USD/JPY Trade Idea – Buying on this Dip, 6 Technical Reasons

Forex Technical Update

USD/JPY 1H chart 2/7/2013 11:15AM EST

(click the chart to see full size)

Trendline: The 1H USD/JPY chart shows the pair consolidating, falling to 93.15 today. Here are some reasons you might want to consider buying on this dip.

1) The trend has been bullish, very bullish.
2) 93.15 was previous resistance pivot and can be tested as support.
3) 93.00 could be a psychological support.
4) A rising trendline that goes back to Jan. 23 is being tested.
5) The RSI is around 40, which has provided support since Jan  28/29.
6) Price has not been able to sustain a break below the 100-hour SMA, and is testing it as well.

Stop placement, target: A break below 93.00 could be a sign that this bullish outlook is not working, unless its a false breakdown. Otherwise, below 93.00 and these support factors, USD/JPY might actually be developing a more significant correction. For now the 94.00 level seem to provide resistance, but since the trend has been bullish, there is potentially a higher upside. In my opinion, trade management in this trend-following scenario can be more aggressive than a trade against the trend.

Fan Yang CMT is a forex trader, analyst, educator and Chief Technical Strategist for FXTimes - provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.

Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analysis.