James Fournier Trade: Bullish USD/JPY.

When seeking to trade and be protable, one must employ a core selection stratergy to only take high-probability and favorable risk/reward trades. In considering the viability of a trade, I incorporate three elements into the decision making process: 1. - Fundamental Picture. A lack of resolution of the European sovereign debt crisis and uncertainty over the viability of global economic recovery has sent investors eeing risky assets as the CBOE Vix Index surpasses its psychologically signicant 30 level. As market fears increase, global liquidity is tightening, which is bad for asset prices but good for the USD as was the case in 2008 (USD Index 70-->80 in 2008). Indeed, if the European debt crisis is resolved, with the market now moving into the winter months (historically an equity buying period), the statistic that 85% of the 100 companies in the S&P 500 that have released earnings results since July 11 have beaten estimates, combined with present 15x PE ratios and +$100 earnings in the S&P 500 represent a strong case for a global move into U.S equities making me bullish USD. Analyzing the Japanese currency, whilst the Japanese economy continues to run a current account surplus - the Japanese nance minister looking to follow the example of the Swiss National Bank is set to take "decisive measures" to limit the yen's rise as its strength is seen as a direct risk to Japanese recovery. I am therefore bearish Yen. 2. - Technical Stand-Point. The USD/JPY has been strongly rangebound in the 76.00-77.00 area over the past several weeks, having broken to new record lows of 75.95 on the 1 9 / 0 8 / 1 1 , a n d wh i l s t i t i s n o t impossible to see a continuation of the downtrend, any further falls should be considered limited. Longer-term technical studies indicate RSI and MACD divergence and I foresee the formation of a major long-run support/ bottom in favor of an intense upside reversal. Im looking for a break back above 77.90 to conrm outlook and to see an acceleration. In the interim, moves/retracements towards 75.00 should be recognized as excellent and attractive buying opportunities.

jamesfournier1991@gmail.com +44 7540184560

James Fournier 3. - Risk/Reward Ratio. In terms of risk/reward, this trade has a high both short-term and longer-term upside potential. If fundamentals continue to point to a double-dip recession then the USD trade should be held for a longer run. On the other-hand if the U.S Federal Reserve opts for more Quantitive Easing to re-stimulate the economy the USD will be under signicant weakness and unless Japanese intervention is stepped up - will invalidate the trade. Indeed, if the RSI and MACD signals become invalidated - the trade success probability will be diminished. In terms of stop loss positioning, stop orders could be placed below the USD/JPY historic low. Conclusion The release of US retail sales tonight could increase my conviction in being bullish USD as long as the gure comes out higher than the 0.7% forecast by analysts. As 70% of US GDP is driven by consumers; this will be a closely-watched data point. Clearly the fall in the equity market has been driven by a lack of condence in global policy makers not possessing the urgency to solve the euro crisis; however it will be interesting to see to what measure this has impacted U.S consumers. If there is any indication that it has not, then the USD/JPY could easily push up to resistance at 77.49.

jamesfournier1991@gmail.com +44 7540184560