As the market is slowly going towards a breakout point in most majors (it spends most of the time in a range, but not ALL the time!), I just wanted to signal a possible long-term opportunity that can arise around the current levels on GBPJPY. I’m looking to make a move & sell GBPJPY somewhere in the 1.57 area IF AND ONLY IF I get the right signal in the next few sessions. Here’s what I have in mind:
First, on the W1 chart we can see that the momentum of the move from 118.80 to 162.58 is obviously broken, and the trend line supporting that rally broke @153. For the last month, the move that broke the trend line was also retraced (check D1 chart) & now price is re-testing the same broken TL around 157-157.50. For me, this is the key area for SMALL shorts with long-term aim. Could this be the last push up before the REAL drop, just like it happened before, in 2007? Remember, history does not repeat itself but it can teach us a lot through its cyclical nature…
I hope it is well understood that I am not suggesting shorts YET, but if short-term charts are giving short signals that conicide with this longer-term scenario, wouldn’t it be nice to hold on to some positions with potential for long-term rallies, while only risking an intra-day stop?
D1 is currently divergent, with a nice double top @157.38, but the bullish trends on D1 & H4 continue to be bull @ the time of this writing. Maybe the time to shoot has not come yet. Nevertheless, my H4 chart only needs 155.20 to turn my indicators bearish & confirm the double top. I’m planning to put on my first short (half lot) around that area & add later down @155.00 & 153.00 for a nice big target (i’m thinking 140.00 & below). Another possibility would be shorting higher up @157.50 or at a spike above this level, with nicer R/R but higher risk. In any case, I will need my M15 & M5 to turn bearish before shorting, no matter how aggressive the level may be. While M15 & M5 are bullish (like they are right now) I cannot even short for a small target.
Finally, what if the bear setup is never confirmed? The 157.50 will probably turn into support, & the bulls can continue their joyride up to 163 first, then 178-180, where I see another possible turning point. For me the bearish setup will fail as 158 is broken on H4&D1 – from there I will start looking up once again.