Posts Tagged ‘USD/JPY’

Trade posted to TAP at 2:21pm ET buy USD/JPY at 85.37. Retest of 4 hour trend line, reverse head and shoulders pattern.

USD/JPY Chart Picture

The USDJPY has been in a steady downtrend since May 2010. With that comes the expectation that a reversal or retracment is possible. However I would caution against thinking it couldn’t go lower….there are no boundaries to what the market can do. As traders it is our job to look for indicators that may be pointing to a potential outcome.

In studying the daily chart we can see that there has been previous support at 86.30 during July 2010 and has now made a new low at the 85.32 area. The pair has now moved back to the 86.30 support area.

Here is where the potential trade setup is shaping up. If we get a break above 86.30 and a retest back down to it, the reverse head and shoulders reversal pattern has potential to bounce the pair back up and could indicate a reversal in the trend. This is just potential….it could just bounce down from here and test the multi-year lows below 85.00. I have attached two images to illustrate the setup, one from the current USDJPY and one from the EURUSD that recently experienced a reversal just as we are anticipating on the JPY. You can see our posts and explaination of the EURUSD here 

This potential setup could take a few weeks to develop.

USD/JPY Chart Picture

EURUSD Chart Picture Result of Bounce

Trade posted to TAP at 10:46am ET, buy USDJPY at 87.40. We have been studying the potential reversal patterns on the weekly chart for this pair for several weeks now. With that expectation I have been looking for confirmations for buying again. With the break of the 4 hour trend line and now retest I am looking for this to begin pressing higher again.

USD/JPY Chart Picture