CADJPY short: continuation of a downtrend?
Updated
There is so much going on on CADJPY.
The main chart, showing the bigger picture, highlights a downtrend with the setup of the moving averages, but it is also clear that the price is going down recently.
If we have a closer look, we can appreciate more details of recent price action and how the trade is structured:
The entry point is placed on a small reaction by sellers to a good level of resistance. Obviously, I would have preferred better candles to play this rejection, but since we have other strong elements in favour of a short position, I'm ok with this kind of reaction and I don't want to compromise my risk to reward ratio to have a better confirmation.
Regarding the stop loss, we have two main levels to consider. The first one is right above the short term resistance. As I mentioned above, at the moment it is clear that we have a downtrend, but reaction by sellers is not that strong. For this reason, I preferred a safer stop loss, placed above an important swing high (as shown in the chart above).
The take profit is placed at 76.30, trying to catch a new lower low on the market, but I will also consider removing part of my position around 77.60, where we have a previous important swing low.
There is also a chance that the price will follow an ascending triangle formation, so I will keep an eye on the uptrend line at the bottom.
Good luck everyone!
The main chart, showing the bigger picture, highlights a downtrend with the setup of the moving averages, but it is also clear that the price is going down recently.
If we have a closer look, we can appreciate more details of recent price action and how the trade is structured:
The entry point is placed on a small reaction by sellers to a good level of resistance. Obviously, I would have preferred better candles to play this rejection, but since we have other strong elements in favour of a short position, I'm ok with this kind of reaction and I don't want to compromise my risk to reward ratio to have a better confirmation.
Regarding the stop loss, we have two main levels to consider. The first one is right above the short term resistance. As I mentioned above, at the moment it is clear that we have a downtrend, but reaction by sellers is not that strong. For this reason, I preferred a safer stop loss, placed above an important swing high (as shown in the chart above).
The take profit is placed at 76.30, trying to catch a new lower low on the market, but I will also consider removing part of my position around 77.60, where we have a previous important swing low.
There is also a chance that the price will follow an ascending triangle formation, so I will keep an eye on the uptrend line at the bottom.
Good luck everyone!
Trade closed: stop reached
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