$USDJPY trend following strategy

In this post, we will show you, how you can add positions in well-developed trend using the Simple Moving Averages. 

After the long term downtrend from that lasted from 2007-2012, we had a period of consolidation that was broken in January 2013 when the pair broke above 200 SMA (blue line). 

usdjpy trend following strategy

After the first impulse swing high and break above 200 SMA, we had a period of consolidation, indicated by the triangle on the chart. That triangle could be used for position entries within a trend and a new break led to new highs. During this time the pair never reached 200 SMA (blue line) and was always bouncing from 34 and 100 SMA (green and red lines). This fact is also a confirmation of the strong, unbroken, uptrend and the zone where you should enter the trades in well-developed trend.


Using the Fibbo expansion from the low and the high of the first impulsive swing high, we can see that it reached 100% expansion 122 level and extended to 125 before downside correction began. Looking at the present moment in the weekly chart we see that 200 SMA (blue line) was broken to the downside, but this break was without confirmation, and the correction within long term uptrend from 2013 reached perfect 50% of Fibo retracement level 100.300. From this level, we have upside reversal of the correction and uptrend continuation. Now the most important resistance from new highs is 120-125 zone and you can now look only for entering long trades, on the daily chart in the SMA support zone, which could increase the probability of winning trade more than counter trend short trades.

We have used our MetaTrader4 TrendTradingDNA template to show you the structure of the USD/JPY long-term uptrend. 

Get the MT4 TrendTradingDNA template

Happy trading! (click on the chart to enlarge it)

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