Same as EUR/CHF, USD/JPY was sliding lower yesterday around midday. The safe haven currencies were finding some demand at that time for whatever reason and CHF and JPY pairs were sliding lower.
Perhaps it was the US Tax Bill which was about to go through the voting process. We know that before major fundamental events forex traders tend to jump on safe haven currencies just in case there is a major screw up.
So, USD/JPY was sliding lower and in the afternoon it reached the 50 SMA (yellow) on the hourly chart. At the same time, it formed a couple of doji candlesticks. These sort of candlesticks signal a possible reverse after a retrace.
This forex pair looks bullish today
Besides that, the stochastic indicator had been oversold for a few hours. All these technical indicators were pointing up, so according to them, the retrace was over.
We decided to open a buy forex signal and that’s what we did; we went long at 112.48. The retrace did end, but not right there. It stretched further down a bit reaching 112.30 and then the price started to turn higher.
This morning, the sellers tried to have another go at the downside, but the 50 SMA provided solid support. We turned back up a few hours ago, but the 100 simple MA (green) decided to provide resistance. The price is slowly pushing above it, but the hourly candlestick must close above it if it is to be broken. There are more moving averages on the way though. The 100 (red) and 200 (purple) smooth MAs are standing just above our heads.
So, there’s still plenty of work to be done by buyers until we reach our TP (Take Profit) level. Again, if you don’t feel like taking too much risk, you can place SL (Stop Loss) at breakeven now that we are about 15 pips in profit.