By: John Ursus
Timeframe: W1
Recommendation: Short Position
Entry Zone: 113.500 – 114.500
Take Profit Zone: 99.000 – 101.000
Stop Loss Zone: 118.500 – 119.500
The USDJPY has rallied sharply and covered over 3,500 pips which led to the creation of a rising wedge formation visible in this W1 chart, but did not face a healthy period of profit taking. The rally took this currency pair from an intra-day low of 76.021 to an intra-day high of 114.210 from where the USDJPY has currently paused its sharp rally. This currency pair could be subject to profit taking which may take this currency pair sharply lower depending on more fundamental data out of Japan.
The sharp move higher has left no support level to limit the downside potential until it reaches the 105.000 are which means the USDJPY could drop 800 pips or more before stabilizing should this currency pair reverse gains. Forex traders are advised to spread their entries over a 100 pips range between 113.500 and 114.000. The upward potential appears to be rather limited while the downside potential remains very attractive.
