WARNING: Cross Pairs should be traded with extreme caution due to their 'heavy nature'. If you don't use wide stops, you'll surely be stopped out before you know it. Disclaimer: I rarely trade cross pairs, I only trade them when it's literally textbook perfect and everything lines up. I'm just putting this analysis here to give some insight on cross pairs, so that you can use the same technique on your own with future trades. All you have to do is combine the other analysis I have into their respective cross pair. Having said that, this is a one time thing, you won't see me post another cross pair analysis in the future.
Given my pending longs on USD/JPY and AUD/USD, this presents a possible pending long on AUD/JPY as well. AUD/USD x USD/JPY = AUD/JPY.
AUD/USD's nearest fib level is 0.9008 USD/JPY's nearest fib level is 102.765 AUD/JPY's nearest fib level is 92.77 However, if you calculate it, 0.9008 x 102.765 = 92.5X
To be safe, let's move onto the next bounce point (e.g., the next fib level). AUD/USD's next fib level is 0.8980 USD/JPY's next fib level is 102.46 (this level may actually never be reached since it would void the trade by breaking the trend line) The new calculated level is 0.8980 x 102.46 = 92.0X
So this gives a potential loading region of 92.5X to 92.0X, which unfortunately doesn't coincide with any fib levels on AUD/JPY. However, these levels do present possible 'levels of interest', not necessarily S/R levels but they are of interest based on how PA reacted to them in the past.
Alternatively, you could approach this from another angle. Based on how price is currently reacting to AUD/JPY (pinbar), it could very well just reverse right now and thus, take AUD/USD and USD/JPY with it, without letting them hit their bounce points.
Personally, I see cross pairs as 'derivatives', so I prefer to study the underlying assets (in this case, AUD/USD and USD/JPY) to determine my entry. Having said that, consider exiting this trade if EITHER AUD/USD or USD/JPY trades become void.
A potential target without calculating anything would be AUD/JPY's high at 94.4X. However, if USD/JPY can hit 103.747 and AUD/USD can hit 0.91292, then the calculated target is 94.7X.
Lastly, I don't really touch on it but the whole analysis requires both AUD/USD and USD/JPY to react in sync. If they don't hit the same levels at the same time, then AUD/JPY will be completely off. What if USD/JPY moves up before AUD/USD? What if USD/JPY moves up while AUD/USD moves down? The combination of moves are endless, which is why you have to trade with extreme caution. However, when things line up, cross pairs are a thing of beauty.
PS: Considering I have pending longs across the board, you could do the same analysis on your own for those X/JPY pairs as well such as CHF/JPY, GBP/JPY & NZD/JPY. (CHF/JPY is calculated differently = USD/JPY divided by USD/CHF)
Comments
ForexWeeklyAnalysis
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Update: Price hit a low of 92.05, so you could've gotten entry. I personally am not trading this since I'm already trading AUD/USD and USD/JPY, no point in compounding more into the cross pair.
ForexWeeklyAnalysis
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Considering AUD/USD continued dropping while I was sleeping and USD/JPY didn't move much, this trade may or may not be considered void at this point in time. This is just my opinion, I have no exposure on this pair so take this for what it's worth. I am however, still holding my longs on AUD/USD (full position) avg price of 0.8980 and USD/JPY (30%) avg price of 102.825.