Potential Trading Setup in USD/JPY

[RichardCox 10]

Here we are going to look at Fibonacci breaks in the USD/JPY in both directions, as an upside break on the daily time frames will signal a bullish move on the weekly charts and give us a clear profit target for long positions that could result a trade worth approximately 700 pips. The dominant trend in this pair has clearly been to the downside, but the latest moves in price activity suggest that a long term base has formed and that a bullish move is highly probably going forward.

 

Upside in the US Dollar against the Japanese Yen (USD/JPY) could rise nearly 10 percent if critical Fibonacci resistance in the 79.90/80.30 zone is breached. The latest rally has been sharp relative to recent volatility levels and if the aforementioned zone (which marks the 38.2 percent retracement of the decline from the highs seen in 2010). This bear move was significant given its relationship to historical averages, so Fibonacci support and resistance levels calculated from this move will be widely-watched by technical traders.

 

On the daily charts, we have seen prices stabilize and consolidate in the 75.50 region, and the latest move is signaling that, potentially, a long term bottom is in place here, providing us with a tradable support base. This is coinciding with oversold indicator readings (on the weekly charts) in areas that previously marked the all time lows (breaking the record decline from 1995). In addition to this, we are seeing a break of the spike highs recorded in October of 2011, which was the Bank of Japan intervention level. Since prices have now moved above that intervention level (an event which was an artificial influence and not indicative of market sentiment), we view the break as a significant event and suggestive of a long term rise in prices. In the daily chart attached here, we can see this break.

 

 

A daily close above this region of resistance will confirm the break and next we will pull out to the weekly charts to get an idea of a suitable profit target for long positions. This area is shown in the weekly chart attached here, coming in at 86.90:

 

 

We are looking at this area because it also matches up nicely with support turned resistance and will likely contain prices on first test. If prices do manage to break this level, the next target will be the 38.2% retracement, which also matches up well with resistance historical levels and will likely coincide with the 100 month EMA on approach. Given that this trade will yield nearly 700 points if the profit target is reached we will need a stop loss less than or equal to 350 points in order to match our 2:1 risk to reward ratio. This stop loss level allows us to trade against 78.00, which was the latest break out point and should contain prices if we start to see downside pressure.

 

The trade is triggered on a daily close above 80.30, and stop losses are set at 76.75, with a profit target of 86.90.

[Obsidian 10]

I very rarely trade usd/jpy but I may consider going long if it can make a weekly close above 80. However it may take some time to break that level

[vs777 10]

hi

 

I am so much interested to know about forex because generally i deal in domestic currency and so can u guide me to trade in international currency.

[RichardCox 10]

hi

 

I am so much interested to know about forex because generally i deal in domestic currency and so can u guide me to trade in international currency.

 

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