USDJPY is has formed a classic inverse head and shoulder pattern. This pattern is seen as bullish reversal pattern after a sharp fall.
I have used the 50 day MA as a quasi trend line and on analysis across various time lines, it has been observed that it has serve as a good resistance and support level in the past.
After the inverses head and shoulder formation was complete, price is currently sitting around the 0.5 Fib levels and will may find support below this at 107.6 to 107.4 levels , where a lot of price action has been visible in the recent past and also concurs with 0.382 levels
One more point to notice is that there has been a bearish divergence on the RSI as indicated in the chart
The way to play I think is as follows:
Step 1 : Go long in tranches, one at the current levels and place a buy order around 107.5 levels or the 0.382 retracement level as indicated on the chart, third on the MA levels, which is slightly higher that the peak of the right shoulder
Step 2 : Stop loss below the peak of the right shoulder (which would also mean that our Inverse head and shoulder pattern has failed and also the trend line is breached and maybe its not a whipsaw only
Step 3: Take profit at 109.2 levels which is around 0.618 levels Fib and also matches the zone for profit taking wrt our target expected if the Inverse head and shoulder pattern would play off in our favor!
If you look the analysis, please share a thumbs up.
Happy to share.
Cheers
I have used the 50 day MA as a quasi trend line and on analysis across various time lines, it has been observed that it has serve as a good resistance and support level in the past.
After the inverses head and shoulder formation was complete, price is currently sitting around the 0.5 Fib levels and will may find support below this at 107.6 to 107.4 levels , where a lot of price action has been visible in the recent past and also concurs with 0.382 levels
One more point to notice is that there has been a bearish divergence on the RSI as indicated in the chart
The way to play I think is as follows:
Step 1 : Go long in tranches, one at the current levels and place a buy order around 107.5 levels or the 0.382 retracement level as indicated on the chart, third on the MA levels, which is slightly higher that the peak of the right shoulder
Step 2 : Stop loss below the peak of the right shoulder (which would also mean that our Inverse head and shoulder pattern has failed and also the trend line is breached and maybe its not a whipsaw only
Step 3: Take profit at 109.2 levels which is around 0.618 levels Fib and also matches the zone for profit taking wrt our target expected if the Inverse head and shoulder pattern would play off in our favor!
If you look the analysis, please share a thumbs up.
Happy to share.
Cheers
Comment:
added the SL and TP levels on the chart
Trade active:
First entry activates, small bounce off the first support line at 0.5 Fib levels. as discussed earlier, add positions if further levels below are tested
Comment:
Classic place to see a Doji formation so far, shows state of indecision
Trade active:
Price finding support thus far current levels of support. We are ready with buy orders at lower levels in case support is breached. Lets wait for price action
Trade active:
Nice support and bounce off the pink zone support as indicated. watch out for this space. Price heading upwards to 0.618 fib levels (109.2 levels is the profit booking level) . Re analysis at that stage
Comment:
Large candle and nice rejection off the resistance area and bang … price falls into the first support zone marked in pink...game on....
Trade closed: target reached:
TP level reached for second time, position closed, however new long can be looked at. Please look at my new post on 5th Nov 2019 on the above pair laying down the terms for the same. Cheers
