Update: Break and Retest Play on USD/JPY

There are setups that are sometimes too good to be true and it seems like I took one this week!

USD/JPY: 4-Hour Forex Chart

USD/JPY: 4-Hour Forex Chart

A few days ago I bought USD/JPY at 102.70 because it was near a Fib retracement level, and rising trend line, Stochastic was in the oversold region, and the 100 and 200 SMAs had just crossed. I was also looking for upside surprises in the Aussie jobs data, RBNZ rate statement, and US retail sales to spur on risk appetite.

My long trade was shaping up quite well in the Asian and London sessions after Australia and New Zealand printed strong reports. USD/JPY was even consolidating at my entry area and risk appetite was slowly creeping back in the markets. I got even more excited when I saw that the US retail sales wasn’t as bad as many had feared.

I learned a lesson on unexpected catalysts when a couple of bearish reports all contributed to USD/JPY’s plunge. As Pip Diddy mentioned in his U.S. session recap escalating threats from Russia, a closer look at the US retail sales data, and an overall reaction to strong resistance levels all brought risk aversion back to the front seat. It caused a breakdown of USD/JPY’s 102.70 support and sent the pair all the way to 101.50. Boo.

A couple of things I could have done better. Simon Wong suggested in my previous post that I could have waited a bit for confirmation of a bounce. François Loneux also suggested that I could have lowered my risk. Or maybe I could have set my orders lower and my stop losses wider since I’m trading a yen pair. Last but not the least, I could have exited earlier when I saw that a 4-hour candle had closed firmly below 102.70. Just some thoughts for my next trades.

How about you? Did you place any USD/JPY trade this week?



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  • tigersee

    Sell off was more due to thread from russia

    • Hucklekiwi Pip

      True. That and falling US bond yields 🙁

  • I think the pair USDJPY has more selling pressure and it’s just going to it’s trend and my technical view is it will break the trend soon.

    • Hucklekiwi Pip

      It looks like it’s ranging for now. Maybe the bulls and bears are waiting for the FOMC statement?

  • Jason

    I think if you go back further and draw a fib level with the previous down swing, you will see that the high was exactly at 61.8% of the swing. I think I would be cautious going long USD/JPY pair given the situation in the longer time frame.

    • Hucklekiwi Pip

      Thanks for pointing it out. I think the 103.00 area was also a previous resistance aside from being a Fib level. Now it’s ranging on the daily time frame.

  • Scalius

    Oversold is not enough. Wait for it to leave oversold territory before entering thread. Also your trendline was broken, better to trade above.

    • Hucklekiwi Pip

      It still hasn’t left the oversold area on the daily time frame. Lesson learned!

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