I was watching the intraday breakdown on the one hour USD/JPY and noticed two things. First I really didn’t have a set up to capitalize on the weakness…on the one hour chart. Second, and this is what turned the light bulb on, price reached the 50% Fibonacci Level support and was testing an intraday double bottom.
…so I started scanning the other time frames I watch. This is sometimes how a trade set up will occur: A significant move will occur on one time frame that is not necessarily a good trade or even a set up, but there could be an opportunity elsewhere. The four hour chart had a market cycle I thought would be a good trend following opportunity. The market cycle was moving upwards in a "12 to 2 o’clock" angle and this confirmed the uptrend that I would wait for a correction in. So this is how the one hour chart’s move lower got me thinking about where this sell off could be an opportunity.
The pullback on the four hour USD/JPY has reached my 34EMA Wave. This is the support off which I look for trigger a continuation entry. In this case the correction to the 34 period EMA high at 90.26 is my swing buy trigger. A few other levels are good to watch and the first would be the 90.00 major psychological level below the entry. The 90.00 level will be support.
Realize also that the same "last major move" on the one hour chart that got my attention in the first place is also the same "last major move" on the four hour chart as well. This is not always the case when it comes to Fibonacci Retracements. The "last major move" is the most recent, significant, sell-off or rally that I will draw my Fibonacci Retracement level from.