USDJPY Pending Bullish Butterfly

USDJPY looks very bearish on the daily charts and it is close to making major breaks of the bullish uptrend, but if the bullish uptrend is going to hold USDJPY is likely already at or very close to a low.

I've been wanting to go swing long USDJPY for a while. Made a few entries. Had some instantly go a couple 100 pips for me. Had some instantly hitting stop losses. All in all, generally even on it and I got bored of trying and decided to wait a while.

And this is the type of thing I've been waiting for. Some sort of nominal breakout of the local lows which also happens to be a breakout of the bigger lows.


It sounds a bit silly to wait for a sketchy bearish breakout to look to enter long but I really like trading false breakouts. My underlying logic for this is simple. When I was a noob and bought the high/sold the low in false breakouts - it never went more than a few points in my direction and then trended hard against that.

Ergo, the exact opposite of that is a trade that can have a really tight stop and achieve big RR trades in the instances it works.

Two rules I've observed in false breakouts are;

1 - The breakout will go just far enough to bring in breakout traders but not far enough to pay them (I've noticed false breakouts are often about 3 candles, but this depends on timeframe and isn't a great 'rule' to use).

2 - The rejection from a false breakout is strong (It can be slow and steady for a while, but it's strong once it starts).

So this creates a viable high RR trade. We can take the tight stop. If it's a false breakout it can work and if momentum pushes through we can quit early. That's half of a high RR trade.

The other half is it traveling far in the other direction without big pullbacks, which is what will usually happen if this is a false breakout.

We have quite low hanging fruit to here in a pullback.


And exceptional RR potential if the bullish trend continues.