USDJPY: Still stuck within bearish channels - yet bounced higher from 122.00 yesterday off longer-term support line
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 123.04 around time of publication.
At the end of May last time USDJPY was reviewed in Ideas You Can Trade the trend was bullish and a higher-high was reached just under 126.00.
Since then the pair has been in pull-back mode and appears stuck within two bearish channels simultaneously (see red channel and white channel - on chart below) and the short term trend has remained bearish.
Yesterday USDJPY found support around 122.00 which coincided on a very long term bullish support line (point 8 on chart below). While the very short term trend could be a continuation of yesterday's bounce towards the upper lines of the bearish channels, whereas if support on 122.00 fails the pair should continue its bearish trend. A longer term view as can be seen on the additional weekly chart below.
Below are examples of how to trade a bullish continuation or a bearish reversal:
1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 123.34 with a Limit to take profit @ 123.99 and a stop-loss @ 122.79 Risk/Reward Summary: Limit risk = 65 pips profit / (-55) Stop-loss risk = Gain to Loss ratio = 1.18
2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 122.20 with a Limit to take profit @ 121.80 and a stop-loss @ 122.55 Risk/Reward Summary: Limit risk = 40 pips profit / (-35) Stop-loss risk = Gain to Loss Ratio = 1.14
Short Term Daily Candle Chart:
Longer term weekly candle chart: