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Forex Flash: Switch to trailing stop in USD/JPY – Nomura

By FXstreet.com,  November 30, 2012, 10:55:00 AM EDT

FXstreet.com (Barcelona) - The Nomura strategy team recommend switching to a trailing stop in USD/JPY.

Over the past week they reveal that they have fielded a lot of questions on Japan and whether they feel that the rally is running out of steam. They note that many participants have tried to fade the move in USD/JPY earlier this week and it is now retesting the highs from the illiquid trading around Thanksgiving. They feel that this will make it hard for anybody to fade strength in coming days and could lead to a further break higher.

More broadly, as we are in the process of pricing a potentially seminal shift within the BOJ, the team find it hard to trade USD/JPY from anything but the long. However, with USD7JPY up more than 6% in less than two months, clearly risk management is becoming increasingly important. For this reason, they recommend raising their stop from 79.75 to 81.90. Typically, they avoid trailing stops but they make an exception in connection with the Yen trade as it is a trend which has the potential to run quite far.




The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.


This article appears in: Investing, Forex and Currencies

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