USDJPY 4H Short Opportunity, But Fundamentals Are Important Too!
Hi everyone,
USDJPY has confirmed a bearish bat harmonic pattern on the 4-hour timeframe.
The potential reversal zone (PRZ) is comprised of 3 ratios:
0.886 XA retracement at 111.652
2.24 BC projection at 111.563,
1.618 alternate AB=CD at 111.647.
Stop loss is set at the 1.13 XA projection, or 112.188.
Take profit is set at two levels, management and final.
The management level is the 0.382 XA retracement, or 110.907.
The final level is the 0.886 XA retracement, or 110.449.
Overall risk to reward ratio for this trade is 2.19.
The terminal price bar has already formed, confirming all three ratios. Also, on RSI has reached overbought territory on the 4H timeframe.
Although the technicals are all good, the fundamentals may be a bit more blurry. Many recent economic indicators published for the US have been positive, likely due to the hold off on interest rate rises from the Federal Reserve. With this, we could see an increase in aggregate demand for goods and services in the US, and as a result of this, to meet up with the increased consumer demand, producers may increase job openings as well. This will be important considering the JOLTS Job Openings report coming out in a few days. Therefore, should the report come out with greater job openings than expected, I may decide to hold off on the short position and watch the market reaction first. However, a report with fewer job openings than expected will only be good for our short position.
As always, watch price action first to confirm a move before entering!
Thanks for reading,
Kevin
USDJPY has confirmed a bearish bat harmonic pattern on the 4-hour timeframe.
The potential reversal zone (PRZ) is comprised of 3 ratios:
0.886 XA retracement at 111.652
2.24 BC projection at 111.563,
1.618 alternate AB=CD at 111.647.
Stop loss is set at the 1.13 XA projection, or 112.188.
Take profit is set at two levels, management and final.
The management level is the 0.382 XA retracement, or 110.907.
The final level is the 0.886 XA retracement, or 110.449.
Overall risk to reward ratio for this trade is 2.19.
The terminal price bar has already formed, confirming all three ratios. Also, on RSI has reached overbought territory on the 4H timeframe.
Although the technicals are all good, the fundamentals may be a bit more blurry. Many recent economic indicators published for the US have been positive, likely due to the hold off on interest rate rises from the Federal Reserve. With this, we could see an increase in aggregate demand for goods and services in the US, and as a result of this, to meet up with the increased consumer demand, producers may increase job openings as well. This will be important considering the JOLTS Job Openings report coming out in a few days. Therefore, should the report come out with greater job openings than expected, I may decide to hold off on the short position and watch the market reaction first. However, a report with fewer job openings than expected will only be good for our short position.
As always, watch price action first to confirm a move before entering!
Thanks for reading,
Kevin
Trade active:
JOLTS Job Openings came out worse than expected at 7.087M compared to 7.550M forecasted. This should result in some sort of bearish reaction with the USD against the JPY, but make sure to observe price action for the next couple of hours just to confirm.
Trade active:
First take profit (management) level reached. I have moved my stop loss to break even level. At this point, you may want to consider taking a 50% profit, but I will be monitoring the following price action to decide whether this is something I will be doing.
Trade closed: stop reached:
Break even stop loss hit. Hopefully everyone took a 50% profit at the 0.382 management level, but if not, at least no capital was lost. Thanks for reading everyone!