Disclaimer : This is not investment advice. Past performance is not an indicator of future results.
Tool used : Fibonacci expansion
Hi Traders! We have USDJPY sell trade setup based on MACD indicator divergence. A detailed analysis of this bearish opportunity is as follows:
USDJPY Weekly Chart Analysis – Bearish Hidden Divergence
On the weekly chart the price which is moving higher is creating a bearish hidden divergence based on the MACD indicator between the first high formed at 112.396 and the second high at 109.486 which we may consider as an evidence of bearish pressure. We may now look for more evidences of bearish pressure on lower timeframes in order to join the bears.
USDJPY Daily Chart Analysis – Bearish Divergence
On the daily chart we have an important resistance zone that has formed based on the 61.8% fibonacci expansion of the first wave at 108.946 and the 61.8% fibonacci expansion of the second wave at 109.613 we have, the price which was moving higher has currently reached this zone and is moving lower. In addition to this we also have a false break of the high at 109.282 with a bearish divergence that has formed based on the MACD indicator and RSI indicator between the first high at 108.475, the second high at 108.897 and the third high at 109.486 we may consider this as an evidence of bearish pressure. We may now look for bearish setups with more bearish evidences on lower timeframes in order to join the bears.
USDJPY H4 Chart Analysis – Bearish Divergence
We have a bearish divergence that has formed on the H4 chart as well based on the MACD indicator between the first high at 109.231 and the second high at 109.481, we may consider this as an evidence of bearish pressure. If the price moves lower and breaks below the low at 108.647 shown in the screenshot below, we may then start looking for pullbacks and then sells with more bearish evidences (candle stick patterns, false breaks, trend line breakout etc…).
The combination of bearish hidden divergence on the weekly chart, an important resistance zone, false break with bearish divergence on daily and the H4 chart bearish divergence could provide us a good sell trade setup. On the H4 chart if the price moves lower and breaks below the low at 108.647 shown in the screenshot above, we may then start looking for pullbacks and then sells with more bearish evidences.
It is always recommended to look for confirmations before you jump into any trade. If you are not sure about how to trade this sell setup then you can use any setup and strategy that you have in your arsenal to look for bearish moves and join this sell trade.
Also don’t forget to protect your sell trade using a stop loss and make sure to set a target and keep a proper risk/reward ratio.
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