Hello traders,
It seems to me that USDJPY is facing some sort of dilemma right now on the longer time frames (weekly charts). Let me explain myself:
In one hard, we’ve broken the downtrend that’s been in place ever since summer 2007, so that’s a full year downtrend. Moreover, the trendline breakout is being confirmed as we speak by a text-book breakout-pullback-continuation pattern. All of you who’ve taken my Forex course will know that a B-P-C pattern is nothing but a confirmation of a breakout from a technical analysis point of view. So yeah, that down trendline seems to be broken for good which is a bullish signal.
Now, in the other hand, the key support/resistance level for USDJPY is still holding price below. That level is 108.50 / 109.00, and it’s been tested over and over again throughout the last three years. For the time being that level is holding price below which is a bearish signal.
So what is it then, bullish or bearish? hence the dilemma.
Here’s my take on the issue: if price breaks above 109.00 we go into full bullish mode on the Yen and thus I’ll be looking for long entries. Conversely, if price remains below 109.00, I will probably stay out of the Yen altogether.
23 July, 2:47 pm
Hi Hector,
Given your last two posts you must be a massive EUR/JPY bull? I’m, also seeing a nice breakout in GBP/JPY on the dailies - does it look valid to you?
-hisgavness
23 July, 3:06 pm
Hey Gav,
Please pull out your GBPJPY weekly chart and draw a down-trendline… Right now GBPJPY is facing long-term resistance. I personally will wait until that gives way.
-HECTOR-
23 July, 3:16 pm
Thanks Hector,
very good point.. seems like a lot of conflicting signals in fx markets currently - which is probably not so surprising given the summer doldurms etc..
do you change your approach at all during times like these? eg zoom into shorter time frames? or zoomout to longer time frames ? do you ever use range style trading?
-hisgavness-
23 July, 3:23 pm
Summer trading gets tricky because market volume gets thinner and that might lead to strange price spikes and stoploss hunts around key S/R levels. There are some specific periods when market conditions are just not friendly such as August, Christmas, major public holidays, etc.
Regarding ranges and trading, I personally do trade range breakouts but I don’t within the range. I never managed to achieve any sort of consistency within ranges.
-HECTOR-
7 August, 9:19 am
Hi,Tanks for yours Analyze. I belief Eur/usd down to 1.5 and up 1.7 . then will rise 2.02
barko