USDJPY Starts Ascent Off Short-Term Channel Bottom

Cory Mitchell, CMT

The USDJPY is moving in a short-term channel and recently consolidated near channel support on the hourly chart. The price has broken above the consolidation, indicating higher prices to come. 

The breakout price of the consolidation is 110.57 (will vary slightly by broker) on the hourly, or between 110.34 and 110.43 on the 15-minute. With an initial stop loss below 110.08, the trade has about 26 to 50 pips of risk, depending on entry. The upside target is 111.50 or slightly above, near the top of the channel. The trade provides a 2:1 to 4:1 reward-to-risk ratio. 

If the USDJPY drops and comes back to the rising trendline, a consolidation would provide another trading opportunity. There is the potential to trade a breakout of that consolidation either higher or lower. 

If the price continues higher, and consolidates near 111.50, this will provide yet another trading opportunity. A breakout of the consolidation higher or lower is tradable. The price either breaks above the channel, or breaks lower signaling the channel is continuing.

A target has been used for this trade given its short-term nature and the well-defined channel. In this volatile environment, there is the possibility for a much larger price move. Therefore, a trailing stop loss can also be used. Trailing stop losses include a moving average, Renko charts, or an ATR multiple.

By Cory Mitchell, CMT. Join me in my free Facebook swing trading group.

Disclaimer: Nothing in this article is personal investment advice, or advice to buy or sell anything. Trading is risky and can result in substantial losses, even more than deposited if using leverage.

Comments (1)

Hit target quite quickly.

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