Direct from the desk of Dane Williams,
exclusive to leofinance.io
Key Takeaways:
- USD/JPY back above daily support/resistance zone.
- Higher time frame, USD/JPY bullish trend remains in play.
- Bias to play the pair remains from the long side.
USD/JPY Technical Analysis
It's Monday in Asia right now and we're back again with forex markets open for another week of fun.
CASINO OPEN as they say!
Flicking through my watch list of forex majors that I like to trade and it was USD/JPY that once again caught my eye as being in play.
You might remember the last time we spoke about the pair on this blog, when USD/JPY was retesting broken daily resistance as support.
If you missed it, you can click the link and go back to check out how the price action was playing out back then.
But essentially what we had was price retesting the daily zone as support, but the only short term zone to buy off had already seen a bounce a few weeks earlier.
I personally didn't buy this retest because there was absolutely zero bounce.
On short term zones like that, you really want to see price at least close above, signalling some sort of bounce.
In this case price went straight through without even giving us a chance to hit buy, let alone close above it again.
With that in mind, let's now move onto the current price action, with a look at where we are on the daily chart below.
USD/JPY Daily:
As we mentioned above, price is now back above the daily support/resistance zone which means our bias is once again to buy the pair.
You can see that price wicked through our zone, but without a close below and that bounce, it's obviously held.
Remember, support and resistance zones are much more of an art than a science and the only reason I'm saying its held is because it looks like it has to the eye on my chart.
Now zoom into the USD/JPY hourly chart and take a look at the intraday price action to hopefully find another potential entry point.
USD/JPY Hourly:
As per my forex support and resistance trading strategy, I've taken the last area of short term resistance that when retested as support, can be used as an entry.
Doing this is all about keeping our stops right and the risk:reward ratio of all our trades high.
If price pulls back to retest this zone, then look for that first hourly close above it and smash that buy button.
We'll know if we're wrong pretty quickly because price will go through the daily support zone and the setup will have been invalidated.
But if we're right, then using this zone will allow us to keep our stops tight and target plenty of upside above.
Let's see how this one plays out.
Best of probabilities to you.
Data to Watch:
- CPI m/m (USD)
- Core CPI m/m (USD)
- Fed Chair Powell Speaks (USD)
- Core Retail Sales m/m (USD)
- Retail Sales m/m (USD)
Why not leave a comment and share a chart of your own in the comments section below? All comments that add something to the discussion will be upvoted.
This daily market analysis blog is exclusive to leofinance.io.
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On weekly candlesticks it looks pretty good, the pair has remained above the bearish channel in the last few days.
Personally I am waiting for the price to break 109.50 and hold above it. I think that would be my entry point with targets at 110.88 - 111. I would have a trade with a risk/reward ratio of about 1/3.
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Do you mind zooming out and showing me how you've drawn that weekly bearish channel? This is another thing that I don't currently have on my charts, but is definitely worth paying attention to.
As for the way I trade, we're seeing a nice little bounce out of my zone now. This is a textbook example of how I like to trade
USD/JPY Hourly Updated:
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Here I show you how I have drawn the downtrend line colleague. It has been respecting it quite well for a long time.
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