USDJPY Bearish Bat Swing Trade, 2.51 Risk-Reward!
Hi traders,
A harmonic bat pattern has formed on the USDJPY on the 4H timeframe. The terminal price bar has just been established, confirming all three ratios of the PRZ. This makes it a great opportunity to enter soon!
The PRZ is comprised of 3 ratios:
1.414 alternate AB=CD, at 108.179
0.886 XA retracement, at 108.243
2.24 BC projection, at 108.278
The take profit levels are comprised of 2 ratios:
Management level -> 0.382 AD retracement, at 107.575
Final take profit level -> 0.618 AD retracement, at 107.161
This gives us a risk-reward ratio of 2.51.
In terms of technicals, RSI has peeked overbought on the main 4H timeframe. Major timeframe analysis on the daily indicates an overall bearish trend (as indicated by the descending blue trendline), going along with our short position. Minor timeframe analysis on the 1H also showed an RSI overbought upon the formation of the terminal price bar, as well as a change into bearish momentum on the MACD.
Price has also confirmed a blue descending trendline acting as resistance, with this level being tested multiple times. Another interesting thing to note is that there is currently a dip in volume on the main 4H timeframe. This is contrasted with a large amount of selling volume upon price approaching the trendline, which could serve as an illustration of such a resistance trendline being respected. This dip in volume could indicate a weakening of the previous move upwards in price, which goes along with our short position. The fact that the previous violent moves upwards were in large part due to the Phase 1 trade deal between the USA and China being declared, and that such a violent move under this significant breakthrough still failed to break the trendline, would further indicate the strength of the resistance trendline.
I think that this is overall a great opportunity to enter in now, with lots of confluence between the harmonic bat pattern, the descending resistance trendline (blue), and the indicators used such as RSI, MACD, and volume!
Thanks for reading!
Kevin
A harmonic bat pattern has formed on the USDJPY on the 4H timeframe. The terminal price bar has just been established, confirming all three ratios of the PRZ. This makes it a great opportunity to enter soon!
The PRZ is comprised of 3 ratios:
1.414 alternate AB=CD, at 108.179
0.886 XA retracement, at 108.243
2.24 BC projection, at 108.278
The take profit levels are comprised of 2 ratios:
Management level -> 0.382 AD retracement, at 107.575
Final take profit level -> 0.618 AD retracement, at 107.161
This gives us a risk-reward ratio of 2.51.
In terms of technicals, RSI has peeked overbought on the main 4H timeframe. Major timeframe analysis on the daily indicates an overall bearish trend (as indicated by the descending blue trendline), going along with our short position. Minor timeframe analysis on the 1H also showed an RSI overbought upon the formation of the terminal price bar, as well as a change into bearish momentum on the MACD.
Price has also confirmed a blue descending trendline acting as resistance, with this level being tested multiple times. Another interesting thing to note is that there is currently a dip in volume on the main 4H timeframe. This is contrasted with a large amount of selling volume upon price approaching the trendline, which could serve as an illustration of such a resistance trendline being respected. This dip in volume could indicate a weakening of the previous move upwards in price, which goes along with our short position. The fact that the previous violent moves upwards were in large part due to the Phase 1 trade deal between the USA and China being declared, and that such a violent move under this significant breakthrough still failed to break the trendline, would further indicate the strength of the resistance trendline.
I think that this is overall a great opportunity to enter in now, with lots of confluence between the harmonic bat pattern, the descending resistance trendline (blue), and the indicators used such as RSI, MACD, and volume!
Thanks for reading!
Kevin
Trade closed: stop reached:
Price was able to break above the upper trendline. Onto the next one!