By Russell Glaser – The USD/JPY appears to be ending a period of consolidation as the pair formed a bullish flag pattern on the daily chart. Below is a possible trade setup for the USD/JPY
The daily chart shows a sharp price appreciation in the pair beginning on March 24th and continued on to set the yearly high for the pair at a price of 94.78. Following this sharp price jump of 432 pips, the pair formed a price channel with a negative slope as shown in the chart below. The Forex Technical Analysis shows this pattern to be a bullish flag.
To trade the pattern, traders may want to wait for a confirmation of the breakout. An entry long on the USD/JPY at 10% above the flagpole at the price of 95.21 (432*0.1 = 43) should provide enough clarity. This would also allow the price to breach the resistance line at the price of 95.
A stop of 25% of the flagpole can be set at 93.70 (432*0.25). This would make for a risk of 108 pips and help contain the risk of the trade.
The first take profit level would be the amount at risk, or 108 pips, at a price level of 96.29.
A second take profit level would be the full length of the flagpole of 432 pips at a price of 99.53.
Forex Market Analysis provided by Forex Yard.
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