I had a pending alert for when the USDX 2-hour chart struck the D extension of its current down A/B boundary last week, but the trade took longer than I expected. However, I got my alert today! Let’s take a look at what the USDX should do according to what we are taught in the UTP, and see if we can find a chart that gives us an opening to use the information we collected.
The market has now definitely struck the D for the current swing. So, what’s is supposed to happen after that happens? Again, now would be a great time to check your UTP out and look at the Score A Point and Pullback section if you can not answer that question. Spoiler alert, if you answered pull back, you answered correctly! Now with the volatility, we are seeing in the dollar lately (thanks Donald Trump!), I am anticipating a deeper pullback, or possibly a pullback to an outer trend line on the destination chart we go to look for movement based on this pullback here on the USDX 2 hour. As the title suggests, I like the USD/JPY chart to foot the bill for a deeper pullback at a deeper fib level. Let’s take a look:
As you can see, I have the monthly target highlighted as this market seems to be (lately), bouncing between the .236 and .500. Here there is the possibility of a deeper pullback and an outer TL being hit. In addition that .618 seems like it is at the top of a range that is all too common in this market. Let’s see if the outer TL lines up with a deep fib level…
As you can see, my pending buy order with a stop below the A of the new swing was triggered. I made my exit the .618 because the market has solid contact points there recently in the past and happened to line up with the outer trend line pretty well. With my stop at 110.189 and my entry at 111.117, my risk comes in at 92 pips and my reward is roughly 150 pips with an exit at 112.841.
I know I have shown you much more compelling trades when it comes to risk versus reward wise in the past, but I believe with the USDX where it is (we are expecting about 68 points of pullback and each point on that charts is worth roughly 2 pips) this trade makes great sense and is worth the risk!
Good luck and hope this one helps you guys make some pips!