Hi everyone! My forex pick for today is the US dollar against the Japanese yen (USD/JPY). If you notice, the currency pair has declined by more than 4% after setting a 4-year high of 103.73 last month as seen in the daily chart above. Based on my technical analysis, the USD/JPY could continue to go down until it finds some support at the 6-month uptrend. A tap and a successful bounce from this level could propel the pair to retest the 103.73 resistance (4-year high) and eventually surpass it when the right time comes. However, on a bearish note, a failed bounce and a breakdown from the 6-month uptrend could slide the pair to the next support at 97.00.
The current chart setup is an excellent trading opportunity for me since I can capitalize on the risk to reward by buying as close to the 6-month uptrend and placing my stop loss at its breakdown. There’s a chance I could lose this USD/JPY trade but above all, as long as the uptrend is intact, I remain bullish on this. Remember, the trend is your friend. Wish me luck!
Sir,
thanks for your post I am fully agree with comments above
thanks
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I couldn’t agree more with this article, very succinct. I’ve also been bullish on the USD/JPY for a while, and I think with the historically weak performance of US capital markets in June paired with the poor manufacturing numbers, we might see the dollar reach that support sooner rather than later. I was wondering about your choice of a 97.00 support, which seems rather low especially with the Nikkei’s recent performance and the BOJ’s continued expansion of the monetary base. Both countries will be seeing some foreign capital outflows That being said, I did technical analysis using 20 day, 2 std dev Bollinger bands and came up with a reasonable support of 98.382.
Thanks Andrew. I’d consider yours too. It’s just a matter of personal preference that I stick my technical analysis to the basic supports and resistances. It works better for me and easier for others to understand. Also, if the uptrend breaks, 97.00 is the stronger support I see where a bounce would likely take place.