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Forex: Ideas You Can Trade - USDJPY Lower as Japan Escapes Recession

Posted by Steven Hatzakis on Feb 16, 2015 8:41:00 AM

USDJPY: Resistance on 1.2050 and Strong Economic Data From Japan Helping Pullback as Yen Strength Returning

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 118.49 around time of publication today.

Last week USDJPY was reviewed in Ideas You Can Trade and the uptrend had been regained but that bullish momentum was short-lived after resistance was encountered earlier than expected near 1.2050. Since that false-breakout, the pair has traded lower in the last four sessions and the prior medium term trend looks (white line on chart below) to be returning and may be fueled by recent economic news.

Positive economic data that helped Japan emerge from recession (despite missing other forecasts) from Japan Monday- which coincided with the Nikkei hitting a double-top pattern  - and coupled with declining growth in US Consumer Confidence figures just released, helped to contribute towards the pullback in USDJPY. These two events could be a catalyst to sustain a continuation lower from here - unless 1.2050 can be overcome in the near term.

Below are example of how to trade a bullish continuation or a bearish reversal:

 1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 120.56 with a Limit to take profit @ 121.99 and a stop-loss @ 119.14 Risk/Reward Summary: Limit risk = +143 pips profit / (-142) Stop-loss risk = Gain to Loss ratio  = 1.00

 2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 117.99 with a Limit to take profit @ 116.97 and a stop-loss @ 118.71 Risk/Reward Summary: Limit risk = +102 pips profit / (-72) Stop-loss risk = Gain to Loss Ratio = 1.41

Medium Term Daily Candle Chart:

USDJPYDaily February 16th 2015 note

Topics: $USDJPY, YEN, forex trading, US Dollar, Dollar Yen, technical analysis, Japanese Yen


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