USD/JPY Rejected From Multi-year High With Strong Downward Momentum

Published On: 8 December 2023, 4:35 PM | Jeraldine Tan, Senior Dealer

Key Entry Price Pivot(s):
  • 140.95
Recommended Trade:
  • Short at 140.95
  • Stop Loss at 146.95 (600 pips)
  • Take Profit at 128.95 (1200 pips)
Alternative Case:
  •  Long at 143.00
  • Stop Loss at 140.50 (250 pips)
  • Take Profit at 145.50 (250 pips)
  • USD/JPY tested high of 151.95 but was properly rejected forming a double top.
  • USD/JPY proceeded to trade lower and broke the neck line of the double top pattern. Momentum accelerated and price traded below 10/20/50 EMAs. Zooming out to a weekly chart, downward momentum is still strong.
  • Given this, there is a potential with-trend trade to the downside for traders who are bearish. Trade is structured on an hourly timeframe, to be triggered on a break down below recent low of 140.95, and stop above recent high for a wide 600pip stop. Position size should be adjusted accordingly.
  • Market may transition into a trading range which has its low at about 127.50 hence take profit target is 1200pips below entry at 128.95 for a 1:2 risk:reward trade.
  • Alternative case is presented above for traders who remain bullish on USD/JPY to structure a recovery trade – possible entry if price is able to break above the most recent high of last candle which indicates loss of momentum, with stop below the most recent low (250pips) and take profit target right below the recent high (250pips) for a 1:1 risk:reward trade.