USDJPY: Bearish Momentum Reversed Since Yesterday's Bounce Off 118.50 Yet Needs To Be Sustained For Recovery
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 119.68 around time of publication today.
In mid-March the last time USDJPY was reviewed in Ideas You Can Trade it was ascending a bullish support line towards the upper side of the recent trading range (between 118.50 - 122.00) where resistance under 1.2200 remained an upside barrier. Since returning lower towards the bottom of that recent trading range - the pair has again found support on 118.50 which coincided with yesterday's low.
Today the pair closed higher for the second time in the last ten daily candles (see chart below) which indicates that a bounce from 118.50 enabled the recovery to a higher-high. If this bounce is sustained into this evening's session as Tuesday unfolds in Asia, then a bullish continuation should follow, whereas if 118.50 is breached to the downside - then a sharp drop should follow.
Below are examples of how to trade a bullish continuation or a bearish reversal:
1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 120.00 with a Limit to take profit @ 120.49 and a stop-loss @ 119.55 Risk/Reward Summary: Limit risk = +49 pips profit / (-45) Stop-loss risk = Gain to Loss ratio =1.09
2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 118.49 with a Limit to take profit @ 117.67 and a stop-loss @ 119.19 Risk/Reward Summary: Limit risk = +82 pips profit / (-70) Stop-loss risk = Gain to Loss Ratio = 1.17
Medium Term Daily Candle Chart: