Trend traders huddle up! USD/JPY is trading a hair’s breadth above the 108.50 handle, which lines up with the 200 SMA on the daily time frame.Thing is, its current levels puts the pair juuust below an ascending channel that has been keeping the bears at bay since August 2019.
Are we looking at a downside breakout in the making? Shorting below the 200 SMA is a good idea if you believe that USD/JPY is due for a drop down to the 106.70 or even the 105.00 previous areas of interest.
But what if we’re actually seeing a good chance to buy USD/JPY? After all, the pair hasn’t dropped too far below the channel support and the 200 SMA support remains intact.
If you’re planning on buying USD/JPY, then you’ll want to see how it reacts to the 200 SMA first, or maybe wait for signs of bullish momentum on the lower time frames.
Watch this one closely, yo!
Earlier this week we discussed EUR/GBP’s downtrend on the 1-hour time frame. But that was a few days ago.Today there’s a possibility that EUR/GBP might break above a double bottom pattern on the WEEKLY chart.
In this case, the “neckline” is just above the .8560 area. And if breakouts can be as strong as the length between the “bottom” and the “neckline,” then we’re talking about a potential 160-pip move. Wowza!
Buying at current levels would yield a nice reward-to-risk ratio especially if EUR/GBP pops back up to the .8800 mid-range area or even the .9250 range resistance levels.
If you’re one of them euro bears, however, then you can also wait for some resistance or selling pressure around the pair’s current levels. Watch out for bearish momentum that could drag the pair back to its .8400 range support.