Been posting quite a few sell setups so I thought I might switch over to a pair worth buying into. USDJPY has been consolidating since last year actually. The day over day movement has been dying down, but we're seeing a pick up.
First of all, notice the bullish close in the third and forth candle back. This is a good first sign of a strong breakout. Those two days represented massive buying, breaking out of the consolidation. This signals that traders are rather bullish in a previously indecisive state. The last two days displayed very little daily change despite wild fluctuations. This can be observed in the size of the candle tails and lack of size in the candles' real bodies. A horizontal line drawn above the July, 2014 candle movement signifies a possible resistance turned support level. This will help with the trade set up.
The trading plan is as followed. Aggressive buyers should look to buy USDJPY right now in case of further upward moment. Conservative buyers should wait for a pull back. A pull back may occur due to the intense buying days before. We can expect some buyers closing out their long orders before another round of traders start buying. The conservative play would be to wait until initial buyers close out their longs before buying into this breakout movement. This is also a good set up to trade because it will help confirm the breakout direction. A higher low fractal signifies weak selling pressure meaning a lack of sellers. The only right move to make would be to go long. Also, historically speaking the Yen has always been depreciating. It has been depreciating for the past two years. In fact, it is really just finding balance from its major revaluation since 1997.
This monthly chart shows the likeliness of a further bullish move. It is rebounding from the resistance and is already above the 65 and 120 simple moving averages. Buying when the two moving averages cross over will be too late and months of profits will be lost. A good sign this is a buy also lies within the dashed line 65 period moving average. Notice how it is curving upwards, which shows an ease-off in the downtrend and is turning around in the opposite direction. Keep in mind, it is not too late to enter now. The strong U.S. economic data has potential to push this pair up to historical levels.
