Market Condition: USD/JPY Pending Bearish Breakout
Target 1:______2X ATR at 107.53
Target 2: _____ 4X ATR at 105.95
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The USD/JPY has declined as much as 525 pips from the standing May 2017 high at 114.28. Currently the pair is retracing from its lows to now test a value of trendline resistance. If prices again resume trending lower, traders may plan for a new USD/JPY breakout under the current June 2017 low at 109.11. Traders should note that daily ATR for the USD/JPY stands at 79 pips. This means a 2X ATR profit target may be considered near 107.53. Alternatively, in the event of a false breakout, a 1X ATR stop loss may be considered near 109.90 to create an initial 1:2 risk/reward ratio.
Traders should note that IG client sentiment is currently reads at +1.68. This reading shows that 63% of traders are currently net-long the USD/JPY. When read as a contrarian signal, sentiment numbers may suggest that the USD/JPY may trend lower. In the event of a bearish breakout, traders should look for sentiment figures to reach positive extremes of +2.0 or more. In the event of a bullish reversal, sentiment values may neutralize or even flip negative. In this alternative scenario, traders may consider deleting any pending orders to sell the market.
Why and how do we use IG Client Sentiment in trading? See our guide.
--- Written by Walker, Analyst for DailyFX.com
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