Dollar traders huddle up! Today we’re checkin’ out a couple of short-term trend plays on USD/JPY and EUR/USD that could either make or break our belief that trends are our friends.
USD/JPY is about to hit the 107.50 psychological handle, which also happens to line up with not only a 61.8% Fib and 200 SMA on the 1-hour chart, but also the resistance of a falling channel that hasn’t been broken since the start of the month. Talk about the signs lining up!
Before you short the dollar like there’s no tomorrow, take note that we have yet to see bearish candlesticks or momentum from the pair. And given how volatile yen pairs usually are, it might be best to jump on a momentum rather than picking a top.
A short trade at the earliest signs of bearishness would get you a good reward-to-risk ratio especially if you aim for the 105.50 previous lows.
If you’re one of them dollar bulls, though, then you could also wait for a break above the SMA and the channel and aim for the next areas of interest near 108.75 and 109.50.
Here’s another one for the trend warriors out there! EUR/USD is lollygagging around the 1.2350 area, which is right smack at the ascending channel support on the 1-hour time frame.
A bounce from the level could take EUR/USD all the way to its 1.2575 previous resistance areas. But if the euro fails to find momentum over the next couple of trading sessions, then you might also want to get your breakout playbooks ready.
Whichever bias you choose to trade, make sure you practice good risk management when you execute, aight?