USD:JPY – Sell Strategy

With markets reacting nervously to this afternoon’s news that Republicans have abandoned the planned passage through Congress of a bill on deficit reduction, the Dollar: Yen set up I discussed in recent posts looks a chance of being triggered today

Close Enough

The set up shown on the chart below involves selling if price stops at or close to the Fibonacci cluster zone. You can access details of the setup in my 13 December and 17 December posts.

USD:JPY CFD - Daily. Source: CMC Tracker

USD:JPY CFD – Daily. Source: CMC Tracker

Wednesday’s high was within 0.6% of the top end of the Fibonacci cluster. Using the approach of allowing a small tolerance filter to determine what is close enough, this set up will trigger if Wednesday’s high is confirmed as a trend peak.  This price filter approach to entry is outlined in the video on Fibonacci strategies I posted recently.

Strategy

One approach to strategy is to enter on the first close below the candle making the trend peak. This would be triggered by a close below the arrow on the chart below.

If this doesn’t happen, we may still push a bit higher and make a new peak at the cluster zone

USDJPY 21 December 2 

If the trade triggers tonight then a move above Wednesday’s high would mean that our hoped for new down trend has failed. This makes a spot just above the peak the obvious place for the initial stop loss.

Remembering that the set up assumes that a trend peak here will trigger a retracement of the rally from black “2”,  a conservative approach to the profit target would be to use the 38.2% retracement level. A clear majority of retracements get at least that far. For good measure this level is also close to the support of the 40 day moving average.

About Ric Spooner

Over 30 years market experience - professional trader, broker, director
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2 Responses to USD:JPY – Sell Strategy

  1. Andy says:

    hi, it quate advace aproache, to me it would still gona go up as there nice rejection pin bar from dinamic 8 ema support.

  2. dv34 says:

    Love the tight stop and big R:R potential… beautiful..

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