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USD/JPY Retreats and Challenges Bullish Scenario

The USD/JPY looks like it is completing a period of bearish correction as price retreated from 118.65 at the start of the year to 112.60 by mid-January. 

USD/JPY 4H Chart 1/23


(click to enlarge)

Bullish Breakout and a Pullback:
- In the previous update, we saw USD/JPY break above the 50-period simple moving average (SMA) as well as a falling trendline
- The RSI pushed above 60, which showed a break from bearish momentum. But it failed to reach 70, which means there was no bullish momentum to follow.
- Furthermore, the breakout retreated before being able to clear the 100-, and 200-period SMAs. 
- At this point, a break above 116.00 would serve a the next bullish continuation signal.

Additional Near-term Trade Idea:
- In the previous USD/JPY update, we assessed a trade plan to buy at 113.50, with a stop at 112.40, and targets of 116 and 118.
- Consider an additional, adjusted trade idea born from near-term price action. 
- Looking at the 1H chart, we can see that there's some support above 113 at the moment. 
- If we can get in around 113.30 and put a stop at 112.90, a very conservative target at 114.50 would provide a 3:1 reward to risk. 
- This trade idea would serve as a play within the context of a bearish market because if price indeed holds under 114.50, it would be likely that bears are in control.