USDJPY: Close Above Old Fibonacci Line Occurred Yesterday Then 104.00 Briefly Tested
The medium term daily candle chart below shows the United States Dollars (USD) versus the Japanese Yen (JPY). This pair is known as USDJPY, and had closed above a prior 0% fibonacci line yesterday were it then re-opened today and traded higher only briefly to touch above 104.00 (near a high of 104.10) before retreating back to current levels near 103.91.
Last time this currency pair was covered in the Ideas You Can Trade series, 102.00 was a distinct support line that was noted as a likely line that could either reverse the trend or provide a gateway to drive it lower.
Since then, the pair reversed, and a bullish continuation followed, the target of 0% Fibonacci line was next, and since that was breached yesterday, and the pair managed to close above it, the move today - even though it was briefly above 104.00 - is a sign of change.
However, if 104.00 creates resistance for further upward movement, the prior range may come back into relevance. Whereas, if the pair can close above 104.00 that should be bullish for USDJPY, and the steep short term bullish channel line (point 5 in green) could provide a continued trajectory for the bullish momentum of the last 7 sessions (to continue).
Below are examples of how to trade a bullish continuation or a bearish reversal:
1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 104.15 with a Limit to take profit @ 104.49 and a stop-loss @ 103.81 Risk/Reward Summary: Limit risk = +34 pips profit / (-34) Stop-loss risk = Gain to Loss ratio = 1.00
2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 103.69 with a Limit to take profit @ 103.32 and a stop-loss @ 103.92 Risk/Reward Summary: Limit risk = +37 pips profit / (-23) Stop-loss risk = Gain to Loss Ratio = 1.60
Medium term daily candle chart: