Fan Yang
All posts from Fan Yang
Fan Yang in Fan Yang,

USD/JPY - Buy on the Dip Trade Ideas

USD/JPY started 2014 in a bearish correction mode. Much of February was sideways mode. After the first full week of March, the pair looks like it has shifted to from sideways to bullish from a technical perspective:

(USD/JPY Daily Chart)

After breaking above the February consolidation range and the 2014 falling resistance, we might want to consider buying on a dip, which can be expected to resolve some near-term overbought conditions reflected by a stochastic reading above 80 in the daily chart.

Buy on a Dip:

1H Chart:

If we believe last week's push can extend without a significant short-term pullback, we should look at the 1H chart for clues to buy on a pullback.

For example, a return back toward the 102.70-103 area, with the stochastic at 20 and RSI at 40, would get me ready to buy.

4H Chart:

If the market needs to consolidate a bit in the short-term we might look for a deeper retracement to 102.20 area, near 61.8% retracement. 

We can look for the S20-R40 combination in the 4H time-frame. Even if the market does not retrace back to 102.20 and instead has a more sideways mode, we can still use the S20-R40 combination as a guide to timing a buy after sideways consolidation.

Fundamental Risk:
This week has relatively few scheduled US releases of significance. The key ones are probably Thursday's retail sales and jobless claims data, followed by a preliminary reading of the Umich consumer sentiment index.

There is a BoJ Press Conference on Tuesday that is worth monitoring.