Position: Short USD/JPY
Entry: At market, 112.74 at the time of writing
Stop – 113.00 (the top of the descending channel).
Target 1 - 112.655, which is the close of the previous day.
Target 2 – the bottom line of the descending channel
Timeframe – Few days - Few weeks
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USD/JPY has been declining since the start of the year and we can clearly see a parallel descending channel on daily charts. Over the past two weeks, however, USD/JPY has rallied back to this descending channel’s resistance.
The Dollar’s recent rally inspired by the hawkish tone of yesterday’s FOMC meeting has lifted the pair to the top of this channel at the 113.00 area.
But the price has failed to rally above the channel and is sliding once again towards the bottom of the channel, presenting a shorting opportunity. A break out of the channel would have signaled a trend change.
Chart 1: USD/JPY Daily Timeframe (December 2016 to May 2017)
--- Written by Oliver Morrison, Analyst
To contact Oliver, email him at oliver.morrison@ig.com
Follow Oliver on Twitter @OPWMorrison
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