Welcome to this week’s newsletter!

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USDJPY REVERSAL OPPORTUNITY…

In this week’s newsletter we are going to take a look at USDJPY as the pair could be set to reverse.

Looking at the strength and weaknesses of the currencies we can see that the USD (red line) is moving lower showing weakness in the currency. The JPY (white line) is at an extreme weakness, when a currency is this low on the strength and weakness chart, we often see a reversal in that weakness. If the JPY could strengthen then we want to pair it with a weakening currency like the USD for trading opportunities.

The weekly time frame shows us that the price is in a strong upward trend with the market forming higher highs and higher lows. However, in normal trending conditions we typically see the market retrace back to a previous area of support before continuing the trend. If this upward trend is to continue, we would expect a retest of the 112.00 level or the previous swing highs at 111.50. For this to happen we should see a lower time frame downtrend as the market moves towards support.

As we can see from the 4hr time frame the price is forming lower highs and lower lows which should continue if the price is going to be in a pullback phase on the weekly.

If the price retests and forms bearish price action at the recent lows of 113.67 or 114.00 we could look for bearish opportunities on this market.

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