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Short-term Trading Idea FX USD/JPY – Bull Speculation: Recoil from Support

Trading opportunities for currency pair: the USD/JPY has broken from the 118.40 support. A strengthening of the dollar to 120.60 and 121.60 can be expected using the pinbar model.

Background

On 2nd February, 2015 the USD/JPY was trading in a 117.20-118.80 range for a few days. I was expecting growth to 118.42. After a fall to 116.87, the bears ended up in a bull trap. By the end of the week, the target was reached.

Current situation

On 24th August the Japanese yen strengthened significantly. Traders were buying the yen as a safe asset due to the fall in the Asian indices, selling the dollar due to expectations that the Fed wouldn’t put up its interest rate in September. After a fall of the rate to 116.13, the pair is stuck in a 36-day sideways.

For the past two days, the yen has been down against the dollar due to expectations that the Bank of Japan is about to relax its monetary policy. On Friday the BoJ’s Kudrova announced that QE will continue until inflation reaches 2%. The next meeting of the regulator will take place on 30th October.

What’s interesting at the moment?

The USD/JPY has broken from the support which was formed from the minimums from March to May. There is a pinbar; its maximum will be broken. Now it’s on the cards. The next targets are 120.60 and 121.60. A close of the day below 118.05 will cancel out the scenario for growth.

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