JPY bulls you got wash n rinsed
This is a highly recurring price action in the market that can trip your forex trading if you never recognise it or you can turn into one of the best price action triggers to have.
SGDJPY 3-day bull trap; resistance still in play
Nothing feels better for the masters of the universe than to do a short squeeze when a forex pair prints an over-compelling bearish setup. This was exactly what happened for yen crosses this week. For illustration, this was what happened to SGDJPY.
- Shorts see 80 region as major level on weekly chart (also back in 2014).
- Month – month trend clearly down.
- Price resistance at this region from Weeks 19 – 21 would be very compelling for bets that the pair will fall.
- 3-day wash n rinse/bull trap/short squeeze from Monday 30 May ran above stop loss orders, kills shorts.
- Price falls back below by Wednesday, zone revealed as still effective resistance, shorts killed. Bear setup remains unchanged with month – month trend still down.
As mentioned, this short squeeze took place for JPY crosses.
- USDJPY 2-day spike above Weeks 20, 21 high, hits April high, reverses stunningly.
- AUDJPY ‘on the back of good GDP data’ expands above week 21, hits Week 19, 20 resistance, and reverses. Now negative for the week.
- NZDJPY wash n rinses Weeks 18 – 21 high.
- CADJPY rinses Weeks 20, 21 high, but still within a 5-week horizontal range.
- GBPJPY rises above April, hits 2014-low and shows the entire 3-month resistance zone as still valid.
For those who missed the boat, wait for pullback. For the very savvy, that wash n rinse itself is a very good trigger to short as price falls back below breakout point. For a quick primer on ‘what is wash n rinse?‘ this is the perfect post explaining the whole action.