Hey traders, hope your week is going well! One of the pairs on my radar today is the USDJPY where we have had a retest of previous structure resistance & may be putting in a 2nd chance opportunity at getting short in the form of a potential double top.
What stands out to me about this situation is the fact that we've recently taken out a key level of previous structure support and on the retest, we start to confluence from our RSI in the form of hidden divergence and an RSI swap.
Although I don't have a long-term bearish bias for the USDJPY this is certainly an opportunity to place a short-term short with a stop loss that is close.
Akil
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If you were waiting for the double top to entry at this point I would consider the move to have already been made and pass on it as price has already achieved the initial target level.
Sorry buddy I see no hidden divergence ? the new structure high following a failed new structure low neither of which has divergence or hidden divergence, no divergence indicates weakness which would indicate a trend continuation topside ? maybe :/
Akil_Stokes
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@vdubus, "hidden divergence is different to regular divergence which is what you're referring to. So yes there is no regular divergence, but there is hidden divergence present as price has made a lower high and the RSI has made higher highs. "Hidden divergence" is a term not literally saying that the divergence is hidden (Not sure if that's where the confusion was, but if so hopefully this response has cleared things up.)
vdubus
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@Akil_Stokes, I understand buddy yes but both price and rsi indicate a new higher highs ? there is no offset ? I think the out come of this setup will be both bearish & bullish. Do you include the wick as new structure high ? I think that could be the confusion. I don't
Akil_Stokes
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@vdubus,Yes I take wicks into account as they represent the extreme if price. So in order to have a violation of a previous high I need both a higher high and a higher close. So looking at the previous wick looking left,price has not made new highs. Our current high did not violate the previous high. I think it's just one of those situations where we're both looking at different sides of the charts therefore we have a different bias. That's trading thought
vdubus
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@Akil_Stokes, Yes I see, I doubt there is a right or wrong answer. I did notice how ever your RSI is set to close, Setting it to high or low id imagine would mirror you extreme representation of price. Worth a try ?
Akil_Stokes
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@vdubus, Trading is all about difference of opinion, if everyone saw the same thing and agreed on price then the markets would never move.