USD/JPY is currently in a new uptrend but this has yet to be established, as the pair is making an attempt to test the rising trend line on the 4-hour time frame. Stochastic bounced from the oversold zone but headed back down, indicating that there’s enough selling pressure to push for a trend line test.

Take note that the trend line lines up with the 200 SMA, which has served as a support area for the pair on the last correction wave. A bounce from the 102.00 major psychological support and trend line might lead to a rally up to 103.00 or the previous highs.

Of course this might depend on how the US NFP release turns out. A slower pace of jobs growth is expected while the jobless rate could tick higher, but this might be mostly a result of an improvement in participation rate.

Going long at 102.00 with a 50-pip stop below the trend line and 200 SMA and a target of 103.00 could make a simple 2:1 reward-to-risk setup.

By Kate Curtis from Trader’s Way