USDJPY: Pullback Deepens by over 300 Pips From Recent High of 110.07
The daily candle chart below shows the medium term price history of the United States Dollar (USD) versus the Japanese Yen (JPY). This currency pair is known as USDJPY, and is trading around 107.24 around time of publication today.
Last week when this pair was reviewed in the Ideas You Can Trade series, a pullback was looming and has since developed with the USDJPY already 300 pips off from the prior high near 110.07 reached on October 1st.
The steep short term bearish continuation line (point 1 on chart below) that was drawn on the chart below- in the last post - has provided bearish support. Static support near 106.75, near yesterday's low, as well as just above 106.00 may be targeted next. Whereas, prospects for a bullish recovery from current levels looks less likely, unless a very small recovery occurs just barely enough for a head-and-shoulders formation to complete (using the high price of September 12th and October 1st) which means 107.42 could provide resistance.
The USDJPY long term chart (further below) still looks bullish while the very short term trend still remains bearish.
Below are example of how to trade a bearish continuation or a bullish reversal:
1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 107.44 with a Limit to take profit @ 107.75 and a stop-loss @ 107.16 Risk/Reward Summary: Limit risk = +31 pips profit / (-28) Stop-loss risk = Gain to Loss ratio =1.10
2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 106.74 with a Limit to take profit @ 106.47 and a stop-loss @ 107.01 Risk/Reward Summary: Limit risk = +27 pips profit / (-27) Stop-loss risk = Gain to Loss Ratio = 1.00
Medium Term Daily Candle Chart:
Long Term Monthly Candle Chart: