Buying the Pullback in USD/JPY at the 20 SMA

Yesterday we had a buy forex signal in USD/JPY which we opened last Friday as this pair retraced lower. The 50 SMA (yellow) provided support, ending the pullback for this pair and it pushed the price higher yesterday as well. Then, the uptrend picked up pace during the Asian session today.

Now USD/JPY has retraced lower and on the H1 chart we have the 20 SMA (grey) which is providing support for this pair. You can see that when the trend picks up pace, the 20 SMA comes into play as support. That’s the case today; the trend got stronger in the last few sessions and now the 20 SMA is providing support on this latest pullback lower.

The price formed a small hammer candlestick on this time-frame which is a bullish reversing signal after the retrace. Besides that, the stochastic indicator is almost oversold, which means that the pullback lower is almost complete on the H1 chart. So, we decided to go long on USD/JPY, and now we wait for the trend to resume again.