Some SA traders advised that they are finding this exercise a little challenging so I’ll break it down for you in case you are a little lost. Simply put – when price moves up it’s headed towards resistance. When price moves down it’s headed for support. If you wonder why stochastics is used in conjunction with support and resistance, it’s because when price moves up the stochastic oscillator draws a line showing the closing price of the previous candles – if price is moving up then stochastic will move up – and as we said, when price moves up it’s headed for resistance. Remember a very simple rule of Forex – bulls buy low and at support and bears sell high and at resistance.
When you have an overbought stochastic, are at resistance you sell – of course if you are able to identify the direction of the market then you’ll be able to determine whether you are selling or waiting for the buy, though let’s worry about market once we have fully understood price.
Your goal for this week is to always buy at support and sell at resistance and only with an overbought stochastic – period!
Though here’s a question – if you have a Daily, H4 and H1 stochastic moving up then you have to wait a number of hours for either one of those charts to move to overbought or oversold – which you could do though why not find a way to get in on a lower time frame.
So if Daily, H4 and H1 are bullish and you missed the initial move, then wait for a retracement and look for an oversold stochastic on M15 and M5 and then buy. The same goes for bearish price action on higher time frames.
Something I invite you to consider, if you are trying to understand how to trade without practicing it’s the same as trying to understand golf without picking up a club or letting your feet touch a course. You have to practice these concepts on a demo account and your goal is to understand the technique so well, it becomes second nature, the result of which will be demo profit. If you know what you are trying to achieve then when it’s not giving you the desired result you can review your actions and identify where you are going wrong – especially with an exercise like this. When you are ready there will be plenty of real money to make, and you will make it because you will know what you are doing.
1. Identify the direction of the stochastic on higher time frames
2. Identify support and resistance
3. Wait for overbought or oversold on M15 or M5 and then buy at support or sell at resistance in line with the direction on higher time frames
If you spend today practicing this at some point the penny will drop and it will start to make sense – though you have to login to your account and try it, and not just once – try it on as many pairs as possible. Also remember – it takes about seven candles for a time frame to move from overbought to oversold. Which means in a single daily cycle there are many H4, H1, M15 and M5 cycles and many opportunities to enter. The question is – do you have the discipline to wait for the setup before you pull the trigger or are you rushing to learn the same lesson you have already learned. Will today be different? Are you going to do something different? We all know what the definition of insanity is, right? If only you knew how close you are to your best life!

The image above shows all of the JPY pairs - instead of going through each pair individually, I look at a scan and see where there is an opportunity. As you can see all the pairs are sitting at overbought and many of them at monthly pivot point resistance. We then scan our H4 charts and see how many of them are aligned with the daily chart. (Keep in mind that the bullishness is due to the market expecting action from the BOJ on 29 July)

As we can see our JPY pairs have overbought stochastics on H4 as well. This is a good sign - let's look at our H1 and see what we see.

Now we can see the full picture. Price is starting to move down though keep in mind that the daily and H4 are overbought because everyone has been buying JPY pairs this week - so if you are a bull then you are waiting for an oversold H1, M15 and M5 and then buying at support. If you are a bear and the pair is still at overbought then wait for an overbought M15 and M5 and sell at resistance. If the pair has already started falling then wait for an overbought M15 and M5 and sell at resistance. The reason we include the M15 and M5 chart is because we want all charts to be pointing in the same direction. Remember that while we have lots of time frames to view our currencies on - price moves up and down every second. So if we have looked at a higher time frame and identified that we want to sell, we must make sure that price is not moving up and at support on a lower time frame. Practice it and it will start to make sense - if you try and understand this without practicing it's the same as trying to understand how to drive a car from just looking at a photo of one.

One thought on “JPY Daily Scan 21 July”

  1. allank says:

    Very informative piece Ryan,thanks a bunch

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.