Looking to buy a break of the trend line in USDJPY

USDJPY has been trading lower from the last couple of days. Earlier, in the Asian session, the pair fell to around 96.50, and then jumped higher again to test the Intraday high of 97.10. I think we should be looking for buy opportunity in the short term.

There is a down move trend line as plotted on the 4 hour chart below, and there is a stiff resistance at around 97.20. If the pair manages to break the trend line along with the resistance, and settles above it, then we may look to enter a buy trade for USDJPY.

We already have a bullish a divergence on the 4 hour chart, which adds value to our bullish view on the pair. Initial target should be around 97.80, where there is another down move trend line as plotted on the 4 hour chart below. Final target according to the bullish divergence rule should be around the third resistance at around 98.20. Stop should be placed below the last low at around 96.50.

Remember, if the pair drops lower, and does not break the trend line, then we will stay away from it and re-analyze later in the week.

Reviewing yesterday’s events and trades
Ranging moves were seen yesterday, and market remained relatively calm as no major fundamental release was scheduled. Canadian building permits data disappointed the CAD buyers, which declined to -21.25%. Other than this US consumer credit was released, which measured a gain 13.63B. In the Asian session, New Zealand’s NZIER Business confidence and Australia’s NAB Business confidence data was released, and both jumped to 38 and 12 respectively. NZDUSD and AUDUSD are trading higher with the better than expected data.

Fundamental Outlook for the day
There is no high-risk event scheduled from the US today as well. Canadian Housing starts, exports, imports and trade balance data is lined up in the US session, which is expected to show improvement. The only low-risk fundamental release from the US is IBD/TIPP Economic optimism, which is expected to show minor improvement from 46.0. Other than this, SNB Chairman Thomas Jordan will be speaking later in the NY session. CHF traders will be watching this event very closely. In the Asian session, we have BOJ monetary policy meeting minutes, which can cause some movements in the yen pairs.

This analysis is taken from today’s Daily Market Forecast, which also includes trade opportunities on: EURUSD, GBPUSD, EURGBP, EURCAD, AUDCAD, AUDNZD and GOLD.
Get it HERE: Vladimir’s Markets Forecast

Trade safe friends. Happy trading!

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