AUDJPY Offering Short Entry

FX:AUDJPY   Australian Dollar / Japanese Yen
The AUDJPY has setup nicely for a pullback entry short into an established bear trend. This must be taken at reduced risk for the reasons mentioned below.

Monthly - Price is trading inside the annual levels of 2017 but has been in a bear trend since the start of 2018.
Weekly - Price is trading below the 200SMA and the 50SMA.
Daily - Price is trading below the 200SMA and the 50SMA.

Despite price still trading inside the 2017 level, we have alignment between the weekly and daily timeframes. Price has now also pulled back to a key level of support-turned-resistance and formed a long-wicked indecision candle which is a setup we look for when taking pullback trades.

Given that price is inside the 2017 annual levels and that this is an entry using a pullback, the risk must be reduced. Full allocation for us at Sublime Trading is 2% per trade so we have allocated a much smaller risk for this currency pair considering the setup.

We now want to see price bounce to the downside, break and close below the March low ideally in the form of a bear flag , and move towards the round number 80. We then want to see price break and close below 80 and weaken further towards 70 and beyond in the same linear trend structure. This will then offer ample opportunities to compound strategically into this initial position.

Trading PBs has its advantages and challenges. The advantage is, of course, more profit compared to entering in on a breakout. The challenge is dealing with the fact that price may trigger us into the trade but may then continue against us as price forms a reversal. Price may also trigger us in and then move into consolidation where we must then apply patience and wait for the breakout.

We must never second guess the outcome of a trade. Each time our edge appears, we must place a trade without hesitation and with the right risk allocated to it. What ever happens next is beyond our control.

Remember, a good trade is one where we follow our trading plan REGARDLESS of the outcome.

Sublime Trading

Trade active: This has moved into profit but needs a breakout after which we will look to compound.
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