USDJPY: Longer-Term Trend Kicking-In
The daily candle chart below shows the price history of the United States Dollar (USD) versus the Japanese Yen (JPY) over the medium term. This currency pair is known as USDJPY, and is trading around 107.23 around time of publication today.
Last time this pair was reviewed in the Ideas You Can Trade series in early September, 105.43 was mentioned as the next upside target and since then was reached as USDJPY broke to the upside of the trading band that had contained it for most of 2014.
From a longer term perspective the uptrend may be repeating with the long term bullish support (point 4 in aqua color on chart below) that was regained in late August. If this trend is resuming, as it appears to be, then 108.00 should be next and over the next few weeks or months highs near 111.00 or more.
Looking at the additional chart below which features MONTHLY Candles (where each candle represents one month), we can see that if the trend repeats then the steep bullish momentum may be here to stay for a while.
Even though the pair looks very bullish, a pullback on the current short term bullish line (point 5 in green) could be very brief before the steep ascent resumes, whereas if that line fails to hold then more bearish momentum could return.
Below are example of how to trade a bullish continuation or a bearish reversal:
1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 107.40 with a Limit to take profit @ 107.89 and a stop-loss @ 106.99 Risk/Reward Summary: Limit risk = +49 pips profit / (-41) Stop-loss risk = Gain to Loss ratio = 1.19
2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 106.94 with a Limit to take profit @ 106.51 and a stop-loss @ 107.30 Risk/Reward Summary: Limit risk = +43 pips profit / (-36) Stop-loss risk = Gain to Loss Ratio = 1.19
Medium term daily candle chart:
Long term MONTHLY candle chart: