UPDATE #1: USDJPY:- What Next? A Bull Cypher? Short w/GREAT R:R

16 ก.ค. 2015

UPDATE #1: Following up on my previous post "USDJPY: Just A Quick Short-Term Thought On What's Next" (see Related d Ideas), except for the butterfly being invalid and quick, prices have done what was expected and reached up into the SR Zone meeting the C point of the cypher I had posted.

Now, the price action has yielded a ending diagonal (wedge) pattern which is a bearish pattern. From here, if the overhead structure rejects prices, then it should drop possibly all the way down to complete the cypher pattern.

Should you take SHORT positions here? I can't tell you what you should do but I've already taken a SHORT position. This is a structure based trade and not a trade based on the CD leg of the cypher although I am using the possible D point of the cypher to take profit. . Remember, until the D point is completed, THERE IS NO PATTERN there! Only a POTENTIAL for there to be a pattern.

THE TRADE SET-UP

Taking the structure-based trade gives an excellent risk-reward ratio Just be warned though that prices could still push a little higher as it is normal for ending diagonals to have a "flare-tail" where prices will jump up out of the diagonal breaking the upper trend line and quickly retracing back down. This is especially common near some S/R as there will be stops there and stop-hunting is one cause of this flare.This price action is what leaves behind a pin bar. So be prepared to handle some possible draw-down.

In my wave count of the recent up-move in this pair, prices should be just about finished with the wave 5 and are getting ready to retrace down.

Also, BTW, there is bearish divergence present as well.

As long as prices don't exceed 124.266, then we will still have a valid C point of this POTENTIAL cypher.If prices do exceed that point, then there is not any cypher. Potential or otherwise.