Hi, Readers ! There is an update to the above Trade usd/jpy which I mentioned yesterday. Take your time in reading and understanding why I decide to give a bit more to my recent trade of Usd/jpy. Its totally advised that You extend your risk based on your account equity & be decisive and flexible to your approach in your trading, otherwise this market can react anytime without any due reason.
I would like to update you on my recent setups of usd/jpy which I update yesterday. I still think the trade is of high probability but as we see immense liquidity in Asian session really give bulls an upper hand but rejection near the area of 106.78 is still quite demanding. Are we still over reacting to the recent rise and falls in japanese pairs. e.g Cad/jpy .
Canadian banks does not change in overall benchmark interest rate of 1.75% which strongly push Canadian dollars to recent lows after we make bundle of pips in our usd/cad pair. Take a look at the Chart here. I am still quite reluctant to what I post but the difference in the approach and setup is quite different from yesterday chart. I'm still looking for complete long term position in usd/jpy.
I would enter one more lot around 106.80 area & then put the stops around 107.32 & look to close first lot around 105.70 & let the rest trail around 106.00 area, & see if price would breach the recent lows of 104.45 & then I would target 102.50 area to close my second position.
Decisive approach in trading is only thing we need to watch out for
You all know, I always try to trade with the edge. So, where do I look for price Action is the nearest support and resistance and the approach and reaction towards those areas. Price has already react a lot to the broken support which in this case must be breached but the last reaction and recent price action of h4 candle which has just closed looking quite reluctant even though push is quite strong from the yesterday's close. If that is the case, then why didn't price manage to breach those levels.
Reason NO. 1 > NFP week. We do see usd/jpy pair react quite volatile to the release of Non-Farm-payroll & tomorrow is the day of NFP & direct relation with usd bond yields usd/jpy reaction to nearest support resistance is quite understandable. But why these areas are so strong that price do scare to react. Reason being Retail traders.
Retail traders put stop orders near those areas and price needs to have enough liquidity to take those orders and react. But even last rejection and order accumulation was quite strong to test the previous swing low which is strong rally and series or rejections tell everyone that there are bundle of stop sell orders just above the recent high and after taking out those sell orders. Price will continue to fall & that is the reason I see those orders around 107.20 area.
Price Action do collect lot of sell-buy orders as marked with blue lines & that is the reason why I always think of the reason behind those moves. Not enough liquidity is the first reason that come to my mind or pending release is the another . Ever Price Action area is a reaction of previous action. IF there is no earlier or clues of reaction price won't move and will going in one side & that is the reason why Forex market is one of the best market based on what you can look to adapt and transform your trading skills and be a professional . This really does not happen in stock market at all. Reason being the closing and opening gaps, overreaction to news & unless you are big Tech giants like Apple or Google. You share price will have an edge as compare to other stocks.
Concept of Trend Trading In Forex
I've put my whole hearted effort in spotting opportunities and present it amongst all my readers. In the below Post I would like to explain you the concept of trend trading and how you can spot opportunities like these. These type of opportunities are very high probability ones and if the below demand buckets are filled these rejection goes right to the next demand or supply level vice-e-versa.
Chart of Aud/cad speaks all in itself. Price got rejected. Either it CP'ed (compressed) to the previous broken support or faking out the demand before hitting supply & then travel right way through that demand for new move.
There are few points I would like to point out here which are
1. Price must have some sort of history prior to testing the broken level
2. Price must have pick all the opposite orders or compressed into the zone.
3. One high probability one is that broken support must have become the base specially if it is a strong one like Drop base drop and no panic buying at support.
4. If all the conditions are met and one is missing then you should look for QM level on smaller time frames and those QM's must become probable FTR. I would explain how to spot these type of opportunities in detail in coming days and weeks.
Stay well, trade well . See you on the other side of NFP release and TRade outcome will be updated on Monday.