The USD/JPY Prepares for a Breakout
Market Condition: USD/JPY Inside Bar
Target 1: 1x ATR
Target 2: 2x ATR
Invalidation: A false breakout
(Created using Marketscope 2.0 Charts)
The USD/JPY is set to close the day lower, but has so far failed to print a new daily low or high. With today’s candle closing inside of yesterday’s price action, traders may use this inside bar to plan for the pairs next breakout. Bullish breakouts for the pair may occur over yesterday’s high at 111.44, which is currently acting as resistance. Conversely, bearish breakouts may be considered under yesterday’s low at 110.35.
Daily ATR for the USD/JPY reads at 94 pips. This means Traders looking for an initial bullish breakout may first target a 1X ATR extension to 112.38 followed by a 2X extension to 113.32. Alternatively, bearish breakouts may target 109.41 and 108.47.Risk may be managed with a ½ ATR stop, to create at minimum a 1:2 Risk Reward ratio.
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.