Hello trend traders,
Since the beginning of December 2012 we have seen an explosion is some of the currencies we have been tracking through the latter part of November. The Yen crosses were on that list and all have performed very well. Today we will look at the USDJPY pair.
Below are two charts of the USDJPY. The upper chart is the monthly view and the lower chart is the daily view. The red dashed line on the monthly represents the resistance zone that was taken out when price burst to the upside. If we draw a channel based on the previous monthly decline, price has now reached the upper channel and this trade can be managed with a tighter stop loss.
The lower chart represents a daily view of the same pair. Again with the aid of the channel, we can see price is in an uptrend. Just by following the trend over the last month, on not only this pair but also the other Yen crosses, good profits have been banked.
If you have missed out on the trend then the next potential opportunity may come in the shape of a pullback. As the upper channel has been hit on both the daily and monthly, we should wait for price to pullback to a support zone before entering with a low risk. The obvious area of current support is around the trendline and the figure 90.
One point to note is we do not have obvious divergence and often after a good run, we will see divergence build up over time providing an advance warning of a pullback. As this divergence is lacking, the pullback may not transpire just yet but patience is key here. After a big move, it is advisable to enter with a small risk from a pullback or a consolidation period of rest.
Happy Dynamic Trading…