Context: CHFJPY has been contained in a gently upsloping, well-confirmed fork since H2 2008, largely remaining below the median line pre-Abenomics. See: in comment.
A rally from the low 80s in summer 2012 is nearing the top of the fork, and has so far failed to convincingly break the CD mid-point (P) of the last ABCD on the weekly chart, closing both below it, and coincident sliding parallel resistance. The modest upward slope of the fork (~1 JPY/year) by comparison with its width (30 JPY) suggests that that it might be worthwhile considering a short position.
=> A) If CHFJPY slides, short at the weekly P & coincident sliding parallel (107.68), stop loss at the corresponding D 109.66. (It might be possible to find a closer stop position that makes sense based on intraday charts as the opportunity arises.) or B) If it meanders unconvincingly towards D of the daily ABCD, the upper MLH should provide strong resistance, justifying a short there 110.2, stop loss above highest sliding parallel (~110.9).
Target: upper quartile (~102.7; it's hard to imagine the BOJ allowing JPY to strengthen enough to take it back to the ML) R/R ratio - A: 1.9, B: 8.8
Disclosure: I'm making this up as I go along. Feedback welcome, trade at your own risk! Good luck :)
Comments
cryptoyoda
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CHFJPY is now poised on the midpoint (P=108.5) of the daily ABCD's CD leg:
If 108.5 becomes support, this provides a setup for a long trade targetting the D of the larger ABCD with a ~4.5 RRR. (Intermediate target/ profit taking point: the smaller pattern's D, RRR = 2)
cryptoyoda
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Oops, text got in the way:
ForceFollower
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A deep analysis. However, it's hard to tell, if the up trend has actually died out: the trend line is still intact, and the franc is stronger that the yen. So, as far as I'm concerned, I'll be rather flat or long. Maybe I'm myopic, but if anything interesting happens here in the coming week, I'll still be looking to go long rather than short.
cryptoyoda
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You could well be right. :) This is based more on hidden pivots which I *think* I understand a bit better than the forks; there's a tendency for trend reversals at the midpoints of CD legs, and at the Ds. If the daily ABCD completes taking CHFJPY well clear of the weekly CD midpoint, the d at around 117 would be the next targets.
The SNB reacted when the CHF was around 110 in 2011, but the CHF index is probably quite a bit weaker right now on a trade-weighted basis, so maybe CHFJPY has headroom before they'd try to intervene.
ForceFollower
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I'm sorry I still haven't updated myself on Hidden Pivots. I didn't have time this weekend, but I will make up for it in the coming days. As soon as I find out what it's all about I will be able to address your analysis.
cryptoyoda
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Have a look at the forex chats. Let me know if you missed it :)
ForceFollower
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Yes, I missed it. Thanks for the link to vimeo - Rick Ackerman.
If 108.5 becomes support, this provides a setup for a long trade targetting the D of the larger ABCD with a ~4.5 RRR. (Intermediate target/ profit taking point: the smaller pattern's D, RRR = 2)