4-hr USD/JPY: A Tricky Set Up For A Potential Buy Trade

For the past few months, USD/JPY gained 2100 pips! Then, about 10 days ago the USD started dropping and so far corrected with 300 pips, dropping down to 155.00. A local Double Bottom got formed and this level also aligns with the important 38.2% Fibonacci retracement. In theory, this should be a signal for a buy trade, but in contrast - we register a Death Cross as well, which is a historic sell signal. This set up on USD/JPY seems like a complete gamble, but the high potential profit makes is worth the risk. In order to minimize any potential losses, we would prefer to place a buy stop pending order, above 156.00. The possibility for a deeper correction towards 61.8% Fibonacci remains very real still, in the context of the 2100 rally since September. In addition to this, later this week on Friday, the Bank of Japan is expected to hike the rates, which may cause the JPY to rally with 500-1000 pips. In all cases, this trade should be taken with smaller lots and wider stop losses, to minimize the risk.