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3:22 PM
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‘ve been crazy busy putting out fires in my office – and perhaps even a little burnt out from the frantic trading and writing schedule I was keep so far this year. So I’ve been keeping an eye on longer-term set ups, namely on the 240-minute and daily time frames. The slower-pace has been suiting me right down to the ground.
The strength of the trends – which is the say the demolition of the U.S. Dollar – has been so steady longer-term that this longer-term, trend-following has been effective and fairly low maintenance.
But there are some pairs like the USD/JPY which have maintained range-bound trading behavior. Now I know the Japanese Yen has already had quite a year in terms of volatility. In fact the pip movement range has been relatively wide throughout the trading day.
Price Movement Range provided by PowerStats courtesy of Autochartist.
Noticing these (sometimes subtle) changes in the rhythm of a pair is important as it impact entry possibilities as well as risk considerations.
The set up I’m waiting on is a bounce which is already under way. Shorter-term time frames like the five and 15-minute charts have already traded higher through the Wave and triggered reversals:
The Channel Down chart pattern has been broken to the upside triggering a reversal on the 15-minute time frame.
These reversals can be bought into but what I’m after is the longer-term trend follow. The 240-minute chart is benefiting from the rally in that the downtrend is correcting higher towards the “swing short zone” between the 20 period SMA and 34 period EMA low. Additionally there is a Channel Down pattern that has downtrend line resistance running along the bottom line of the 34EMA Wave further strengthening the potential selling pressure at that level.
240-minute USD/JPY trading higher towards my swing short zone between the 20 period SMA and 34 period EMA low.
In this case, the near-term strength is leading into a longer-term short is what I call a “one-thing-leads-to-another” set up. I will want to see that the five and 15-minute charts are showing exhaustion as the 240-minute swing short is triggering.
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