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USD/JPY trade setups using 146.50 for protection

Sitting in the middle of its recent range at the beginning of a week laden with risk events, 146.50 looms as a potential level USD/JPY traders can build setups around. With price and momentum breaking their respective downtrends last week, and with no meaningful sign of further deterioration in the US labour market based on recent jobless claims data, buying dips is preferred to selling rallies near-term.

Given that view and proximity to 146.50, one potential setup would be to buy a clean break above the level with a stop below for protection. Traders could target 149.70 which is where the former uptrend dating back to early 2023 now intersects with horizontal resistance. Traders could also buy around these levels with a tight stop below for protection, although that screens as a lower probability setup despite what would be entry at lower levels.

While price momentum looks to be shifting higher, should USD/JPY continue to be capped by selling at 146.50, traders could look to sell below the level with a stop above for protection. 143.60 is one potential target given it attracted buying support on several occasions during August.

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