The Chart of the Week: USD/JPY bears looking for shorts for favourable risk/reward territory
- The USD/JPY charts are starting to ripen for shorting conditions, although there is still some development required.
- The monthly structure is critical in this analysis, but the daily chart is opening up the prospects of a trade for the days ahead.
The price is beginning to show signs that a new cycle could be emerging below a critical monthly resistance area which gives rise to the possibility of a swing trade shorting opportunity on the lower time frames.
We first need to see confirmation that the price is in bearish conditions on the lower time frames, but prior to that there is scope for some upside to come in the next days that will be giving bears a discount from a key daily structure.
The following is a top-down analysis offering two scenarios for a short position.
Monthly support turning resistance
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Firstly, the monthly chart is showing that a long term important level is under pressure, setting the stage for a bearish playbook.
Weekly bearish conditions
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The weekly chart is confirming bearish conditions also.
Daily shorting area
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if the price were to pick up some last-minute liquidity from the structure, then this would offer an ideal set-up from the structure and improved risk to reward ratios.
Alternatively
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Alternatively, if the price continues to sell off from here without any pullback to resistance structure, then bears will be keen to be short below the current support on a restest of it.
Author
Ross J Burland
FXStreet
Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.
