USDJPY: Pullback Meets Median Line Of Bullish Channel, and 118.00 regained from Session Low of 117.42
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 near 118.02 around time of publication today and off session lows of 117.42.
Last week when this pair was reviewed in Ideas You Can Trade, an upside target of 119.00 was discussed and had since materialized and USDJPY pushed toward 122.00 near a multi-year high. However, after 122.00 was missed on Sunday the pair fell sharply on each of the last three trading days. This sharp drop coincides with USD weakness returning along with a pullback in major stock market indexes.
This pullback for USDJPY could be healthy considering how steep the uptrend has been so far, meanwhile the area reached today above session lows (near current levels) appears to be near the median line of the bullish channel (point 5 in green on chart below) and could therefore be tested and build support to reverse the pullback.
If this support line and area near 118.00 fails the steep correction may deepen and cause the pair to retest towards 115.00. Considering how USDJPY was just near 122.00 a few days ago reminds of the degree of volatility in this pair even towards the end of the year as markets become more quiet.
Below are example of how to trade a bearish continuation or a bullish reversal:
1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 119.33 with a Limit to take profit @ 120.98 and a stop-loss @ 117.86 Risk/Reward Summary: Limit risk = +165 pips profit / (-147) Stop-loss risk = Gain to Loss ratio = 1.12
2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 117.39 with a Limit to take profit @ 116.21 and a stop-loss @ 118.04 Risk/Reward Summary: Limit risk = +118 pips profit / (-65) Stop-loss risk = Gain to Loss Ratio = 1.81
Medium Term Daily Candle Chart: