Wednesday, December 23, 2009

More FX obessions

Again talking about USDJPY. Sorry that I have been focusing a lot more on FX at the moment. It will change once the new year comes. FYI I have not made a single SPX based trade for the past 2+ weeks and been only focusing on FX (EDIT: with the exception of course on taking equity positions but only certain picks).

Ok I have marked a serious area of resistance and support with the blue rectangle. As you can see this has been a point of battle over the past year either trading above or below.

Currently MACD divergence on the daily is quite high so even if this does not move lower we need to continue sideways to get rid of the overbought conditions. The channel is the one I had been describing in the past and we are lining up nicely with the big support/resistance zone and previous down channel. So thus far it makes it 3 indications that we have some serious resistance ahead.

The last and final observation is the fact that every advance of the declining lower trend line ended up with a parabolic or overthrow like ending move - its even more visible on the 60 min. This again happened here with the last 3 days having been quite strong.

At this point my stop is close above the peak high now with minimal capital being risked ($200) and possible gains of a move towards a minimum of 88-89 ($3300 gains at 89). If the bottom is in on this currency pair its ok, we break important resistance rally some, and eventually will come back where we can go long. Either way a good setup.

As you can see risk/reward wise FX offers amazing setups and since you have so many different markets it pays of being patient and waiting for setups to come to you (instead of me chasing SPX).

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