I had been short on MOST of the Yen basket for the last 2 weeks. As you may have seen, they are currently way down. (Though I was very relieved to see some of my scale in trades in the positive Wednesday afternoon.) I have closed ALL of those short trades and I believe I have discovered a nice buying opportunity, should the technicals I’m looking at pan out. On the larger time frame (daily), the NZD/JPY clearly shows current market price, (or very close to it) is an important level to this chart. I plan to use that level as a potential entry should we see the following:
Now we need to get a sense of where the market may intend to go long term so we don’t get caught up in our relatively short-term trade plan on this pair.
Looks like the market recently tested the .382 and is looking to test the .500 level. I am looking for a deep pullback to trade as we just hit our closest daily target. In addition, I have a possible crown forming on the next chart, which also supports my thinking that we want to see higher price targets on this pair for the next week or two. I could definitely see support acting to form the right tip here IF INDEED the center tip is formed.
So, we have a nice potential pattern here that I’ve seen time-and-time-again, but we can’t just trade on the rumor of a crown. We need a setup with great risk versus reward. Let’s get a little closer to the market and see what we can find…..
It appears on the most recent fib scale that we have pulled a .860 which is the beefiest of all possible trade set ups per the UTP. It offers us a very reasonable stop loss order in relation to our entry and we still have the A protecting us. In addition, we have the highest potential strike rate out of any level of the fib scale. Again all these screams “GO LONG” to me. But again, we need to wait for the proper set up and timing. So here is what I am looking to do only after the market tests the bottom of the A here (it will) and only AFTER we are above a price of 76.234. Let’s see what it might look like:
Again, here I am looking to enter north once we have tested the .786 again here and are above 76.866. My stop I have pending at 75.577 and my limit on the first order in this trade will be the .860 extension or 80.052. Remember, we need price on the right side of this trend line in black and we are waiting for price to cross 76.866 before we enter long. We are risking 91 pips here from entry and the reward is a hearty 312 pips.
Good luck on this and hope this helps!
P. S. As an update to the last post the USOIL chart did strike the $50.00 price target and USD/CAD hit the target we talked about for exit in the last trade in 6 days.