Strategy of the day on USD/JPY
The spot rate is currently testing the upper limit of its medium-term bullish channel at 92.30 suggesting a decline. However, a break of these levels will initiate a more violent bullish channel.
Technical indicators provide buy signals, but until the resistance is not broken the assumption of a decline is most likely. Bollinger bands have greatly tightened in recent days showing a decline in volatility and the imminence of a violent movement.
The spot rate approaches the upper limit of its channel, we suggest 2 scenarios. The first one is the hypothesis of a decline where we recommend a sell on the level of 92.30 with the 1st objective at 91.70 and then at 91.50. A breakthrough of 92.50 will invalidate this scenario. The second scenario is a break of its resistance where we advise a “buy stop” which means to buy the spot rate as soon as it is broken through its resistance of 92.30 with the 1st objective at 92.90 and then at 93.10. A breakthrough of 92.10 will invalidate this scenario.
The material has been provided by Instaforex Company – http://www.instaforex.com/