USDJPY: Resistance Line of Bearish Channel Breached Today
The medium term daily candle chart below shows the United States Dollars (USD) versus the Japanese Yen (JPY), known as USDJPY, and trading at 102.60 (as of publication) and higher today than over the last 8 trading days.
The pair has been in a bearish channel resembling an Andrew's Pitchfork pattern since early January, with the middle line of the channel and upper resistance and lower support line guiding prices lower. The price action today has pushed through the upper resistance line of this channel. If this bullish continuation follows on the current support line (point 5 in green on chart), the zero percent Fibonacci line (point 10 in white on chart) near 103.70 could be targeted next for resistance.
If the bearish trend resumes along the bearish channel, bearish support could be found on the resistance line just breached today, which could help the pair descend back to test the 102.00 level again which has acted as support near today's lows, and the low of yesterday. If 102.00 is breached, the 23.6% Fibonacci Retracement drawn near 101.15 could be tested again.
Last time the pair was covered in the ideas you can trade series, the bearish momentum was expected to continue towards 100.00, and since then support had been reached just above 100.00 on a long term bearish support line (point 8 in dark red) nearh 100.75 on three consecutive days, and which was enough to reverse the downtrend and bounce the pair back to current levels.
Below are examples of how to trade a bearish continuation or a bullish reversal:
1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 103.02 with a Limit to take profit @ 103.67 and a stop-loss @ 102.54 Risk/Reward Summary: Limit risk = +65 pips profit / (-48) Stop-loss risk = Gain to Loss ratio = 1.35
2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 101.95 with a Limit to take profit @ 101.32 and a stop-loss @ 102.22 Risk/Reward Summary: Limit risk = +63 pips profit / (-27) Stop-loss risk = Gain to Loss Ratio = 2.33
Medium term daily candle chart: