USDJPY: Upside Resistance target of 122.00 may be Retested Before 121.00 is Breached - if Uptrend Holds
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 121.34 around time of publication today.
Last time USDJPY was reviewed in Ideas You Can Trade the yen was strengthening following positive economic data from Japan - which pushed the USDJPY pair lower. However, that trend reversed shortly after publication - and the pair has since risen towards current levels - with a high of 122.00 hit on March 10th. This uptrend is happening as JPY weakness is returning - and as the USD continues to push to new multi-year highs - and after continued QQE maintained by the Bank of Japan to stimulate the economy.
With USDJPY now holding above 121.00, a level that it has surpassed in each of the last eight trading sessions, although the trend has been someone sideway in the last few days - a breakout may be brewing.Two very short-term support and resistance lines are set to intersect around tomorrow (see lines crossing last candle on chart below) and where the pair may take a new direction either back towards 121.00 or to test 122.00 - the latter of which is the next upside resistance target.
Below are example of how to trade a bullish continuation or a bearish reversal:
1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 121.51 with a Limit to take profit @ 121.99 and a stop-loss @ 121.09 Risk/Reward Summary: Limit risk = 48 pips profit / (-42) Stop-loss risk = Gain to Loss ratio = 1.14
2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 120.96 with a Limit to take profit @ 120.66 and a stop-loss @ 121.26 Risk/Reward Summary: Limit risk = 30 pips profit / (-30) Stop-loss risk = Gain to Loss Ratio = 1.00
Medium Term Daily Candle Chart: