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Contributors Top Trade Idea for August 18th – 19th – USD/JPY

liquid marketsHow would the winding down of Federal Reserve’s ‘Quantitative Easing’ policy impact the Dollar?

Sentiments rippled across the markets mostly with fear and uncertainty especially after the disappointing corporate earnings were announced last week. Rumors has it that the majority of investors are feeling anxious whilst wondering what would the Feds have up their sleeves that could either make matters worse, by seeing a further dip in the markets or on the contrary, prepare the market for a rally. At the moment, the dollar is trading sideways which does reflect the current sentiments amongst traders since as it looks, decisions of whether the Feds would decisively ‘taper’ on its’ cheap money policy is still a big question mark.

Trade Idea Dollar Yen 18th August 2013 (1)

As illustrated above, we are looking at the USD/JPY on the 1hr chart and a ‘W’ pattern is probably emerging. Prices are expected to travel upwards when market opens from point C to approximately point D in order to complete this W pattern. The Dollar versus the Yen closed at 97.50 area which is also a significant psychological level. In order for us to gauge a highly probable Buy entry , it would be wiser for us to wait for prices to first cross over and travel upwards well above the 97.84 to the 98.07 area marked by the horizontal red lines on the chart. The first ‘Trade Idea’ is for a Buy hence marked as 1). The colored lines within the yellow box are prices that mark the potential reversal point contributing to a free fall of the dollar.

For a Buy entry, I would enter either at 97.90 or if being more conservative at 98.10 or even at 98.30. The TP levels would be at 99.10 (TP 1); 99.40 (TP2) or 99.70 (TP3). The stop loss would be 99.70 or 99.80.

Once the ‘W’ has completed, one could prepare a Sell entry at below the 99.29 area preferably at 99.10.The TP level would best be between 38.2% to 50% Fibs Retracement level of C to D. SL should then be just above the X point preferably at 100.10.

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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