Our thoughts on the USD/JPY...

FX:USDJPY   U.S. Dollar / Japanese Yen
285 2 11
Last week’s sharp run to the downside pushed the U.S. dollar into further losses, stripping over 350 pips off its value. This bearish assault took out weekly support at 110.09 (now acting resistance), and closed the week just ahead of weekly demand (105.19-107.54) at 108.04. Along the same vein, daily trading also collided with demand at 107.60-108.35, which sits directly above the aforementioned weekly demand zone . The response seen from this daily demand printed a nice-looking inverted selling wick (pin-bar) – a typical reversal candle pattern! Should the bulls defend this area, we see little overhead resistance until around the 110.96 region.

Turning our attention to the H4 chart, Friday’s trading struck the 109.00 handle going into the London open, forcing this unit to close the week out just ahead of the 108.00 line. With this pair in a clear downtrend at the moment, is it wise to go fishing for long trades from here? Well, with a very impressive weekly demand lurking just below current price at 105.19-107.54, and a daily demand in play right now at 107.60-108.35, which boasts a reversal candle pattern (see above), we feel a bounce north could be on the horizon. That being the case, our plan of attack will consist of looking for lower timeframe long entries within the H4 green shaded zone (108.00/107.50). In between this area sits the lower half of the daily demand zone and also the top-side of the weekly demand base (see above for values), thus making it one awesome barrier for a bounce to be seen. The reason for requiring a lower timeframe buy setup to form (see the top of this article for confirmation techniques) prior to risking capital here is simply due to the pair being in a downtrend right now.

Levels to watch/live orders:

• Buys: 107.50/108.00 Tentative – confirmation required (Stop loss: dependent on where one confirms this area).
• Sells: Flat (Stop loss: N/A).
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Thanks for the idea
when you are looking for a confirmation, which is the smallest timeframe, which you use - M5 or M15 ?
Is the idea active now?
Hi Jaxx,

The lowest we like to go down to is the M15. However, we know of some traders who go down as low as the M1 to find confirmation. As of yet, we have not been able to pin down a setup from here.

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