This week, we received a question more on the mechanics of trade placement then analysis.
Question from Ee
For EURSGD, I don’t understand why I’m getting invalid S/L or T/P message when setting a sell limit. Would you be able to help? Thanks.
Sell Limit at F6: 1.47521
SL: 1.48725, TP1: 1.4266
Reply from Jerome:
As current price is at 1.4840 and your queued price is lower at 1.4752, you would need to use a Sell Stop instead of a Sell Limit.
Also note that in a downflow 1234 pattern, point 4 should be higher then pt2 or at least same high.
Can check with you on USDJPY? Can say that should be looking to short USDJPY since bearish reversal is more or less confirmed based on the below observation?
1. In D1 TF, boxes flattening.
2. There is a double top chart pattern.
3. In the double top pattern, there is a false break of last year high in D1 TF in the form of shooting star.
4. H4 bearish expansion.
Reply from Tiong Hum
Answering point by point first before developing my own reasons after.
- “In D1 TF, boxes flattening.” This is not a valid reason. If boxes flatten and move sideways, it could be a ranging or sideway consolidation which could lead to further continuation.
- “There is a double top chart pattern.” There may be a potential double top on weekly chart but it is something we anticipate. Further explanation later.
- “In the double top pattern, there is a false break of last year high in D1 TF in the form of shooting star.” I agree this is favourable for shorting. The false break vindicates last year high as an effective resistance.
- “H4 bearish expansion.” Yes from 3rd week of March.
This is how I see valid reasons for selling USDJPY
A. We saw week-week bearish expansion in the 3rd and 4th weeks of March. This is the beginning of a down trend on H4 time frame.
B. Because of the more or less sideway movement of price this week and last, it looks like side way consolidation. Price could also be retracing to a potential resistance set at points C and D which are effectively box highs of the month of Jan and Feb. If this resistance is effective, than the price action above (point E) will turn out to be bull trap.
C. 1-2-3-4 setup is visible although we need to verify point 4.
This is my input for 4-hourly. Please plan accordingly.
As for that double top on weekly chart, it can only be confirm when price goes below neckline. It could also be a 1-2-3-4 up trend that has just printed point 3.
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