The last time I wrote about USDJPY I pointed out that the price was in a sideways consolidation and we would need a break of that before knowing how to trade it. Well, the break happened yesterday and I’m now looking at this as a signal to go short.

A daily time frame chart showing US Dollar versus Japanese Yen

USDJPY Daily Chart: Break of consolidation and an inside bar.

The market gapped up on Sunday night’s opening but the gap closed throughout the Monday session, pulling back to test support at a confluence of the Daily and Weekly pivot points (not shown). That support gave way quickly and we ended the day with a large bear bar which broke our channel support line, shown in yellow above.

Today price retested our channel but failed to close back above, forming an inside doji bar instead as indecision swamped the market. A break below this inside bar tomorrow could bring the bears to the table and is the entry signal I’m looking for. I am however feeling a bit more cautious than normal because this is, well, the Yen, and we have history, which is why I’m placing my entry below the low of Monday’s bar, just in case of a fakeout.

So, we’ve several reasons to get into this trade (historical level at 94.60 giving an expected turning point, a break and retest of our sideways channel, a conservative entry, SSI favours short trades) with relatively few points of concern (possible support with the monthly pivot and 50EMA being just below this level. It’s the Yen) so with luck and a fair wind we could be just in time to ride this one south for a decent profit.

Happy trading!

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About TheDayTrader

My name is Adam. I'm a day trader. I've been trading full time, mostly Forex but stocks and indices too since 2009 and I love it. When I'm not trading, I'm writing about trading here and for trading magazines, learning to fly and enjoying country life in the Cotswolds with my wife, dog and chickens.


USDJPY Update — 1 Comment