USDJPY: Will the steep short-term bullish trend-line fail or hold?
The chart below shows USDJPY following up several steep short term bullish support lines (point 3 on chart) after finding the support it needed to reverse the previous bearish trend on a medium term bullish support line (point 4) which was the same line discussed in a previous article on the USDJPY in mid June.
USDJPY is currently trading around 100.00 and considering the USDJPY pair has managed to escape 3 very bearish channels (point 1, 2 and 5) in the short term and hold its current bullish trend line (point 3) - may suggest that current resistance which has halted the previous two daily candles (point 7) could be tested again - so long as the current bullish support line holds (point 3) with a possible attempt to regain a higher bullish channel (point 6) .
However, a long term look at the USDJPY (see additional long term chart further below) shows that the pair is approaching long term resistance lines coinciding near 102.00 by the end of July.. Therefore, although the strong bullish momentum has been regained and was tested (point 7), it could be short-lived if reversed near 102.00 or anywhere in between. On the other hand, if the current short term bullish trend (point 3) fails to support USDJPY then support may be targeted on the top of the descending medium-term bearish channel (point 1) back near 98.00. For now the trend is bullish, but that can quickly change. Note: Above numerical points refer to short term chart below (not longer term chart).
Below are examples of how to trade a bullish continuation if momentum continues or a bearish reversal due to failure of current support.
1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 100.20 with a Limit to take profit @ 100.69 and a stop-loss to cut losses @ 99.78 Risk/Reward Summary: Limit risk = +49 pips profit / (-42) Stop-loss risk = Gain to Loss ratio = 1.17
2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 99.42 with a Limit to take profit @ 98.54 and a stop-loss to cut losses @ 99.97 Risk/Reward Summary: Limit risk = +88 pips profit / (-55) Stop-loss risk = Gain to Loss Ratio = 1.60
Short term chart (daily candles):
Longer Term view: