Sophia Todorova has a background in teaching and psychology, and as such relishes the idea of assisting new traders on their journey to Forex trading success. Technical Analysis is her passion. The charts speak, and she listens.
The Usdjpy monthly chart currently has an engulfing bullish candle, and a bounce after a 50% Fibonacci retracement of the reversal bar. This bounce, however, brought it to a key resistance area at 84.00, at which point it appears a bit stuck. The weekly close two weeks ago responded to this resistance with an equally impressive engulfing bearish candle. In spite of this, the bulls seem quite intent on holding ground, and now the daily appears to have formed a set of double tops after having broken into the buy zone by breaching the down trend line and pulling back towards 82.30s for a retest, and possibly right shoulder of a bullish reversal. This would have been the ideal entry really, but I am hoping for a second chance.
There are conflicting signals on the pair, so it is important to proceed with caution if trading it. This is my plan:
The monthly reversal bar and the subsequent inverse head and shoulders pattern on the daily chart do suggest a scenario, however, I am aware of the significant resistance at the 84.00 area that might be a challenge to get past. This is why I will be waiting for a retest of the right shoulder at 83.00 before positioning long. An alternative which I prefer is a strong break of the daily double tops, and then a retest for entry. The first major target I’m considering is 85.50. This trade setup offers the potential of getting in on the start of a major trend reversal, which is not an unreasonable expectation at these levels. My plan is in place, now for the market to show its hand.
Thanks a lot, and let’s make this week a profitable one! 🙂
Also, if you trade Cadjpy, this is a recent post I made on the pair: http://winnersedgetrading.com/cadjpy-technical-outlook-trading-opportunities/
Forex Crunch: Elliott Wave Video: Eurusd- December 12
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