USD/JPY News Spurs Breakout Entrys
The
USD/JPY
has been planted in a range for months. Price has failed to
trend
by not making new lows or highs since August. Currently support lies at the August 19th low at 75.93. Resistance is established at the September 9th high of 77.84, completing our 191 pip range. Traders have multiple options here, looking for either a breakout or for
range
bound conditions to continue.
Fundamentally, both of the Dollar and
Yen
have been competing as safe haven assets. This has caused both to make gains against other currencies. It would be reasonable to expect this trend to continue however, Japanese officials have taken a stand stating that they will be taking steps against a strong Yen. This is exactly the catalyst that we are looking for to potentially break the
USD
/JPY from its range.
Taking Price in to a 4Hour chart we can see our established support and resistance lines. Using the news as catalyst traders can begin placing entry orders for a breakout. Entry’s should be placed over the previously discussed September high of 77.84. Traders preferring to trade manually may look for a candle close above this level.
My preference is to buy a breakout of the USD/JPY over previous highs. Entry’s should be placed over the 78.00 figure with Stops should be placed at half the distance of the previous range at 77.00. Limits should look for a minimum 200 pip gain for a clear 1:2 risk/reward ratio.
Alternative scenarios include price continuing to range between established support and resistance
Additional Resources
Support and Resistance Video
How to Trade Breakouts
To contact Walker , please email [email protected]. You can follow on Walker onTwitter @WEnglandFX.
To be added to Walkers’ distribution list, please send an email with the subject line “Notification,” to WEngland@fxcm.
