USD/JPY Daily Price Forecast – 17th January 2025

Detailed Analysis of the USD/JPY H4 Chart:

1. Overview of the Trade Setup:

• Instrument: USD/JPY (H4 timeframe)

• Buy Stop Level: 155.690

• Stop Loss (SL): 154.948

• Take Profit (TP): 156.113

This trade setup is based on a bullish momentum confirmation, with the price positioned near a key support level and showing signs of a potential upward continuation.

2. Key Technical Indicators:

• Momentum Power:

  • The momentum power is negative (-0.10420000), indicating bearish sentiment. However, the chart suggests a potential reversal as the price approaches a key support level.

• Price Action:

  • The price is close to the 155.500 round level, which is a significant psychological level. A break above 155.690 would confirm bullish momentum.

  • The candlestick patterns show rejection of lower prices, with buyers stepping in near the support zone.

• Moving Averages:

  • The price is below the 200-period moving average (green line), indicating a bearish trend. However, the recent price action suggests a potential retracement or reversal.

  • The moving average is sloping downward, but the price is attempting to break higher.

• Support and Resistance Levels:

  • Support: The support level at 154.948 (SL) is well-placed below recent lows, allowing room for minor retracements.

  • Resistance: The resistance level at 156.113 (TP) aligns with previous price action and a potential supply zone.

3. Risk-to-Reward Ratio:

• Risk: The distance between the Buy Stop and the Stop Loss is 74.2 pips (155.690 – 154.948).

• Reward: The distance between the Buy Stop and the Take Profit is 42.3 pips (156.113 – 155.690).

• Risk-to-Reward Ratio: Approximately 1:0.57. While the risk-to-reward ratio is not ideal, the trade is valid due to the potential for a bullish breakout.

4. Trade Justification:

• Bullish Momentum:

  • The price action near the 155.500 round level suggests a strong likelihood of a bullish breakout.

  • The chart indicates a long trade confirmation, aligning with the buy stop order.

• Trend Alignment:

  • While the price is below the 200-period moving average, the candlestick patterns and support levels suggest a potential reversal or retracement.

• Logical Stop Loss and Take Profit:

  • The Stop Loss is placed below the recent support level, allowing for minor retracements without invalidating the trade.

  • The Take Profit is placed at a logical resistance level, ensuring a realistic target.

5. Potential Risks:

• False Breakout: If the price fails to sustain above 155.690, the trade could be invalidated.

• Market Volatility: Sudden news or events could cause unexpected price movements.

6. Summary of the Trade Setup:

• Buy Stop: 155.690 (above key resistance level to confirm bullish momentum).

• Stop Loss (SL): 154.948 (below recent support to allow for retracements).

• Take Profit (TP): 156.113 (at a logical resistance level).

This trade setup aligns with the potential for a bullish reversal, offering an opportunity to profit from a retracement or continuation of the upward move. However, the risk-to-reward ratio should be carefully considered before execution.