4Xlounge Round Table – The JPY Bounce
4Xlounge Round Table Trading Signals
All of the JPY pairs have been in extended trends for the past few weeks. A few of the JPY pairs are starting to show signs of a possible turn. Sooner or later, all of the JPY pairs will need a consolidation move. The USDJPY might be the only exception. The USDJPY has been running sideways for more than a week. There have been several reports that the BOJ is actively defending support for the USDJPY.
The Market Barometers
The Market Barometers are definately showing a JPY over extention. The Bigger Picture Barometer is suggesting a strong bounce or consolidation in the near future. Keep in mind that the Bigger Picture Barometer is using 1 month and 3 month data. This means that any consolidation will be very strong, but it will be hard to time (i.e. larger time frames are usually a little harder to time).
Bigger Picture Market Barometer JPY 1
Bigger Picture Market Barometer JPY 2
Big Picture Market Barometer JPY 1
The Trade Plan
There are several different 4Xlounge tools and systems that you can use to catch a longer term consolidation. Remember, the JPY consolidation will probably last for 1-2 weeks once it begins (and it may have already begun). The consolidations could last a lot longer. Plan to hold these trades for a minimum of 7-8 trading days. Here are a few ideas:
Plan 1 - Live Web Charts – My personal favorite tool for catching these moves is our Power Bars and X Trend Systems. I usually start hunting on the 30 minute Power Bars and X Trend. If those systems are too messy for an entry, I will try the 1 hour X Trend. If that does not work, I will look at the 4 hour Power Bars and X Trend. One of those systems will eventually give me an entry. It might take a little patience, but one of the systems will pan out. Just follow the rules and pick your entries carefully.
Plan 2 - Trend Map – Second on my hit list is our Trend Map software. I would wait for a 1 hour or 4 hour entry signal. Just load all of the JPY pairs and watch the software for an entry. Pretty straight forward. Trend Map will probably give you a trade much sooner than a Live Web Chart system. Our Trend Map software is still my favorite trading tool.
Plan 3 - This option is very powerful and extremely accurate. I would look for rolling trend entries on the 4 hour and Daily time frames. Most of our Pro Members don’t even know about the other time frames (dispite our best efforts to inform them). The Tech Scalper is a fantastic way to spot new trades. Like most of our tools, a little practice will improve your performance.
Setting Up The Trade
Remember to watch for news (not for the usual reason). A news spike in favor of the JPY might provide an excellent entry for a longer term consolidation against the JPY. The JPY pairs love double bottoms before long term reversals. I would expect to see at a few double bottoms from some of the JPY pairs. If you enter one of these trades, you must place your stop below the “absolute low”, not the swing low. Risk/reward will be tricky for some of these trades. If you do not see at least 2:1, do NOT take the trade. Here is my setup:
Targets = I will use 3x the Daily ATR or the top level Fibonacci pivot on the Daily Power Bars charts.
Stops = I will set my stop below the absolute low to protect against a possible double bottom. I will place my stop 1 x the 1 hour ATR below support. I will probably add to my position if it tests support.
Please keep your leverage in check and do not bet the farm on a single trade. If you have any questions or if need help with a trade that you see forming, please post on the forum and we will be happy to help. I probably won’t post trades for this setup, but our Round Table Team will try to catch a few of the moves.
