USD/JPY has been trading on an uptrend for the last 3 weeks. This pair has been pretty bearish since the beginning of the year, but formed a reversal in the last week of March, and the trend has turned bullish since then.
Last Friday, USD/JPY started retracing down. The retrace is continuing today, as well, but I think that the retrace lower might have reached its limits. As you can see from the hourly USD/JPY chart below, this pair has reached the 100 SMA (green) and it seems that the moving average is not letting go.
The 100 SMA has been doing a good job providing support
The 100 SMA has been holding on all morning, so it is providing solid support. The stochastic indicator has been oversold and it is now reversing higher. According to this chart, the retrace is complete and the uptrend is about to resume.
The H4 chart has just become oversold too
If we switch to the H4 chart, we see that the stochastic indicator has just reached oversold levels, as well, which means that the retrace is complete on this timeframe. Besides that, the 50 SMA (yellow) is standing just below there. This moving average has provided support and resistance before, so it is likely to do the same again. The market sentiment is still positive, which is bullish for this pair and we decided to pull the trigger. We placed the Stop just below the 100 smooth MA (red) while the Take Profit target is below the 200 SMA (purple).