Trading Time Frames

USDJPY (Daily):

The chart below demonstrates the volatility of this pair. It essentially is moving sideways with a large distance between chart highs and lows. Friday’s price actions saw this pair open at the 200 day MA and push higher until the 100 day MA. From there, price fell below the 200 day MA and closed below its open. The Dollars inability to close above the 200 day MA is bearish signal.

USDJPY (30min)

The candle we described above typically implies profitable intraday chart patterns. Somewhat lengthy and equal size wicks on both ends of the candle. It suggests price rose from its open, only to retrace the move. Once price crossed below the open, it accelerated downwards. Take a look at the 30min chart below to see how it played out and where a day trader may have entered the market. The price pattern formation on the chart below is a Head and Shoulders. When price breaks below the neckline a trader will enter with a stop placed at the height of the shoulder. There are many techniques used for picking PNL exits.

GBPUSD (4hr)

After looking at the USDJPY 30 min chart above you decide to see what other intraday moves are possible. The GBP has shown recent strength against the Greenback as it tries to distance itself from its European counterpart. When moving averages are quoted the default is the daily simple moving average. However, on the chart below the GBP has not had a solid break above the 100 SMA on the 4hr chart since the end of April. A Trader who traders Support and Resistance would place a Sell at the 100 SMA. There are various confirmations one can use. In the case we use a simple Relative Strength Index (RSI). The RSI tells us that although price broke the 50 SMA the overall trend is weak as the RSI slopes down and fails to make a new high. Lastly, if you were looking at the 30min USDJPY trade and you were familiar with current market correlations you would know that recent JPY strength intuits overall Dollar strength. Therefore, the information you obtain from the 30minute chart can provide insight to momentum changes likely to occur on your 4 hour chart.

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