I've entered a long position in USD/JPY tonight.  The pair has been in steady downtrend for several months and is finally showing signs of taking a breather.

The pair rallied nicely in the second half of December, breaking the down trendline.  The pair has fallen since the beginning on January, but now appears to be making a higher low and turning north again.  The bullish engulfing pattern on today's daily chart is what caused me to pull the trigger and bet on USD/JPY rising.

Ok, so it's not a true bullish engulfing pattern.

Today's open was slightly higher than yesterday's close (by about 10 pips), but what I see on the daily chart is enough like a bullish engulfing pattern to make me feel comfortable entering a long position.  The action over the past two days shows bears pushing the price down yesterday at the end of about a week-long downtrend; today the bulls took over with conviction, pushing the dollar up past yesterday's high.  So, while it's not a true bullish engulfing pattern, the reasons for trading a bullish engulfing pattern are there.

So, I'm long with my stop just below today's low, betting that this pair will rise.  However, as my last trade showed me, I could be wrong!

• Long Entry:  89.994
• Initial Stoploss:  88.450

Edit 1/19/2009 7:30 PM: After moving up for a couple of days, the pair as retraced a bit today. Though my position hasn't yet hit 1R, I've moved my stoploss to breakeven, which is below today's low, to protect my capital. Hopefully tomorrow will see USD/JPY resuming its move up.

Edit 1/20/2009 9:00 PM: My stop at breakeven was hit today, taking me out of the trade.  After an initial thrust up, the pair didn't seem to have the follow-through that I had expected.  So, I'm happy to be out with a scratch trade.  The pair may resume its move up, but for now, I'm happy to sit on the sidelines and watch.