Forex Strategy: USD/JPY Hammer Hinting at Uptrend Continuation
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- USD/JPY Technical Strategy: Hammer formation near 102.00 favors upside
- Longs preferred with target of previous high near 102.63
- The small correction within the context of a broader uptrend supports a bullish bias
The recent correction in USD/JPY has found some buying support at the psychologically significant 102.00 handle, which is just shy of the 38.2% Fib Retracement level. Another Hammer candle formation on the four hour chart may be hinting at some further upside potential for the pair. From a purely technical perspective longs are preferred with a target of the recent high of 102.630, and a stop below nearby support at 102.00. This would offer a reward of 38 pips with a risk of 26 pips.
However, when taking a look at the economic calendar, fundamental event risk is posed by upcoming testimony from recently-inducted Fed Chair Janet Yellen. A dovish tone from the central banker may prompt further speculation over the timing of future stimulus cuts by the FOMC and weaken the US Dollar.
Confirm your chart-based trade setups with the Technical Analyzer.
Four Hour Chart - Created Using FXCM Marketscope 2.0
--- Written by David de Ferranti, Market Analyst, FXCM
Contact and follow David on Twitter: @Davidde
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