USDJPY: Bullish Run Thwarted Under Bearish Resistance Line, Then Slight Recovery
The medium term daily candle chart below shows the United States Dollars (USD) versus the Japanese Yen (JPY), known as the USDJPY pair.
Today the pair encountered resistance under a medium term bearish resistance line (point 9 in red on chart below) which reversed prices towards 102.00 where USDJPY since made a swift recovery towards current levels of 102.54 (around time of publication), from session lows of 102.15 earlier in the day.
The pair has been trading within a range in the last few months, from about 101.00 to 104.00, and with 102.00 acting as a horizontal support level and which was noted in the last post in this series regarding USDJPY. 102.00 is a level to watch out for, including the close above 104.00 discussed in the last post, and which never occurred and thus wasn't as bullish as expected and had since caused a reversal back lower within the trend.
Following today's bearish move, unless the bearish resistance line can be overcome, 102.00 may be tested, and if it fails, then prices should head towards a longer term bullish support line (aqua colored trend line below) which could provide a bounce or reversal of any bearish momentum.
If the bearish line that provided resistance today can be overcome, then the bullish momentum of the last few weeks that had resulted after support was found on the above mentioned long term bullish support line - that trajectory may continue to push USDJPY back towards 103.00, and higher in the short term.
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 @ 103.39 and a stop-loss @ 102.79 Risk/Reward Summary: Limit risk = +37 pips profit / (-23) Stop-loss risk = Gain to Loss ratio = 1.60
2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 101.98 with a Limit to take profit @ 101.72 and a stop-loss @ 102.19 Risk/Reward Summary: Limit risk = +26 pips profit / (-21) Stop-loss risk = Gain to Loss Ratio = 1.23
Medium term daily candle chart: