Setup
1: As we can see, price has broken above an area of resistance and has come down and rejected off it. This shows us this area may now become key support.
2: Price failed to close below the 61.88% and 66.00% retracement zone, showing us that price may respect this area and end its pullback here.
3: The golden fib zone being almost in the middle of the key area is a good sign and helps to confirm our theory that this area will continue to be important.
4: We have had a BOS/COCH (break of structure, change of character) with price breaking above previous highs.
5: The USA has an interest rate of 5.25 while Japan has -0.10.
Interest rates play a big part in banks/hedge funds deciding where to invest their money as currencies with a higher interest rate are more attractive to foreign investment.
This causes the value of the currency with a higher interest to increase as more people buy it as the demand of the currency grows while the supply does not.
Entry
If Asian session is able to break the lower timeframe high of 138.144 without making a new low I will enter into a trade with 1% as my SL.
Take Profit
Traders looking to just scalp a move to the upside on market open could aim for 138.647. This is where price got to before we saw the big push back to the key area we are now in.
Those looking for a swing position should aim for around 141.149. This was the the area price last saw a pull back on before entering the range we have just broken from.
Stop Loss
137.239 is my recommendation. Price coming down to this level would show us the Fib level is no longer respected and price would be making a new low on the larger timeframes.
Notes
Although this is personally how I trade I would recommend to only close 80% of your position on TP or better yet, just move SL to break even.
If we continue upwards we could see a break of monthly highs and continue upwards. Keeping your trade going could see a trade of a R:R to possibly 1:3 or maybe even 1:6.
Anybody looking to take the trade should know that on market open for the week we can see moves that aren't indictive of how price may play out.
1: As we can see, price has broken above an area of resistance and has come down and rejected off it. This shows us this area may now become key support.
2: Price failed to close below the 61.88% and 66.00% retracement zone, showing us that price may respect this area and end its pullback here.
3: The golden fib zone being almost in the middle of the key area is a good sign and helps to confirm our theory that this area will continue to be important.
4: We have had a BOS/COCH (break of structure, change of character) with price breaking above previous highs.
5: The USA has an interest rate of 5.25 while Japan has -0.10.
Interest rates play a big part in banks/hedge funds deciding where to invest their money as currencies with a higher interest rate are more attractive to foreign investment.
This causes the value of the currency with a higher interest to increase as more people buy it as the demand of the currency grows while the supply does not.
Entry
If Asian session is able to break the lower timeframe high of 138.144 without making a new low I will enter into a trade with 1% as my SL.
Take Profit
Traders looking to just scalp a move to the upside on market open could aim for 138.647. This is where price got to before we saw the big push back to the key area we are now in.
Those looking for a swing position should aim for around 141.149. This was the the area price last saw a pull back on before entering the range we have just broken from.
Stop Loss
137.239 is my recommendation. Price coming down to this level would show us the Fib level is no longer respected and price would be making a new low on the larger timeframes.
Notes
Although this is personally how I trade I would recommend to only close 80% of your position on TP or better yet, just move SL to break even.
If we continue upwards we could see a break of monthly highs and continue upwards. Keeping your trade going could see a trade of a R:R to possibly 1:3 or maybe even 1:6.
Anybody looking to take the trade should know that on market open for the week we can see moves that aren't indictive of how price may play out.