im waiting for a setup on the lower time frames to enter the trade.
looking for a minimum of 400 pips on this one, going to to targeting the green channel marker.
Yes, there is indeed a clear channel action and market closed at the top of it on Friday and is close to a bunch of other resistance levels. So, I will agree with you only on the following: giving the volatility stretch, it is reasonable to expect a pullback, a dip of some sort where buyers will emerge. BUT just because we have a channel and the market is overstretched, does this mean that price will drop from here (140.56) to 136.56 (400 pips)?
It could but personally I find it improbable because of central bank action. Unless something changes in the commitment of the BoJ and GPIF to reallocate funds on the massive scale they announced, the probable play is Yen weakness and USD strength, as well as Nikkei strength. Now, if UJ keeps on going up, and EU keeps on dropping, what is EJ going to do? Not move very much as the size of flows in EU and UJ are some of the largest in the FX market.
BUT if EU has a contra-trend retrace move up, and UJ either doesn't dip much or even keeps rising, even at a slow rate, that will further support EJ in the coming week. Problem is that EJ is a synthetic, ie influenced by what happens with EU and UJ flows.
Anyway, first we need to define what is the time duration of the interval during which you foresee a 400 pip drop from current levels. 1 week? 2 weeks? 1 or 2 months? 6 months? 1 year?
Anyway, all I am saying is that the upside seems more probable. BUT if the 61.8% fib and TL we see on the monthly chart do not break and provide solid resistance (as long as there is no massive market changing fundamental news coming out) then I would agree and start looking to position myself short. But until then, I'll wait to see what happens around the 141 level.