USDJPY River Theory

[downrivertrader]

Yesterday, I recommended an aggressive long trade out of the 115.68 level back to River at 116.51. This is exactly what happened and hopefully you booked 85 points or so on this trade.


River level is 116.86 today and this level will need to be resolved. A move out of this area should determine the next significant move in this pair so be alert and get set up with proper risk.


The monthly price distribution is out of balance on this pair and my bias is for continued USD strength in the short term. Please refer to the monthly PDA chart for reference on this.


So how do we trade?
Aggressive traders can set up shorts on a continued move into River at 116.86 with Risk just above this level as any significant intraday move through this level points to additional upside. Short targets are 115.68 and 114.73 where I would cover.


A move above and through River and I would establish longs with Risk under Zone -1 at 116.63. Ideally you would be able to establish longs on an intraday pullback to the 116.86 area. Upside targets are 117.99 and 118.57.


NEUTRAL UNTIL RIVER IS RESOLVED AT 116.86

[downrivertrader]

Hopefully, you were able to take yesterday's recommendation to set up shorts on a move into River at 116.86. The high was actually 116.89 and we have had a nice move down of almost 100 points as of this post.
I expect we will see some volatility on the ECB news out of Europe later today so stay nimble and execute your plan.
If you are short, stay short and use the River level at 116.68 to establish your risk limit. Short targets continue to be 115.68 and 114.73 where I would cover. You may want to take partial profits at 115.68.


As I mentioned yesterday, the monthly price distribution is out of balance on this pair and my bias is for USD strength to return in the short term. Please refer to the monthly PDA chart for reference on this.

BEARISH WHILE BELOW RIVER AT 116.68

[downrivertrader]

We have had some wonderful profit on our short positions on the USDJPY over the last several days. However, last week I was warning about near term USD strength in this pair. On Thursday and Friday the USD strength materialized and price moved up in a range of around 261 points. My conclusion was inflenced by the out of balance state of our Monthly Price Distribution Analysis. Please remember to review these charts to get a overall view of value on this pair and help with your shorter term trading plans.


On Friday the River Level was at 117.05, I recommended to set up longs at this level . I hope you were able to catch this move of over 100 points. Our first target was at 117.99. You may have chosen to take partial profits here.


So what now?


It is very important to review our PDA chart. You will see that we are at a key topside level in the short term distribution. If we build value here and don't move up, then the downside will likely materialize rather quickly so be very nimble with current longs or new longs as we are at critical mass in the short term strength.

If you are long stay long and continue to look for 119.35 where longs should exit for the short term. I will likely look to set up shorts at this level, but lets see when(if) we get there. I would now manage my risk by using the River Level at 117.43 as a downside guage. A move below here and I would cover any longs and stand aside.

If the market gives us the chance, look to get long ahead of 117.43 with risk below this area as we look for 117.99 and 119.35. I think the market could possibly range trade the 117.43 / 119.35 zone this week but let's see where we are in the next couple sessions first.


Only a move through and settle below River at 117.43 would cancel my short term bullish bias


SHORT TERM BULLISH WHILE ABOVE RIVER AT 117.43