USD/JPY Daily Price Forecast – 10th February 2025

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Trade Summary:

USDJPY
Sell Stop @ 151.748
TP @ 151.292
SL @ 151.498

Trade Setup Overview

• Instrument: USD/JPY (H4 timeframe)

• Trade Type: Sell Stop

• Entry Level: 151.748

• Stop Loss (SL): 152.498

• Take Profit (TP): 151.292

This trade setup is based on a combination of technical analysis, momentum confirmation, and price action. Below is a detailed breakdown of the justification for this trade:

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1. Technical Analysis

Key Levels

• Resistance Level: The price has shown resistance near the 152.000 level, as evidenced by previous price rejections. The stop loss is placed slightly above this level at 152.498 to account for potential false breakouts.

• Support Level: The 151.700 level is a significant support zone, and the sell stop order at 151.748 ensures entry only if the price breaks below this level, confirming bearish momentum.

• Take Profit Level: The TP is set at 151.292, slightly above the next support level, ensuring a realistic and achievable target.

Trend Analysis

• The price is trading below the 50-period moving average (green line), which is acting as dynamic resistance. This indicates a bearish trend, and the trade aligns with the prevailing market direction.

• The recent lower highs and lower lows confirm the continuation of the downtrend.

Price Action

• The price is consolidating near the 151.700 level, forming a potential bearish continuation pattern. The sell stop order ensures entry only if the price breaks below this consolidation zone, confirming the continuation of the downtrend.

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2. Momentum Confirmation

• The momentum indicator shows a value of -0.11555000, indicating strong bearish pressure in the market. This aligns with the trade direction and supports the likelihood of a downward move.

• The chart notes confirm that momentum supports the trade, awaiting candlestick confirmation for execution.

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3. Risk-Reward Ratio

• Stop Loss (SL): Placed at 152.498, above the recent resistance level and the 152.000 round number. This ensures protection against false breakouts while allowing the trade room to breathe.

• Take Profit (TP): Set at 151.292, slightly above the next support level. This level aligns with the next logical support zone, providing a realistic target.

• Risk-Reward Ratio:

  • Risk: 0.750 (152.498 - 151.748)

  • Reward: 0.456 (151.748 - 151.292)

  • Risk-Reward Ratio: ~1:0.61. While the risk-reward ratio is less than 1:1, the high probability of success based on technical and momentum analysis justifies the trade.

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4. Candlestick Confirmation

• The trade setup is waiting for a bearish candlestick breakout below the 151.748 level. This ensures that the trade is executed only when there is clear evidence of selling pressure.

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5. Psychological and Round Numbers

• The levels chosen (151.700, 152.000, and 151.300) are psychological round numbers, which often act as key support and resistance zones in forex trading. These levels are likely to attract significant market activity, increasing the probability of the trade's success.

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6. Trade Justification

• Bearish Momentum: The momentum indicator confirms the trade direction, suggesting that the price is likely to move lower.

• Breakout Potential: The sell stop order ensures entry only if the price breaks below the consolidation zone, reducing the risk of false signals.

• Logical Stop Loss and Take Profit: The SL and TP levels are strategically placed to balance risk and reward while aligning with key technical levels.

• Confluence of Factors: The trade setup is supported by multiple factors, including momentum, moving averages, psychological levels, and candlestick patterns.

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Conclusion

This trade is justified based on the confluence of technical analysis, momentum confirmation, and logical risk-reward management. The sell stop order ensures entry only if the price breaks below the consolidation zone, confirming bearish momentum. The SL and TP levels are well-placed to protect against losses and capture potential gains, making this a high-probability trade setup.

Trading is all about statistics.

While we can experience winning streaks, we can also suffer from losing streaks.

As such, we should always size each trade to withstand losing streaks (if any).

It's widely recommended that you should not risk more than 2% of your capital for each trade.

We believe it's easier to control your lot size by limiting your lot sizing to 0.01 for every $500 in your account.

So if you have $5000, then risk no more than 0.10 lot size per trade.

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If you spot a mistake especially when it comes to the price, please use common sense and check the chart.

We wish you good luck and good profit for this trade idea.

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