I am looking at some recent chart patterns that have developed and/or triggered in the USD/JPY. When the Dow wakes up — as it has this week — the dollar-yen gets moving as well. The Dow rally has helped the dollar gain on the yen and the move higher is setting up another test of the 100.00 century level.
I am looking at the support (forecast region) of the 60 minute channel reversal to become a rallying point for a move higher to what could be a short off the ceiling that is waiting. There is support also visible on the daily chart (below) and the bounce there is slowly approaching the area of resistance that prices were rejected from earlier this month.
I am looking for another short off the 100.00 level. My entry is likely to be at 99.50 major psychological level since prices have fallen short of the 100.00 before…i will not assume it will make it all the way up there. In fact, another more aggressive entry would be the 99.20 minor psychological level.
The validity for the trade is based upon the pressure that I am expecting to see as the USD/JPY rallies to the 100.00 ceiling. But it the ceiling is broken, don’t argue with it. I am looking at a 100.20 stop loss to account for some wiggle around the “00” but a rally could resume if buyers can establish support, so be aware, keep the stop tight enough the keep from losing more but enough to allow for the back and forth we’re likely to see.