Last week we opted to remain on the sidelines in USDJPY having identified a range between 98.90 and 100.70 and waiting for a breakout to show directional bias. As we had suspected, the range broke to the upside, setting a bullish tone for the pair.
Current USDJPY price action is showing mixed message. Last week ended showing an Evening Star formation, though today’s candle looks poised to invalidate that signal with a Bullish Engulfing. The latter scenario is in keeping with the range break we identified, though we can’t treat it as a valid signal until the candle closes. Should last week’s bearish reversal signal be invalidated, we will look for additional upside momentum.
USD/JPY Strategy
1. If the Bullish Engulfing is confirmed, long USDJPY above 102.40.
2. If entry conditions are met, set stop-loss near 101.05 below recent wick lows.
3. Following confirmation, set profit target near 105.61, risking 135 pips to gain 321.
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