USD/JPY Strong S/R zone from the past

How to participate in the USD/JPY uptrend
In yesterday’s post, I was talking about intraday resistance on USD/JPY. I said it was a bit risky scenario because this resistance went against a long-term uptrend (therefore it was a counter trend resistance).

Today, I would like to look more into the big picture of USD/JPY and comment on the strong long-term uptrend.

How to enter a trade in a trend
When I see a strong trend, I always look for ways how to jump in the trend and participate in it.

I never jump in it without giving it a thought. I always wait for a pull-back before I enter the trade.

In other words – I never enter long when the price is at it’s highs (as well as I never enter shorts when the price is at it’s lows).

A significant area on USD/JPY
So, let’s have a look at the USD/JPY now. If you look at the Daily chart, you can see strong buyers pushing the price up.

The price went through a pretty significant area and now it rotates above it.

This area is around 109.70.

Why is it a significant area? Because in the past, the price reacted to it several times. This level worked as a strong SUPPORT as well as a strong RESISTANCE.
So, this level was pretty clearly pretty important in the past and it is quite likely, that it will also be important in the future.

I bet you heard about this scenario. It is nothing new, actually.

Support becomes a Resistance, Resistance becomes a Support…
Let’s now have a look at the picture. It is a USD/JPY Daily chart, and the strong level (around 109.70) is highlighted in yellow. I also marked places where the price had strong reactions to this level in the past.

As you can see, at first the level worked as a strong SUPPORT (the price bounced upwards from it). Then the price went below this level, and reacted to it from below (level worked several times as a RESISTANCE).

Now the price went through the level again and this former RESISTANCE became a SUPPORT again!

What’s next?
It will be very interesting to watch how the price will react to this level when it hits it again. I think that it is pretty likely, that it will work as a SUPPORT again and the price will react to it and go up again.

Remember, this trading opportunity is on a Daily chart. So if you decide to trade this, or any other trading scenario based on Daily charts – you need to have adequate Stop-Loss (for example 50 pips). You need to let the trade breathe – because it is a swing trade, not an intraday trade.