USDJPY: 102.00 Failing Today as Brief Touch at 103.01 Last Friday Short-Lived
The medium term daily candle chart below shows the United States Dollar (USD) versus the Japanese Yen (JPY), known as the USDJPY pair, and trading near 102.12 around time of publication today.
At the end of last week the pair briefly tested above 103.00 only to return sharply near current levels, as an imminent breakout of triangle formation that is near its completion is about to occur (either today or within the next five sessions as the lines of the triangle converge).
The move of last Friday could be considered a head-fake to the upside, before continued downward momentum follows, such as the direction that already started to follow. Such a bearish continuation could certainly build if 102.00 gets further violated, and would represent a breakout to the downside of that Triangle, once and for all, as a new beginning follows after that trend soon becomes history.
If however the two trend lines that form that triangle including the bearish resistance line -which could act as bearish support - and the long term bullish support line, continue on their current trajectory course, then more of the same range-bound trading could follow - although a lower-low looks more probable when compared to recent weeks. Accordingly, support should exist around the 101.50 area, and a bounce to the upside could see 102.50 again although 103.00 doesn't appear to be coming any time very-soon.
Below are examples of how to trade a bearish continuation or a bullish reversal:
1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 102.38 with a Limit to take profit @ 102.58 and a stop-loss @ 102.18 Risk/Reward Summary: Limit risk = +20 pips profit / (-20) Stop-loss risk = Gain to Loss ratio = 1.00
2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 101.82 with a Limit to take profit @ 101.54 and a stop-loss @ 102.02 Risk/Reward Summary: Limit risk = +28 pips profit / (-20 ) Stop-loss risk = Gain to Loss Ratio = 1.40
Medium term daily candle chart: