Buying the Pullback in USD/JPY at the 200 SMA
[[USD/JPY]] turned quite bullish in September. This pair has been really bearish during summer, having lost around 8 cents from top to bottom, as the trade war escalated and the market sentiment deteriorated as a result. Safe havens were in great demand during that period, with GOLD surging more than $250.
But, the sentiment improved in September after US and China softened their rhetoric, while last month, comments about the Phase One deal gave this pair another boost, as the sentiment improved further. But, every pair has two sides of the coin to trade.
USD/JPY also trades the USD, apart from the sentiment in the JPY. The US manufacturing sector has fallen in contraction and yesterday’s ISM manufacturing report showed further contraction in this sector, which went against expectations, catching traders off guard. The USD lost around 100 pips and this pair turned bearish.
But, we decided to open a buy signal from here, since the price is finding support at the 200 SMA (red) on the H4 chart, hoping for a bounce from here. This moving average has been providing support a few times, despite being broken. Eventually, the price has reversed and has climbed above it, pushing the trend higher. This looks like a similar pattern, hence the buy trade.
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