Top Trade Idea For May 6th, 2014 – USD/JPY
By Gregor Horvat on May 6, 2014 12:38:18 GMT
Good day to our readers!
In our past trade we were looking at the EURUSD longs which are still in play (click here), so today we will focus on some other pair. It will be USDJPY, pair that could start moving in days ahead since pair turned down from 103.00 after a spike that followed the NFP report on Friday.
Below we have a daily chart of USDJPY where you will see that in the past few months each time when NFP was released pair has been in a downtrend for another week if not more. So if we respect the reactions from March and April then we may assume that it may happen something similar in May. In fact we also see a bearish “Head and Shoulders” pattern, ideally with right shoulder now complete at 103.00.
If we scale down to lower time frame like 4-hour chart then we can actually see that move from 101.30 to 103.00 unfolded in three legs. From an Elliott Wave perspective this is referred as a corrective price action that is showing signs of completion after recent decline through the lower side of upward corrective channel.
So if we put the NFP impact, H&S pattern and the Elliott wave pattern all in one context then we can assume that pair will continue to the downside. With that said, we are interested in shorts.
Short ½ at market
Sell limit ½ at 102.50
Stop at 103.05
Target at 100.10
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About Gregor Horvat
Gregor Horvat, based in Slovenia, has been in the forex markets since 2003. He is a technical analyst and individual trader who has worked for Capital Forex Group and TheLFB.com. He also is founder of forex services on www.ew-forecast.com. EW-Forecast.com provides technical analysis of the financial markets, highlighting behavioral patterns based on the Elliott Wave Principle (EWP). Website: http://www.ew-forecast.com/ Try EW-Forecast.com’s Services For 14 Days for just € 1 at http://www.ew-forecast.com/service
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