USDJPY – Important Consolidation Before a Breakout
U.S. Dollar/Japanese Yen FX:USDJPY
It looks like the market found the support at 108.00 and started a sideways movement above this level. The market is in a consolidation and breakout signals will tell us about further market movements.
If the price breaks the downtrend line and 109.00 resistance, we should be ready to see an upward movement to the resistance zone formed by SMA50 and 110.00 resistance level . The breakout can be used for buying with profit targets at SMA50 and stops below the local swing low. It will be possible to buy based on the daily and lower timeframes.
If the price breaks the support zone , it will confirm the downtrend. The market will be able to reach the support zone between 105.00 and 104.65 levels. This breakout signal also can be used for selling based on the daily and hourly charts. Don’t forget to place stop orders above the local swing high and the downtrend line. The main target for sell trades will be 105.00 support level .
If we look at the indicators, we will see that they provide different signals. RSI is bullish and confirms the price reversal from the support. MACD also supports the upward movement. MAs tell us about the bearish trend and DMI confirms it. As we don’t have signals confirming only one direction, we will have to get additional signals. The breakouts above or below the key zones will provide us such signals which will be used for trading.
Source: TW DLavrov