Trend continuation setup in upcoming week USDJPY
We like to take a contrarian view on retail trader market sentiment, with most retail traders going long USDJPY we want to go short since we all know 90% of traders lose. This also lines up well with the fact that the trend for USDJPY is down on all timeframes up until the monthly. Furthermore, there is evidence that this will be a powerful rejection because these two currencies are converging (4 Hour) and are about to share the same level of strength, and we all know currencies hate being strong together, one must dominate the other, we are looking for USD to show some weakness to also feel comfortable with shorting.
To confirm entry into this trade we are going to look at price action(nice rejection of area) + similar rejection on USDJPY's strongest correlated pair, GBPJPY; on approach to area we want to see structure to the left of GBPJPY's chart to show that not only is this a place sellers come in but a TIME sellers come in. A forex chart is a 2D chart it has time and price (when and where)
Things that make this trade powerful:
Risk reward of 1:2 = we need to be right 33% of the time which is about how much a market trend and we are trend traders.
Trend= We figure out the dominant trend to increase our odds since the market trends 30% of the time. Being with the trend increase odds of success by 15%
Price action = a rejection of the area.
Retail trader market sentiment = Taking a contrarian view on market sentiment which is too short.
Currency strength convergence = Big move coming to decide which currency is strongest.
Correlation = When USDJPY reaches this area we are looking for a similar structure on GBPJPY to know the time and place to short on the chart.
This list is not a checklist, it is merely a list of the order of importance for getting into this trade.
If you like this analysis, feel free to follow me and post your comments, tell me what you see that I may have missed that can put this trade against me.
This is my road to 1 million dollars series.
To confirm entry into this trade we are going to look at price action(nice rejection of area) + similar rejection on USDJPY's strongest correlated pair, GBPJPY; on approach to area we want to see structure to the left of GBPJPY's chart to show that not only is this a place sellers come in but a TIME sellers come in. A forex chart is a 2D chart it has time and price (when and where)
Things that make this trade powerful:
Risk reward of 1:2 = we need to be right 33% of the time which is about how much a market trend and we are trend traders.
Trend= We figure out the dominant trend to increase our odds since the market trends 30% of the time. Being with the trend increase odds of success by 15%
Price action = a rejection of the area.
Retail trader market sentiment = Taking a contrarian view on market sentiment which is too short.
Currency strength convergence = Big move coming to decide which currency is strongest.
Correlation = When USDJPY reaches this area we are looking for a similar structure on GBPJPY to know the time and place to short on the chart.
This list is not a checklist, it is merely a list of the order of importance for getting into this trade.
If you like this analysis, feel free to follow me and post your comments, tell me what you see that I may have missed that can put this trade against me.
This is my road to 1 million dollars series.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.