USD/JPY Approaching Range High To Set-up Short Side Trade

Published On: 11 September 2023, 9:30 AM | Jeraldine Tan, Senior Dealer

Key Entry Price Pivot(s)
  • 151.945

    Recommended Trade
  • Short at 151.88
  • Stop Loss at 153.38 (150 pips)
  • Take Profit at 148.88 (300 pips)

    Alternative Case
  •  Long at 152.38
  • Stop Loss at 150.88 (150 pips)
  •  Take Profit at 155.38 (300 pips)

  • USD/JPY has been in a Broad Bull Channel since the start of 2023 following a sharp sell-off from the highs of 151.945 in Q4 2022, perhaps due to consistent rate increases in US
  • Broad Bull Channel means bear pressure is strong although general trend is up. Hence more likely, we should expect this to be a bull leg in a range, rather than a strong continuation pattern leading to a breakout
  • We can expect traders who went long in the Broad Bull Channel to take profit around the previous major high of 151.945, which is at the top of the channel. This also coincides with the big round number 152.000
  • The Broad Bull Channel is forming the last leg (wave 5) in an Elliot Wave and we could expect 2 legs down from there (wave A-B-C)
  • With the confluence of these 4 factors, we propose a trade structured with a stop loss of 150 pips (based on ATR of around 120pips) with a 2x reward at 300 pips below entry price which looks reasonable for a move towards the bottom of the Broad Bull Channel
  • Alternative case is presented above for traders who are bullish on USD/JPY to structure a breakout trade