USDJPY → About to Breakout to New Highs? Let’s Maximize Profits!

USDJPY is on its third leg up in this bull channel that started at 141.000. We're near the top of Resistance Zone, is a long justified?


How do we trade this? 🤔

USDJPY → About to Breakout to New Highs? Let's Maximize Profits!


We need confirmation of a breakout to justify a long. After the initial bull run to 152.000, USDJPY pulled back with three legs to 140.200 and followed with a run to our current position of just over 149.000. The price action is technically at a new high in this run which could be the top of the third and final leg up.

Given the two strong bull bar closes on February 2nd and 8th and the lack of a sell signal, I do not believe this leg is over yet. What we need is a close above the Resistance Zone at 150.000 followed by a test of the top of Resistance as support. Once we see that support, it's reasonable to enter a long position with a 1:2 Risk/Reward Ratio. Take half profits at 1:1 Risk/Reward which is 151.200, move the stop loss up to the entry price to lock in profits, then swing the second half above the previous 152.000 high. 152.000 is a significant resistance area and I would be cautious to assume we'll make it to that price, however, the trend is our friend until the very end. Until we have a reason to change our bias, we must remain long.


💡 Trade Idea 💡

Long Entry: 150.385
🟥 Stop Loss: $149.250
✅ Take Profit #1: $151.200
✅ Take Profit #2: $152.650
⚖️ Risk/Reward Ratio: 1:2


🔑 Key Takeaways 🔑

1. Two strong legs up in a micro bull channel.
2. Third leg in progress, strong bull bar closes on February 2nd and 8th, indicating more upward momentum.
3. Near the top of the Resistance Zone, wait for a close above and test of Resistance as Support.
4. Enter a 1:2 Risk/Reward trade taking half profits at 1:1 Risk/Reward.
5. RSI at 63.00 and above the moving average, supports long bias.


💰 Trading Tip 💰
The longer a trend continues after 3 legs, the probability of that trend continuing lessens. Because of this decreased probability, we ought to reduce our risk when entering trades.


⚠️ Risk Warning! ⚠️
Past performance is not necessarily indicative of future results. You are solely responsible for your trades. Trade at your own risk!


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