Trading week 21/14

During last week usd/jpy broke down below support at 101.20. I look closely at this area, because just below is another important support at 100.78.

support lines at daily usd/jpy chart

support lines at daily usd/jpy chart

For now there was a strong move down and right after that was bounce back. As you can see, usd/jpy returned from 138.2% Fibonacci extension line:

daily usdjpy

move ends at 138.2% extension line (daily usd/jpy)

It is clear that buyers try to protect 101.00 area and move price higher. If they manage to close above 102.8 then we might see some potential to move even higher.

I want to focus on move from 20th may. We had here a clear ABC pattern with resistance at 61.8% Fibonacci retracement. OK, let’s say we are following a trading plan. There is a signal to sell, we take short position. USD/jpy moves down, below 0% line and at 127 or 138.2% extension is time to take profit. That part should be clear:

15 min usd/jpy trade

15 min usd/jpy trade

It is not over. Price moves back to moving averages and there is a resistance. Looks like another ABC pattern but this time there is a strong move down. Let’s say you have short position again, but where to set take profit targets? Should you stick to the extension lines from the previous move:

extensions lines from previous move

Or maybe to the most current one move:

extensions from current move

As you can see, Fibonacci extensions from the current ABC move worked better. You can and should pay attention to extension lines from earlier moves. However, when there is a strong move, it is a good idea to stick to the most recent move.

On daily eur/usd we can see that sellers are in control of situation. Price broke below 200 simple moving average. It is also below 10 moving average which works as resistance. The pressure is down so that means that we should not trust to much in moves up.

daily eur/usd chart

daily eur/usd chart

Because of down trend, I hunt mainly for short positions. In the end of the week there was an interesting move which ended at 238.2% Fibonacci extension line:15 min eur/usd and 238.2 Fib extension

S&P500 ended week with record. It looks like bulls are strong here. Trend is up, but if you look for short term resistance lines then Fibonacci extensions work well like on this 4 hour S&P500 chart:

sp500, 4 hour chart

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