USDJPY – SELL – 3rd March 2021

USDJPY – SELL – 3rd March 2021 (Closed)

Good morning team,

Unfortunately, there was a couple of fake breakouts from technical structures yesterday on the AUDJPY and EURNZD. This morning we are taking a look at the USDJPY which is trading at a key mirror resistance zone and the top of a channel formation.

USDJPY 4 Hour Charts

We can see a bearish divergence coming into play on the RSI suggesting bulls are running out of steam. There has also been a completion of a major wave 1 with an ending diagonal formation (rising wedge), suggesting we could see a larger correction. The 107 resistance is a mirror level to a previous key zone, if we see a rejection from this level targets can be found around 105, which may set up for an inverted head and shoulders formation.

USDJPY – 1-Hour Charts

Waves 1 and 5 are of a similar length with the full extension in wave 3 which ticks the box for Elliott waves theory. Waves 1,3 and 5 all have 5 sub-waves which also suggests the formation has completed.

We are now looking to trade a possible correction lower.

Trade Setup: SELL market execution, current price 106.73, stop loss 107.43 and take profit target 105.33.

Stop loss: 70 pips

Take profit: 140 pips

Trade Setup
SELL - Market Execution

Entry
106.73

Take Profit
105.33

Stop Loss
107.43