Beast (GBPJPY) 080916

How to trade this plan
1. Support and resistance zones shown in green and pink with arrows indicating direction. Bulls buy at support and bears sell at resistance.
2. Keep in mind that when price breaks through support the level will be tested in future as resistance – this is called role reversal.
3. Market direction indicated by 21 and 55. Take note of where the 21 is in relation to the 55 and where price is in relation to the 21. Also take note of the width between the two moving averages. If price is below the 21 you may consider looking for selling opportunities. If the 21 is dynamic resistance then if price falls from the 21 it predicts a lower low – the opposite applies when the 21 is dynamic support. If the 55 is dynamic resistance then if price falls from the 55 it predicts a double bottom – the opposite applies when the 55 is dynamic support.
4. Direction of price is indicated by 5 and 8 MA’s and stochastic cycles. Remember that when you line up higher and lower time frames, price is going in the same direction. The goal is to line up market and price while using support and resistance as your leading indicator.
5. Pay attention to reversal patterns on higher time frames when in a trending market – a reversal pattern could mean the end of a trend. Keep in mind that a reversal pattern that is not at support or resistance is meaningless.
6. Pay attention to reversal patterns on lower time frames when confirming your entry and if you want additional confirmation wait for a 5 8 cross on M5 or M1 before entering your trade. Remember – we enter on the second chance on the 5 minute chart.
7. I have added a summary under the H1 chart indicating observations and trade plan.

Note:
a. Please read Kate’s post on Forex Major Currencies Outlook everyday so you are up to date with the latest news. You can follow Kate here
b. Please be aware of risk events for the day by using the Forex.Today calendar
c. Watch Wayne’s webinar daily at 13:30 SAST or catch the recording on the Forex.Today Youtube Channel

GBP JPY Daily

GBPJPY H4

GBPJPY H1

Price was in a range for most of yesterday though we broke out to the downside and then returned to role reversal resistance and then later in the Asian session the H1 21 though have failed to make a lower low. We have also failed to break out of the current range to the upside. Market participants could have been waiting for the news that came out of Japan in the early hours of the morning or they could be waiting for the ECB announcement later today. Either way I would not trade while price is in this range - should we break below I would trade the pull back. Should we break above I would wait for a confirmed higher high and then buy the higher low as indicated in the above chart. Keep in mind that due to today having a high volatility news event we might not see such elegant price action as depicted in the plan. In the event that the ECB rate announcement causes volatility on this pair (highly likely) one would use the strategy Wayne employs when trading NFP. For more information on that strategy please watch this video: https://youtu.be/NGLGOKZVIPY

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