Shorting the Retrace in USD/JPY at the 100 SMA
USD/JPY has climber nearly 100 pips in the last 2 sessions, but the main trend is still bearish and the pullback is complete now
[[USD/JPY]] has been trading on a bearish trend since the beginning of May when the sentiment turned negative on a weakening global economy and increasing trade and geopolitical tensions. The trend was quite strong during May but it slowed down during the first couple of weeks of this month and we saw a weak pullback higher during that period, which was another sign that the pressure was on the downside. The weaker the pullback, the stronger the trend, right?
The sellers returned again last week and this pair turned bearish again. This week, the pressure hasn’t been as strong but USD/JPY made new lows nonetheless and dipped below 107 for some time. We have had a few successful signals playing the downside in USD/JPY during this time and we plan to stay bearish on this pair.
In fact, we just opened a sell signal a while ago. USD/JPY has been retracing higher since late US session yesterday and it has climbed around 90 pips from the bottom. But, the buyers are running against the 100 SMA (red) on the H1 chart now where it is finding resistance.
Right above that, we have a previous resistance level which stands at 107.70s, while the stochastic indicator is overbought on the H1 and H4 time-frames. So, this retrace is complete and we went short for these reasons. Now let’s wait for the sellers to return again and resume the bearish trend.
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