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Forex: Ideas You Can Trade- USDJPY Pullback May Follow Bullish Move

Posted by Steven Hatzakis on Nov 15, 2013 11:49:00 AM

USDJPY: Pullback May Follow Recent Bullish Price Action

The medium term daily candle chart below shows the United States Dollars (USD) versus the Japanese Yen (JPY). This pair is generally known as USDJPY (or Dollar-Yen) pair and is trading near 100.20 after moving significantly higher in yesterday’s trading session following a successful break above the 38.2% Fibonacci level (point 10 in white on chart) that was previously noted as an imminent target earlier this week.

Unless the steep short term bullish momentum (point 3 in blue) can be sustained, and break above any static resistance near 100.60 (point 2 in yellow) and reach the 23.6% Fibonacci level (point 10) just below  the long term bearish resistance line (point 8 in dark red), then the pair could have a short term pullback along a line such as (point 1 in magenta) previous bearish lines including short term bearish channel (point 9 in red). If the latter of these occur (a bearish move), USDJPY may test the long term bullish support line (point 4 in aqua) if it can manage to break below both 38.2% and 50% Fibonacci levels, if such a pullback occurred.

The breakout of the previously discussed triangle formation has clearly been confirmed already, however, the essence of the trend lines that constituted the triangle and the of trend is still in play and prices may continue to narrow as a new triangle is set to develop when the lines of the long term bearish resistance  (point 8) intersect with the line of long term bullish support (point 4) over the medium to long term.

Below are examples of how to trade a bullish continuation or a bearish reversal:

1.  BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 100.71 with a Limit to take profit @ 101.09 and a stop-loss @ 100.41 Risk/Reward Summary: Limit risk = +38 pips profit / (-30) Stop-loss risk = Gain to Loss ratio =  1.26

2.  BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 99.87  with a Limit to take profit @ 99.48   and a stop-loss @ 100.05 Risk/Reward Summary: Limit risk = +39  pips profit / (-18) Stop-loss risk = Gain to Loss Ratio = 2,16

Medium Term Chart:

usdjpydaily nov 15 2013 note

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