USDJPY - Potential Short Term Reversal
USDJPY has been trending up since the end of March, is this the time when we could see a short-term move to the downside.
So here is what we are seeing:
4 Hour Chart (Higher Timeframe Analysis)
Trading in an upward channel, so a short position is going against the recent trend, so we need to be aware of this prior to taking any entries.
15 Minute Chart - Market Cycles
Our market cycles indicator has identified that we have moved 3.8 x Average Daily Range in an upward direction on Friday and that we are potentially ripe for a cycle down. It has also suggested that we have made a Peak Formation High. This is shown by the red colouring of the Asian Session Range and the annotations on the chart.
1 Hour Chart - Liquidity Zones
During Friday's New York session, strong selling activity printed a 1 hour bearish zone. Confirmation of the zone's intention is not yet clear as price has not broken the low or the high and there is the danger that price will bounce off the bottom of the zone to make a reset and continue on a further move up.
15 Minute Chart - Liquidity Zones
Here we can see the liquidity zones on the chart.
1. We have rejected a resistance level from November 2022
2. During Friday's New York session, strong selling activity printed three new Bearish Liquidity Zones, with one showing as orange as this could be a potential support level that we need to be aware of. The reason this zone is showing orange is because the price has never traded below this zone and bounced back out of the top.
15 Minute Chart - Volume Trend
The volume trend (bottom window of the chart below), is showing a significant shift in market sentiment. From making higher highs and higher lows, we have more recently made the transition to lower lows and lower highs.
What we are Looking For?
So from all of the above, we are not saying go press sell now and cross your fingers. We will wait until the market reveals its intentions and will be looking for a number of things to happen before we take an entry.
Firstly we would like to see a liquidity grab to the high.
This is a very crude price illustration below.
As for when and in what format the price action will take is unknown. The New York morning session would be the most likely time for a reversal, with an intra-session pattern or more likely a multi-session pattern. We have to keep an open mind and when a setup reveals itself to make sure that we are focused on managing risk.
What Else Could Happen?
There is a danger that this bearish liquidity is formulating a trap move for a continued move up and a reset of the market cycle. We would consider this a market reset if we see the first Asian Session (ideally two) closed above the previously identified Peak Formation High level.
Targets
As for the target, if we do see a break to the low of the orange zone to get confirmation we are in a down cycle then there is plenty of room for a move down to the green support zone at the bottom of the chart below.
Please trade your own plans and manage risk, risk and more risk.
So here is what we are seeing:
4 Hour Chart (Higher Timeframe Analysis)
Trading in an upward channel, so a short position is going against the recent trend, so we need to be aware of this prior to taking any entries.
15 Minute Chart - Market Cycles
Our market cycles indicator has identified that we have moved 3.8 x Average Daily Range in an upward direction on Friday and that we are potentially ripe for a cycle down. It has also suggested that we have made a Peak Formation High. This is shown by the red colouring of the Asian Session Range and the annotations on the chart.
1 Hour Chart - Liquidity Zones
During Friday's New York session, strong selling activity printed a 1 hour bearish zone. Confirmation of the zone's intention is not yet clear as price has not broken the low or the high and there is the danger that price will bounce off the bottom of the zone to make a reset and continue on a further move up.
15 Minute Chart - Liquidity Zones
Here we can see the liquidity zones on the chart.
1. We have rejected a resistance level from November 2022
2. During Friday's New York session, strong selling activity printed three new Bearish Liquidity Zones, with one showing as orange as this could be a potential support level that we need to be aware of. The reason this zone is showing orange is because the price has never traded below this zone and bounced back out of the top.
15 Minute Chart - Volume Trend
The volume trend (bottom window of the chart below), is showing a significant shift in market sentiment. From making higher highs and higher lows, we have more recently made the transition to lower lows and lower highs.
What we are Looking For?
So from all of the above, we are not saying go press sell now and cross your fingers. We will wait until the market reveals its intentions and will be looking for a number of things to happen before we take an entry.
Firstly we would like to see a liquidity grab to the high.
This is a very crude price illustration below.
As for when and in what format the price action will take is unknown. The New York morning session would be the most likely time for a reversal, with an intra-session pattern or more likely a multi-session pattern. We have to keep an open mind and when a setup reveals itself to make sure that we are focused on managing risk.
What Else Could Happen?
There is a danger that this bearish liquidity is formulating a trap move for a continued move up and a reset of the market cycle. We would consider this a market reset if we see the first Asian Session (ideally two) closed above the previously identified Peak Formation High level.
Targets
As for the target, if we do see a break to the low of the orange zone to get confirmation we are in a down cycle then there is plenty of room for a move down to the green support zone at the bottom of the chart below.
Please trade your own plans and manage risk, risk and more risk.
Comment:
So on that run up, on a super fast chart (15 secs), we now have some levels that we can work with. As you would expect on a run up like that there is going to be some bullish momentum.
These green bullish zones that have been printed on the 15 sec chart below are now areas that we will want to see break before we consider a sell reversal, unless we see some strong bearish sentiment higher up the chart.
Also we will want to see some kind of pattern at the levels of interest.
These green bullish zones that have been printed on the 15 sec chart below are now areas that we will want to see break before we consider a sell reversal, unless we see some strong bearish sentiment higher up the chart.
Also we will want to see some kind of pattern at the levels of interest.
Comment:
On the super fast 1 sec chart we now have a gap level, that can be useful if we see a break back below
Comment:
There is no bearish sentiment on the above chart. The volume trend indicator does show a shift, but looking for more from the chart before considering an entry
Comment:
We are so close to the opening bell of the US stock markets. Would now want to wait for that - to confirm where the general market sentiment is at.
Trade active:
What a liquidity grap. Will document entry to follow.
Comment:
So the entry on the 1 sec chart. There is a chance this will go back for a 2nd leg. So trade is at breakeven and we will look to re-enter if opportunity presents itself.
Due to the risk reward our strategy allows profit taking at min of 4:1 risk reward, so take profit 1 has been taken at 50 pips which was the resistance level identified earlier.
Due to the risk reward our strategy allows profit taking at min of 4:1 risk reward, so take profit 1 has been taken at 50 pips which was the resistance level identified earlier.
Comment:
First profit target was identified here on a 15 sec chart.
Will leave the rest at breakeven and move on to the next opportunity.
Will update this idea further if that was the high of day.
Will leave the rest at breakeven and move on to the next opportunity.
Will update this idea further if that was the high of day.
Trade closed manually:
So the breakeven stop on the remaining position has gone now. Will have to see tomorrow how this pair looks. So base hit trade. Will have to wait to see what tomorrow brings.
On the hourly chart, we have concerns over this pin bar. Analysis on the chart below.
For now nothing more can be done today. Will wait to see what comes later in the week.
On the hourly chart, we have concerns over this pin bar. Analysis on the chart below.
For now nothing more can be done today. Will wait to see what comes later in the week.
Comment:
During Asian USDJPY has cleared any stops above the previous swing high and has now started showing bearish liquidity.
This is show on the 15 sec chart below. These can be useful levels for planning entries. We will have to see what sets up today.
This is show on the 15 sec chart below. These can be useful levels for planning entries. We will have to see what sets up today.
Comment:
we have some bearish sentiment on the 1 sec chart with a level to work with, which is in line with the minor level at the highs in the chart above.
Some news at 9.45 EST, so no entries as yet.
Some news at 9.45 EST, so no entries as yet.
Trade active:
Grabbed an sell entry on the news.
On the news spike we had a trapped buyers zone (orange), entry was on the retest of the high after confirmation of the volume trend break (bottom indicator)
This may be to early an entry, but there was the reaction we were expecting to get to break even quickly. This could go back to retest the highs, so want to make sure we don't bag a loss.
On the news spike we had a trapped buyers zone (orange), entry was on the retest of the high after confirmation of the volume trend break (bottom indicator)
This may be to early an entry, but there was the reaction we were expecting to get to break even quickly. This could go back to retest the highs, so want to make sure we don't bag a loss.
Comment:
We are trading above the 200 EMA on the 15 minute chart. Ideally we need to see these ema's break for a further move down.
Comment:
Took profit 1 at the 200 EMA on the 15 min chart at 35 pips.
Leave the rest on the table at break even.
Leave the rest on the table at break even.
Trade closed manually:
Breakeven stop has just been taken on the rest of the position. Seems that she is not ready yet. So small base hit winner. Not much more can be done today.
Comment:
It looks like with the close of two asian session above the previous peak formation high, we have a market cycle reset for a continued move up.
We have a recently printed a new bull zone on the US news. If this zone is confirmed over the next hour or so, then for us this will confirm the market cycle reset.
Dollar has been strong all week and difficult to trade against.
So as an idea, we were wrong on this one, although we did manage to get a couple of base hit winners trying to catch a move down.
We are able to do that by trading in the correct places and managing risk with tight stops.
More than anything I hope by documenting the thought process of what we were seeing and how we went about finding entries was useful.
So this idea as far as we are concerned is finished and won't add any further details to this idea.
Below is a 15 min chart, with the details of what we are currently seeing
We have a recently printed a new bull zone on the US news. If this zone is confirmed over the next hour or so, then for us this will confirm the market cycle reset.
Dollar has been strong all week and difficult to trade against.
So as an idea, we were wrong on this one, although we did manage to get a couple of base hit winners trying to catch a move down.
We are able to do that by trading in the correct places and managing risk with tight stops.
More than anything I hope by documenting the thought process of what we were seeing and how we went about finding entries was useful.
So this idea as far as we are concerned is finished and won't add any further details to this idea.
Below is a 15 min chart, with the details of what we are currently seeing
Comment:
Have posted this idea I think it is important to provide a summary of what we originally were seeing and then how the market over the course of the week gave us clues as to its real intentions.
Why Sell?
1. So it had travelled 4x ADR up.
2. Then made a peak formation high
3. Price was at a bear zone level 1 hour
4. 15 minute bear zone printed on news last Friday.
The Evidence of knowing when we were wrong:
1. Tuesday during asian the 1 hour bear zone was confirmed as a trap zone.
2. Thursday the asian session closed above peak formation high. Suggesting a reset for a continued move up.
3. Friday asian session closed above peak formation high. Two days even more confirmation.
4. Friday 8.30 EST News dump created a new bull zone on the 15 min chart.
Price has gone to the top of the red zone. So there is always the possible it will reject this level.
But the fact that we have a confirmed bull zone in there and as long as that level holds we consider this as a market reset and would expect the next market cycle on this pair being up.
If this zone breaks to the low or we print some bear zones, then it could still make a strong move down.
Now we have a level we can work with on the buy side next week that gives us a clearly defined areas as to where the sentiment is.
The 15 min chart below outlines these points when they happened:
Why Sell?
1. So it had travelled 4x ADR up.
2. Then made a peak formation high
3. Price was at a bear zone level 1 hour
4. 15 minute bear zone printed on news last Friday.
The Evidence of knowing when we were wrong:
1. Tuesday during asian the 1 hour bear zone was confirmed as a trap zone.
2. Thursday the asian session closed above peak formation high. Suggesting a reset for a continued move up.
3. Friday asian session closed above peak formation high. Two days even more confirmation.
4. Friday 8.30 EST News dump created a new bull zone on the 15 min chart.
Price has gone to the top of the red zone. So there is always the possible it will reject this level.
But the fact that we have a confirmed bull zone in there and as long as that level holds we consider this as a market reset and would expect the next market cycle on this pair being up.
If this zone breaks to the low or we print some bear zones, then it could still make a strong move down.
Now we have a level we can work with on the buy side next week that gives us a clearly defined areas as to where the sentiment is.
The 15 min chart below outlines these points when they happened:
So nothing to do yet, but wait.