By: John Ursus
Recommendation: Short Position
Entry Zone: 105.000 – 105.500
Take Profit Zone: 101.750 – 102.250
Stop Loss Zone: 106.250 – 106.750
The USDJPY enjoyed a strong rally over the past 33 trading months. The sharp rally took this currency pair from an intra-day low of 76.021 to an intra-day high of 105.694 where the rally stalled and price action started to reverse. This currency pair has now formed a rising wedge formation and could exercise downward pressure on the USDJPY over the next few trading weeks.
Forex traders should watch out for the support level which is ascending in the current rising wedge formation as a breakdown is expected to sharply increase selling pressure in this currency pair. Forex traders should consider splitting their lot size into multiple entry positions across the rising wedge formation in order to decrease the risk on this trade. The upward potential appears to be rather limited while the downside potential remains very attractive.