Price Discount in USD/JPY - Trend Continuation
The market is a discounting mechanism. When prices rise too high, buyers start taking profits, aiming to buy at lower prices during an uptrend. This behavior sustains the trend.
In USD/JPY, this concept is evident. The swing low at 160.26 attracted strong buyers, pushing the price above the previous high, creating a new higher high. At this peak, buyers no longer saw value and took profits, seeking a discount to buy at a lower price.
Fibonacci retracement is useful in trending markets, as its key ratios indicate potential levels of trader participation. Currently, the price has been discounted to the 76.4% retracement level of the rally. The corrective ABC pattern brought the price from the high to the current discount.
Based on this scenario, we expect more buyers at this higher low, pushing the price above the recent high. Using Fibonacci as a target tool, we anticipate the price reaching at least the 123.6% level of the current rally.
The risk in this trade is if the swing low of 160.26 is broken, buyers won't be profitable, so this level will be our stop loss. The risk/reward ratio for this trade is 7.05.
Always think in probabilities.
In USD/JPY, this concept is evident. The swing low at 160.26 attracted strong buyers, pushing the price above the previous high, creating a new higher high. At this peak, buyers no longer saw value and took profits, seeking a discount to buy at a lower price.
Fibonacci retracement is useful in trending markets, as its key ratios indicate potential levels of trader participation. Currently, the price has been discounted to the 76.4% retracement level of the rally. The corrective ABC pattern brought the price from the high to the current discount.
Based on this scenario, we expect more buyers at this higher low, pushing the price above the recent high. Using Fibonacci as a target tool, we anticipate the price reaching at least the 123.6% level of the current rally.
The risk in this trade is if the swing low of 160.26 is broken, buyers won't be profitable, so this level will be our stop loss. The risk/reward ratio for this trade is 7.05.
Always think in probabilities.
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