Safe-Havens Mixed Ahead Of Break

Posted Friday, October 4, 2019 by
Shain Vernier • 2 min read

The week is growing short on Wall Street and sentiment is turning positive as the closing bell nears. U.S. stock indices are on the rally, led by a 225+ point mid-session gain in the DJIA DOW. Consequently, safe-havens are turning in a mixed performance. Gold is the headliner, losing about ¼% on the session. The USD/CHF is trending south and the USD/JPY is holding near flat. All in all, the havens are in a stalemate.

Earlier this week, I issued a long trade recommendation in the USD/JPY from a key area of Fibonacci support. The timing of the trade wasn’t ideal and it was stopped out by only a few pips. If you missed the update, feel free to check it out here.

Now, it appears the macro Fibonacci support level is proving valid. Let’s dig into the technicals and see if we can spot a trading opportunity in one of the forex’s traditional safe-havens.

Safe-Havens Mixed, USD/JPY In A Holding Pattern

All in all, it has been a big week for the yen against the Greenback. Rates of the USD/JPY are off more than 140 pips and testing a key area of macro Fibonacci support.

USD/JPY, Daily Chart
USD/JPY, Daily Chart

Here are the levels to watch in this market through the Monday session:

  • Resistance(1): Bollinger MP, 107.46
  • Support(1): 62% Retracement of September’s Range, 106.78
  • Support(2): September Low, 105.74   

Bottom Line: When at first you don’t succeed, try again. While this is typically good advice in life, it can cost a fortune in trading. There are few things worse than repeating losing trades; it is wise to avoid doing so, especially against the current strength in safe-havens.

However, the importance of the 62% Retracement of September’s Range (106.78) in the USD/JPY can’t be ignored. As of now, I will be going long at market from 106.78-106.84. With an initial stop 1 tick beneath today’s session low (106.55), this trade produces 30 pips on an approximate 1:1 risk vs reward ratio.

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