Selling rallies offers good risk/reward in USDJPY

The bearish pressure was eased for the USDJPY pair in the yesterday’s NY session. However, I think that the pair is coming closer to a major resistance zone. There is a down-move trend line waiting for the pair, as can be seen in the 4 hour chart shown below. There is also a critical resistance at around the 102.70/80 levels. The pair also has a band to band move on the 4 hour chart along with a bearish hidden divergence. So, there are many reasons to enter into a sell trade in the short term.

Looking at the 1 hour chart of USDJPY, there are over 20 candles ride to the upside. I think we should wait for a small push up, and once the pair forms a bearish candle pattern along with the divergence, then we can jump into a sell trade. Remember, we need the 102.70/80 levels to hold for the bearish view in the pair.

Initial target should be around the 20 moving average on the 4 hour chart, and final target could be around the last low. Stop should be placed above the 102.80 level.

Reviewing yesterday’s events and trades
The tensions in the Ukraine are starting to ease a little, but the risk factor seems to be lagging. The pairs like the EURUSD and AUDUSD were unable to gain any momentum to the upside. In the previous session, the Australia’s GDP figures were released. The outcome was better than expected, as the GDP came at 0.8%, 0.1% more than the consensus. The AUDUSD pair climbed towards the 0.9000 level, but failed and dived back to trade around the 0.8950 level. The EURUSD was also seen nervous, as the pair traded below the 1.3740 level.

Fundamental Outlook for the day
Today, many economic releases are scheduled in both European and NY sessions. The Euro zone services PMI figures, retail sales data and GDP data will be released in the European session. Later in the NY session, the BOC interest rate decision is lined up. The ADP nonfarm employment change figures, ISM non-manufacturing index and beige book will also be released in the US. So, we can witness some action on the coming session. In the next Asian session, the Australia’s imports, exports, retail sales and trade balance figures will be published, which can again create some volatility in the AUD pairs. So, keep an eye on all these events and trade accordingly.

This analysis is taken from today’s Daily Market Forecast, which also includes trade opportunities on: EURUSD, EURCHF, USDCAD, EURCAD and NZDUSD.
Get it HERE: Vladimir’s Markets Forecast

Trade carefully friends. Happy trading!

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