Selling the Retrace in USD/JPY
Skerdian Meta • 1 min read
USD/JPY has turned bearish this month as the sentiment in financial markets has deteriorated with the escalating trade war. The first two weeks were pretty bearish but the price started to retrace higher in the following week and it stretched further up last week. Although, last week ended up being another bearish week as the downtrend resumed in the second half.
Today though, we saw another pullback higher amid some USD buying taking place this morning. The USD turned bearish in the last two days of the previous week after the soft US manufacturing and services reports we saw last week. But, the sentiment is still negative in financial markets, so JPY buyers should return again soon.
The price is already starting to reverse back down as the current H1 candlestick shows. The stochastic indicator is overbought which means that the pullback up is complete and the previous H1 candlestick closed as a doji which is a reversing signal. So, we decided to go short on this pair and now the bearish trend is resuming, so we’re holding on to this trade.