JPY & USD Break Out Trades

Hello Forex Traders,

Only a few days remain in the month of October… as Forex traders we must find a balance between squeezing out a few more profitable trades in the short time that is left, and keeping a close eye on risk management as to avoid larger draw downs before month end closure. Let us take a look at potential break out trades today. If you are looking for more long-term analysis on EURUSD and GBPUSD, check out this article.

USDJPY BREAKOUT

Today or otherwise later this week I believe there is an interesting potential on the USDJPY. The UJ seems ideally set for a break out trade to the upside.

29- 10- 2013 UJ STRIKE

Here is why:

1)      The 1 hour chart has a trend line (light green) with a good angle of 24 degrees

2)      USDJPY has bounced off of a deep Fibonacci (78.6 / 88.6%) retracement

3)      The break above the trend line would propel the currency in a uptrend channel

4)      The 4 hour chart is bouncing off a trend line (magenta)

5)      The daily chart could have completed a triangle (blue circle on 4 hr chart)

29- 10- 2013 uj strike 4

There are other reasons why the setup could be good. Make sure to try out our Forex trading room to find out what other rules and guidelines we have to increase the odds of success and to obtain an edge.

The break out trade could lead to a major move up. In fact the USDJPY could be at the very start of a bigger bullish uptrend… however, there is always a risk of that analysis proving to be incorrect so here are the potential targets Forex traders could think of:

a)      The conservative target is the top at 98.95

b)      The other long-term target is the top of the daily wedge (dark red trend line) at 100 which is also the 100 psychological number

c)       The more aggressive target is the -1.618 Fibonacci target at 102.90 (which is still below the daily top)

29- 10- 2013 uj str d

EURJPY BEAKOUT

The USDJPY could pull the EURJPY with it. Here too there is a potential for a break out trade to the upside – the screenshot of the 1 hour chart shows which trend line (light green) can provide that opportunity.

29- 10- 2013 ej

In the larger context, price is neatly contained by 2 trend channels in fact. One trend channel is shallower whereas the 2nd shows the more recent acceleration of price to the upside. Here the break out trade shows less space as price is close to the top of the channels. Of course there is always the potential for price to break above those resistances, but in this case aiming for the conservative target which is top at 135.50 would seem most suitable.

29- 10- 2013 ej 4

EU & GU

The EURJPY could get wind fall from the EURUSD as well. The question is whether the EURUSD will make a deeper retracement before breaking to higher grounds? One way of measuring that is by keeping an eye on the trend line (green). A break above might see a break out trade to the -0.618 at 1.3872. A bounce off of the trend line could see the currency pull back to a deeper Fib like the 50% at 1.3727 before continuing up. The break out to the upside or the bounce off of the 50 Fib are the with the trend setups.

29- 10- 2013 eu 1

The GBPUSD has a similar trend line (green) although price is further away from it. The target is for sure the top at 1.6255 due to the daily and weekly resistance.

29- 10- 2013 gu 1

Before we wrap it up, check out Tim’s great article here. 

Thank you for sharing this article and wish Good Trading!

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