Yesterday we posted an update about USD/JPY. As we mentioned there, this forex pair has been trading in a 40 pip range between 111.50 and 115.50 in the last couple of months and yesterday we were approaching the 111.50 level.

But before that, the sellers had to take out 112 first. In our other update, we presented you with a trade idea for a short term signal, whoever read that update. The logic behind that was to place a sell pending order below 112 and target 20-25 pips on a break, so if you took that trade then well done.

Today though, we find this pair below 111.50. That doesn´t exactly throw our first trade idea out the window, not yet. Since 111.50 has been providing solid support lately, we thought that risk/reward would be favourable for a long term buy forex trade.

We also highlighted that we would watch the price action closely before pulling the trigger because no level lasts forever. And we were right, the 111.50 support level has gone but the 100 and 200 SMAs on the daily forex chart are still holding on.

The two moving averages are still holding on

We´re still too close to 111.50, so this doesn´t count as a proper breakout just yet. The daily candlestick has to close below that level so we can consider it as a proper break.

In fact, this might as well be a fakeout so we have to be careful. Personally, I'm going to wait until today´s candlestick closes before making a decision. If it closes around the 111.60-70 level, then it would be a great signal for a buy long term signal, targeting at least 200-300 pips, because it will form a pin or hammer, which are reversal patterns. So, let's hang on until then.