USD/JPY Potential Retracement (February 4, 2014)

USD/JPY recently broke below the 102.00 major psychological support level and dipped below the 101.00 mark this week. However, with stochastic reaching the oversold region and crossing upwards, dollar bulls may be back in action for the near term.

If that happens, the pair could retrace to the former support zone, which is around the 61.8% Fibonacci retracement level. Cautious traders can wait for reversal candlesticks or for stochastic to reach the overbought zone before shorting around 102.00.

A short order at 102.00 with a 50-pip stop and a 100-pip target would yield a 2:1 reward to risk.

By Kate Curtis from Trader’s Way