Ninja (USDJPY) 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

USDJPY Daily

USDJPY H4

USDJPY H1

If you were looking to trade USDJPY yesterday, you would have noticed we were in a range on H1 that we only broke out of towards the end of the London session. The trade plan was to return to previous resistance (WM1) and then bulls would buy at the higher low. This happened though price came down from DM3 and is now at previous resistance placing us in another range. Note - do not trade in the range. Rather wait for a breakout and trade the pull back. It is clear that either there are fewer market participants due to summer, or smart money is still undecided on market direction. The market may have been waiting for the news out of Japan released in the early hours of the morning as an indication of what BOJ are likely to do at the next bank meeting or they are waiting for the ECB decision later today to determine risk sentiment. Either way our strategy remains the same - do not trade in the range, wait for the breakout and trade the pull back. Note the X at current support and resistance - these pink and green zones will become role reversal support and resistance once a breakout has occurred. Be patient, be disciplined, be prepared.

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