think of Sony, Toyota, Toshiba, Honda, Nintendo, Yamaha, and the likes of many other Japanese conglomerates and it is not difficult to see how exports are important to the Japanese economy. Japan is a country which relies strongly on their exports, hence, they would often seek to keep their currency weak or at least maintain stability. When the Yen over-strengthens, government officials will voice their displeasures through the media. It is often a hint to currency speculators to get out of the turf. 

When the same rhetoric such as:

"Watch out and get out of the way!! I am going to do something soon!!" 

is repeated multiple times by the Japanese officials, the market has been fore-warned. We are the retail traders. We do not have the financial muscles to go against the markets. In the forex ocean, we are the shrimps, and we follow the whales. If BOJ does intervene, watch for a 200-300pips USD-JPY bullish spike in a single day.

Potential intervention zone is around 75.50-77.00. How to trade this intervention? Open a sub-account. Transfer a small amount of money to this sub-account. Highly important: you may need to hold this trade for weeks. So do ensure you have enough money in the sub-account to meet the weekend margin requirements. 

Place a limit buy order anywhere from 75.50-77.00
Stop loss below 75.00
Target profit 80.00

The following quality article is contributed by FMG (Derrick) who is an active forex trader. He is also the webmaster of http://www.forexmindgames.com/ and his contribution is published as we both hold the same judgement and view on USDJPY.

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