$USDJPY: One thing (could) lead to another

• ragheehorner
• January 4th, 2010

Happy New Year everyone – I’m glad January is here.  Time to get back to work!  My forex trading world basically revolves around four to seven pairs.  My bread and butter being the $EURUSD,$USDJPY, $USDCAD, and$GBPUSD.  Tonight I’m managing a short in the $USDJPY on the 30 minute chart.

The market cycle is heading lower as the 34ema Wave travels downward between “4 and 6 o’clock”.  Each hit on the 34ema low is a shorting opportunity on a bounce within the downtrend.

The initial shorting set up (circled) came after the first leg lower and the subsequent bounce.  I’ll admit — and agree with with Tom Petty –  that the waiting is the hardest part.  It seems that after a sharp move lower that a retracement is the unlikeliest scenario.  But I think that’s exactly why it’s best to wait.  “Great entries” usually feel like their fought for.

I’m certainly not ignoring the low on this chart at 92.15.  This level is sandwiched between the minor 92.20 and the major 92.00 psychological levels.  In fact, the 30 minute ride lower could lead into a 240 minute Wave reversal short which would be triggered if prices are able to trade below the 34ema low on the 240.

That trigger is currently at 92.29.  It’s not an easy short though since the 92.15, 92.00, and 91.88 are all support levels that buyers could support.  Could is the key word and so the 30 minute will be my guide.  The 240 minute short will be confirmed, triggered, and in most ways depends on the short term weakness reflected on the 30 minute chart.

This is NOT multiple time frame confirmation.  Both these set ups are individual and separate.  I could simply continue to short bounces into the Wave on the 30 minute chart or — if I my risk tolerance is up for it — I could short the 92.29 trigger on the240 minute chart.  The deciding factor for most people reading this at this point will likely be whether or not the 30 minute bounces back to the 34ema low.  Because if momentum heads lower without a correction, I may not see at 92.51 correction or may simply want to trade the 240 breakdown.  For the 240 to confirm the MACD Histogram should be negative (which it is) and the CCI should be below -100.

– Raghee

Tickers: USDJPY

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