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Contributors Top Trade Idea for August 4th, 2013 – USD/JPY

liquid marketsDollar’s ‘Trend Continuation’ to the upside once the Bullish ‘M’ pattern has completed.

The US economy seemed to have gathered some momentum recently giving rise to positive market sentiments. Additionally, the recent release of a barrage of US economic data are said to have raised confidence in both consumers and investors which might just decrease the likelihood of Quantitative Easing.

With the dollar currently trading sideways as indicated on the daily chart below, prices seemed to be ranging between 99.83 to 98.06 when markets came to a close as of last week. The markets could potentially be pushing the Dollar upwards only if it were to be above the 99.83 level giving a reasonable Buy entry point ideally at the 98.90 level. However, a Sell entry below the 98.00 which I believe to be more likely with 97.90 being the price I would go short the USD/JPY.

usdjpy

The bullish ‘M’ type pattern supports my predicaments for a possible shorter term downward move from the C point right down to either one of the D points. Both D1 and D2 are probable Take Profit (TP) levels at either 91.65 or 89.00 respectively. Once the ‘M’ pattern is believed to have completed at either D1 or D2, then a potential bounce back upwards could possibly occur. The D1 and D2 points are both the 127.7% & 161.8% Fibonacci extension  of B to C. Coincidentally, if the length of AB were to be similar in length with CD then the D point is expected to land at the 91.65  area giving it a higher probability target or take profit level.

Ideally when one trades following either the ‘M’ pattern as illustrated above or any one so called Harmonic chart patterns, the Stop Loss (SL) suggested to be just above the C point and I would have preferred for it to be at either 101.55 or 101.60 .

Happy Pipping !

About Kenny Simon

kennysimonKenny Simon is Head of FX Training at Liquid Markets. He is a contributor for the Technical Analysis section of LQD ‘s Blog. Being a fan of the wonders of nature, he  believes that trading in-harmony with the market’s natural ebb and flow could potentially increase one’s success in obtaining Low Risk, High Probability Trades. Besides the technical aspects of his analysis, Kenny emphasizes the importance of understanding and applying Fundamental Analysis, Money & Emotions Management into one’s approach to trading the markets.

 

 

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