As I mentioned on my Twitter update yesterday, I finally pulled a trigger on this setup:
With London and U.S. traders back from the holidays yesterday, I wasn’t surprised to see a burst of volatility at the beginning of the London session. And since not much has changed from last week’s economic themes, I entered at market as soon as a bearish candle ended a small consolidation on the 4-hour chart. It also didn’t hurt that the yen was gaining across the board and Stochastic had just left the overbought area at the time.
I entered 0.50% of my account at market (101.75) and placed a 50-pip stop loss. I figured my falling channel trade idea would be invalidated at around 102.25. I’m looking for a drop to 100.00 but for now my PT is placed at 100.80.
Unfortunately, it looks like the initial burst of volatility was just that – a burst. The yen didn’t gain momentum for the rest of the day and USD/JPY even popped to 102.15 yesterday. Yikes!
For now I’ll hold on to my position, at least until the pair closes above 102.00, the falling channel, or the 200 SMA. I hope the dollar bulls step in real soon!