A-B-C-D Trade - page 45
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USD/JPY bounced off 85.21, which is the FE 127 that was plotted per last post.
We also monitor the longer term charts, and know that this price was also the previous high from Sept 3rd. Euro session. Saw that on the 1-Hour chart and added a horizontal line on our charts to remind us.
Now plot a retracement from same high of 85.76 and this low of 85.21. The bounce has hit the 38.2% fib of 85.43, which is about same as the FE 61.8 from ABC on top pointing down.
Experienced traders can/will trade between the fibs. In this particular case, even experienced traders will use caution on short positions, some will avoid shorts together (on Yen crosses).
Now let's add the fibo fans. We'll use the EUR/USD, but all 3 pairs have the general parameters.
1) Fibo fan pointing down:
Sept 15th 15:00 (GMT) high 1.3036
Sept 16th 03:10 low 1.2975
2) Fibo fan pointing down:
Sept 15th 11:00 low 1.2959
Sept 15th 22:40 high 1.3019
3) Plot retracement fibs from:
High = 02:00 1.3007 (this is also Point B on ABC pointing down).
Low = 03:10 1.2975
Once low was established/hit at 1.2975, the fibo fans can be adjusted. We caught that low with fan pointing up (78.6). That price is also the 78.6 horizontal retrace fib from last Euro session high/low. Remember, we advised you to plot for all 3 pairs. It is also the FE 100 from the ABC pointing down.
EUR/USD bounced off that low of 1.2975 and retraced to the 61.8% retrace fib = 1.2995 (per #3 above). This was a 20-pip gross bounce, plenty of room to shave off a few pips. It is also in the direction we prefer, considering recent intervention jitters.
Also notice both fibo fans crossing in that neighborhood. All 3 pairs retraced 61.8%.
If we are active during Asian, we try to keep our ears open to any "verbal" intervention.
In this case with the Yen, it can come in the form of statements by government officials. A jittery market can react with strong positions against the Yen.
Traders, after intervention, have shown a history of testing the Central Bank's comfort zone. It is currently believed that USD/JPY trading below 83.00 will be uncomfortable for Japan, since physical intervention occurred just below this level.
Right now EUR/USD taking off to upside. The strong move against the USD, is currently holding back USD/JPY.
Edit: When looking at the 3 pairs, as we mentioned, we also see EUR/JPY rising.
EUR/USD just completed a "W" and is retreating from 1.3007 fib resistance.
Sounds like the spurt, a few minutes ago around 06:45 -06:55, was attributed to positive comments by the EU Finance Minister.
This comes on the same day renewed concern about some EU nations with large debt levels.
These occurrences can drive one crazy. Stick to your technical tools.
Negative CHF data relased at 07:15 = Euro gaining against CHF and USD.
EUR/USD
FE 100 = 1.3033
FE 127 = 1.3043
EF 161.8 = 1.3055
EUR/USD
Additional resistance = 1.3036 which is yesterday's European session high.
Fibo fan from previous post also temp. resistance.
Volatility now probably due to data releases. Although it was negative for the GBP, we saw EUR/USD react choppy and USD/JPY with EUR/JPY upwards.
USD/JPY at previous high resistance of 85.62.
While this pair was just breaking from last resistance of 85.41, we monitored EUR/USD. There was a point in time EUR/USD headed down pulling USD/JPY up.
We used this to exit our long USD/JPY position, which was entered from a dip. All 3 pairs had a pivot about the same time. USD/JPY's pullback (where we entered) was at the 38.2% fib from Asian high to low.
EUR/USD now in tandem with EUR/GBP (UP) after data that was negative GBP.
EUR/JPY up
USD/JPY now soften and down a few ticks.