If you’re looking to trade USDJPY, you should keep your eyes glued to the potential inflection points marked by the descending triangle on its 4-hour forex chart. Price has been forming lower highs and finding support above the 101.00 major psychological level.
Price has recently bounced off the support level but you can still trade USDJPY by shorting at the triangle resistance, which is at the 102.00 mark. Shorting at that level and aiming for 101.00 with a tight stop could yield a good return on risk for a day trade.
Trade USDJPY Recommendations
The main event risk for this trade is the upcoming US non-farm payrolls release, which could lead to large dollar swings depending on how the actual results turn out. Analysts are expecting to see a 214K rise in hiring, weaker compared to the previous 217K increase and the other month’s 282K gain. Nonetheless, the jobless rate is likely to hold steady at 6.3%.
The ADP report, which can be considered as a leading indicator for the NFP, came in stronger than expected. However, manufacturing indices have printed mixed readings when it comes to employment levels.
A much weaker than expected NFP reading could eventually lead to a break below the 101.00 support area and further losses for USDJPY. If you’re bearish to trade USDJPY, this could be your chance to hop in a short trade and go for a long-term target of 400 pips, which is about the same height as the chart pattern.
On the other hand, a much stronger than expected NFP reading could lead to dollar gains, but the magnitude mostly depends on how much the actual figure beats forecasts. Anything north of 250K could be very dollar bullish and lead traders to trade USDJPY with an upside bias.
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