The USDJPY has broken below the key 100 level as visible in this D1 chart. This currency pair has remained in a rectangular chart pattern and is currently trading at its horizontal support level which is enforced by its flat 50 DMA. We expect the USDJPY to stabilize near current levels and stage a rally which should take it back to its horizontal resistance level.
MACD has stabilized, but just completed a bearish centerline crossover which could be reversed shortly as the histogram gaped away from its moving average which remains in bullish territory and we expect the gap to close. RSI is flirting with oversold territory and a visit of those levels should be short-lived with a breakout offering a buy signal.
We recommend a long position at 97.50 with a potential second entry level at 95.00. We also recommend a stop sell order at 96.50 in order to hedge the initial long position and before adding new long positions to this trade.
Traders who wish to exit this trade at a loss are advised to place their stop loss level at 96.50. We will not use a stop loss order and execute this trade as recommended. Place your take profit target at 99.50.
Here are the reasons why we call the USDJPY currency pair higher
- USDJPY is currently trading at horizontal support levels which are enforced by its 50 DMA
- MACD stabilizes and the histogram has gaped away from its moving average which remains in bullish territory
- RSI is flirting with oversold territory and a breakout after breaching into oversold territory will provide a buy signal
- Profit taking after a sizable move lower in order to realize profits
- New institutional long positions by swing traders at solid support levels
Open your PaxForex Trading Account today and add this currency pair to your forex portfolio.