USD/JPY has confirmed the potential downtrend, after it made a retest of the broken trend line support last week. This could mean that further losses are in the cards for the pair.

Take note though that stochastic already reached the oversold zone, indicating that a bounce is still possible in the near term. If you’re looking to ride the downtrend, you can sell at market with a stop above the retest of the trend line. Aiming for the previous lows can still offer a 1:1 return on risk, good enough for a short-term trade.

If you’re bullish on this pair though, a bounce could take place once the pair tests the previous lows around the 103.00 major psychological support level.

By Kate Curtis from Trader’s Way