We have been talking about this pair for sometime in light of its recent move against the Greenback. Analyzing a 4hr chart we see a great Head and Shoulders pattern appear signaling this move. The longer the time frame and the more identifiable the characteristics, the more likely a trader will generate positive PNL from the move. You can see in the chart below the 2 shoulders and head form. The great part about this pattern is that you have very clearly defined entry point and stop loss point. Often choosing an exit is more difficult than an entry point.
You will come across many traders and when you ask what they trade some are exclusive Dollar/Yen traders, whereas others will trade a wide range of pairs. The reason that you find this distinction is that there is a rhythm or pattern to trading this pair, however, if you only look at it on occasion it appears to be random and quite choppy. We are using a 4hr chart below to identify a step pattern that quickly turns into a narrow range, followed by a break below the range
Monday’s candle is relatively close to what candle technicians refer to as a Shooting Star. You can see that it sits by itself above recent price action. However it is a down candle in spite of opening higher than the previous close, suggesting that buyer jubilation which prompted price to open above its last close have lost momentum. Instead, you have a candle that will close near its low. This is a reversal bearish signal and signifies buyer exhaustion as you can see 8 out of the last 9 sessions finished with gains. You need to confirm this with a secondary confirmation.
Written by bforex.com