USDJPY Mean Reversion Setup – Waiting for Doji Breakout

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usdjpy mean reversion

USDJPY launched upwards last week, especially after the NFP data was released towards the end of week. This caused some nice moves in many markets, including this one – which was influenced heavy by the USD strength.

In the War Room we do a lot of mean value analysis, which is the study of price in reference to the mean. One of the things this type of analysis can provide is visual over extension cues for the market. We can see here price has accelerated away from its mean value, creating that classic over extension gap.

We also have an indecision Doji candle, that has a bearish close in it’s body – communicating a potential reversal.

If price does break the Doji structure lows, it could kick off the mean reversion move. Generally when these setups play out as expected – the moves are quite violent.

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The Forex Guy is an educational Forex trading blog run by Dale Woods who has been a passionate retail Forex trader for over 6 years. Dale trades the Forex market exclusively with price action based methodologies, believing price action trading to be one of the powerful approaches used the market today, and really is the core foundation of any good trading system. Dale also strongly believes in keeping charts clean and keeping things simple, logical and uncomplicated. By making trading decisions straight off the raw price action data, you can ‘bypass’ unnecessary variables like exotic indicators, trading robots or magical pivot levels. Dale enforces the idea that there is hardly any edge trading news and economic data releases and much prefers to make trading decisions straight from the candlestick themselves. ‘The Forex Guy’ is dedicated to providing knowledge to serious and passionate traders who want to learn the art of price action trading, positive geared money management and how to psychologically condition themselves to become a professional trader.

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