Bank of Japan ready to easy monetary policy again

Japanese yen continued falling on Monday. Thus, USDJPY ia rising for 3rd straight week after Bank of Japan announced further possible monetary easing. Will such a trend persist?

In the end of last week head of Bank of Japan Haruhiko Kuroda said the bank is ready to cut interest rates or increase volume of bond buying programme. The first option is more preferable. Current rate is -0.1%. Deflation of 0.5%year over year was recorded in August 2016 in Japan while the BoJ targets 2% inflation till March 2018 when the further tax year ends. Reaching the target may require additional monetary easing. The current volume of the programme is 80trn yen a year. The most significant economic data will come out in Japan on October 23 and 27 – trade balance and inflation for September. The next BoJ meeting will take place on November 1. This week the factory orders will come out on Wednesday and producer prices on Friday. Moreover, some other indicators are expected.

usdjpy

On the daily chart USDJPY: D1 has left the triangle to move upwards. Further growth is possible in case of more active measures of BoJ to ease monetary policy.

Parabolic indicator is giving bullish signals.
Bollinger bands are slightly widened which means higher volatility. They are tilted up.
RSI is above 50 having formed positive divergence. It has left the overbought zone.
MACD is giving bullish signals.

Bullish momentum may develop in case the yen rises above the last fractal high and Bollinger band at 104.21. This level may serve the point of entry. The initial stop-loss may be placed below the Bollinger band, Parabolic signal and the last fractal low at 100. Having opened the pending order we shall move the stop to the next fractal low following the Parabolic and Bollinger signals. Thus, we are changing the probable profit/loss ratio to the breakeven point. The most risk-averse traders may switch to the 4-hour chart after the trade and place there a stop-loss moving it in the direction of the trade. If the price meets the stop-loss level at 100 without reaching the order at 104.21, we recommend cancelling the position: the market sustains internal changes which were not taken into account.
Technical analysis summary

Position Buy
Buy stop above 104.21
Stop loss below 100

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