Trade

Short USDJPY @ 110.30
Stop @ 110.05
Initial target 107.84
Reward:Risk 3.1

Big picture

USDJPY formed a huge head and shoulders pattern (depicted below by the red curves) in 2015 that drove a big down move. With the presidential election last year in the US, the dollar regained much of its losses, however it stalled at the neckline of this pattern. Since then it has been forming a big descending triangle pattern. This is clear below:

It is therefore likely that the USDJPY will trend lower over time.

Daily chart setup

Below the daily chart shows this triangle pattern, and I have highlighted the numerous reversals near the top of the triangle. This looks very bearish.

Today, USDJPY turned back around the upper trend line of this triangle. There is already a good reward:risk ratio by simply trading this down to the triangle's resistance area. However it is quite likely that this will eventually be breached opening up a larger move. We will try to stay in this trade to catch this move.

If the trade entry is triggered, the stop loss will be adjusted as the trade progresses and our position may be closed early based on price action. Please pay attention to your risk management - I recommend not to risk more than 1% of your account per trade.

Bonus trade

Let's test out platinum to see if today was a pullback to refresh a new uptrend.

Buy stop order @ $986
Stop @ $976

Other trade updates

After the BOE announcement today, the pound shot higher. We are staying long GBP against the AUD, NZD and EUR, and have raised target and stop prices. See this page for the original post as well as updates.

What do you think?

Thanks for reading, any feedback is much appreciated!

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Disclaimer: These are my ideas only and do not constitute investment advice. If you place any trades listed here you are doing so at your own risk and I hold no responsibility for any losses. Please pay attention to your risk management.