The US Dollar (USD) extended upside movement against the Japanese Yen (JPY) on Thursday, increasing the price of USD/JPY to more than 105.00 as bulls gain strength. The technical bias however remains bearish because of a Lower Low in the recent downside move. The pair has formed a great inside bar trade setup after the emergence of a giant candle on 24th June amid Brexit vote. A breakout through the aforementioned candle will provide clear direction for the pair.

Forex Technical Analysis: USD/JPY
As of this writing, the USDJPY pair is being traded near 105.48. An immediate hurdle may be seen around 105.54, the low of May 3rd which is now acting as critical resistance level ahead of 106.82, the high of Brexit candle as mentioned before. A break above the 106.82 resistance area will result in bullish breakout in inside bar trade setup, inciting renewed bullish pressure in price. A sustained move above 106.82 will put 111.00 in sight for long term traders.

On the downside, the pair is likely to find a support around 103.57, the horizontal support area ahead of 100.00, the confluence of psychological number as well as swing low of recent downside move and then 98.99, the low of Brexit candle. A downside breakout through the Brexit candle will put 90.00 support zone in sight for long term traders.

USD/JPY Trading
Considering the overall technical outlook, buying or selling near above mentioned levels after the inside bar breakout appears to be a good strategy in short to medium term. A similar trading bias can be exercised using vanilla options that will enable you to structure market price activity in more creative ways. This is also a forex trading strategy that can help limit some of the volatility risk that has been seen recently in the financial arena.

By Richard Cox

© 2016 Richard Cox - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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