USDJPY → Bull Trend 1st Leg Complete! Long Again? Let's Answer.
Updated
USD/JPY broke out of its descending wedge last week in a fantastic move toward the Resistance Zone (Now the Support Zone). We capitalized on that trade, you can find the details in the chart below. Are we ready for another long?
USDJPY Trade - Last Week:
How do we trade this? 🤔
We finished last week with a wild doji candle (one bar trading range) just above the 30EMA. That may have completed the first leg up in this new bull trend which has yet to be determined if it's a pullback on the macro bear trend or the start of another push up to higher highs. If it's a pullback in the bear trend, then we should expect no more than two legs to the upside before the price falls down again. If this is another run toward 152.000, then we should expect at least three legs to the upside.
We do have justification to long on the Daily or 4HR. The Daily chart shows weakness above the 30EMA, the 4HR chart shows us stuck just below the 200EMA as shown in the following chart:
USDJPY 4HR Chart:
Both RSI's call for a pullback; the 4HR is high and below the Moving Average, and the Daily is around 50.00 but has a gap back down to the Moving Average. We need to wait for a pullback to happen which will likely bring the price toward the bottom of the Support Range around 143.800. At that price area, we need to look for a strong buy signal telling us we're going up for a second leg.
Until then, it's best to wait on the sidelines for more price action and an optimal entry.
💡 Trade Idea 💡
Long Entry: 144.350
🟥 Stop Loss: 143.100
✅ Take Profit: 146.850
⚖️ Risk/Reward Ratio: 1:2
🔑 Key Takeaways 🔑
1. Breakout from Descending Wedge
2. 1st Leg up Potentially Complete
3. Wait for Pullback to Bottom of Support Zone Area.
4. Look for Bull Confirmation near the 143.800 Area to Long.
5. RSI at 52.00 and above Moving Average. Bias to Long, but wait for Gap to Close.
💰 Trading Tip 💰
Traders often get trapped trying to trade the end of a second leg thinking a third leg is coming. Pullbacks often have two legs and when the third leg fails, it's in part because the traders stop loss is hit, causing the price to go the opposite direction of their trade and continuing the macro trend.
⚠️ Risk Warning! ⚠️
Past performance is not necessarily indicative of future results. You are solely responsible for your trades. Trade at your own risk!
Like 👍 and comment if you found this analysis useful!
USDJPY Trade - Last Week:
How do we trade this? 🤔
We finished last week with a wild doji candle (one bar trading range) just above the 30EMA. That may have completed the first leg up in this new bull trend which has yet to be determined if it's a pullback on the macro bear trend or the start of another push up to higher highs. If it's a pullback in the bear trend, then we should expect no more than two legs to the upside before the price falls down again. If this is another run toward 152.000, then we should expect at least three legs to the upside.
We do have justification to long on the Daily or 4HR. The Daily chart shows weakness above the 30EMA, the 4HR chart shows us stuck just below the 200EMA as shown in the following chart:
USDJPY 4HR Chart:
Both RSI's call for a pullback; the 4HR is high and below the Moving Average, and the Daily is around 50.00 but has a gap back down to the Moving Average. We need to wait for a pullback to happen which will likely bring the price toward the bottom of the Support Range around 143.800. At that price area, we need to look for a strong buy signal telling us we're going up for a second leg.
Until then, it's best to wait on the sidelines for more price action and an optimal entry.
💡 Trade Idea 💡
Long Entry: 144.350
🟥 Stop Loss: 143.100
✅ Take Profit: 146.850
⚖️ Risk/Reward Ratio: 1:2
🔑 Key Takeaways 🔑
1. Breakout from Descending Wedge
2. 1st Leg up Potentially Complete
3. Wait for Pullback to Bottom of Support Zone Area.
4. Look for Bull Confirmation near the 143.800 Area to Long.
5. RSI at 52.00 and above Moving Average. Bias to Long, but wait for Gap to Close.
💰 Trading Tip 💰
Traders often get trapped trying to trade the end of a second leg thinking a third leg is coming. Pullbacks often have two legs and when the third leg fails, it's in part because the traders stop loss is hit, causing the price to go the opposite direction of their trade and continuing the macro trend.
⚠️ Risk Warning! ⚠️
Past performance is not necessarily indicative of future results. You are solely responsible for your trades. Trade at your own risk!
Like 👍 and comment if you found this analysis useful!
Note
As expected, USDJPY fell back down to the 4HR 30EMA and Daily 200EMA. We need a strong bull bounce here to follow through with this analysis and keep my premises valid. If the price closes below the mentioned EMA ribbons, we should adjust our bias and likely consider the bullish action to "Push #1" a pullback in the macro bear trend.
Trade active
USDJPY gave us our 4HR 30EMA support and closed above the 1HR 30EMA with a strong bull bar. We have strong support at this level with a reverse head and shoulders playing out on the 1HR timeframe. This is the Higher Low we were looking for an is now reasonable to enter the trade identified in the analysis almost at the exact price.
Long Entry: 144.326
Stop Loss: 143.100
Take Profit #1: 145.500
Take Profit #2: 146.750
Risk/Reward Ratio: 1:2
The stop loss will be moved to my entry price once the first take profit target is hit and half of my position is sold. This locks on profits and allows the remainder of the trade to be executed without the vulnerability of initial risk being involved.
Trade active
Our first take profit was hit! Half of my position has been sold at 145.500 and my stop loss has been moved to my entry, locking in profits.
We're now at the Push #1 price area where there is potential for resistance, thus, the reason this zone was Take Profit #1. Let's watch for a break at the top of the Push #1 wick at 146.000 and if we get a close and some confirmation, our next take profit target of 146.750 is looking probable.
Trade active
USDJPY has fallen into a micro bear channel with two legs down to the 1HR 200EMA and also, the 30EMA and 200EMA on the 4HR chart. What we need now is a reverse head and shoulders IE, a higher low and a break of this micro bear channel. Since the first take profit was hit last week and moved our stop loss to our entry price, the current trade has no initial risk.
Trade closed: target reached
USDJPY Target #2 has been hit! Per my last update, we did in fact get the higher low reverse head and shoulders that led us up another bull channel to the final take profit. Our first half of the trade captured 120 pips, the second 245 pips!
You can see my other current live trade on USD/CAD where I just hit take profit #1 and made some trade adjustments:
A new USDJPY analysis will be coming soon to capture the next moves!
-Joe Dean
Trader Engineering Course
**Available Now at TraderEngineering.com**
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