USD Bulls on the Charge Again – Are You Trading the USD/JPY Breakout?
Skerdian Meta • 2 min read
The forex market has been pretty quiet in the last couple of weeks due to a thin Christmas market. But today, the forex traders are back from their winter holidays, the market is on the move again, and it has shifted in favour of the Buck again.
The commodity currencies have put up a decent fight overnight, but they have given up all the gains since the European trading session started. The Euro, on the other hand, has lost about 100 pips since then.
But this latest USD surge can be best observed in USD/JPY. This forex pair has declined about 200 pips during the last week of 2016 mainly due to profit taking and tidying up of open forex trades for yearend. However, in the last 2-3 trading days, this pair has resumed its uptrend again and we´re now close to the top from two weeks ago.
This means that US buyers have launched another attack after taking some time off in the last two weeks. Will this be the next leg of the uptrend? Well, some important support and resistance levels have to be broken before we can consider this as the next leg for the USD uptrend which started about two months ago when Donald Trump won the US presidential elections.
The price in USD/JPY is slowly creeping up to the highs
EUR/USD has to break below 1.0350 and USD/JPY has to break above 118.60-70, so it can count as a USD uptrend extension. Personally, I don´t like to trade breakouts, so I might hold back if USD/JPY breaks that resistance area, but you might as well buy this forex pair if it breaks the resistance and if it suits your money management techniques.
I´d prefer to wait for a small retrace to 118.60-70 after the breakout before loading up longs on this pair. That´s a conservative forex strategy, but the winning odds increase substantially with this trading strategy and I prefer being safe than sorry.