USDJPY> Advanced Pre-emptive Entry for Triangle Break Out
Hi Yen Risk Takers,
This idea is similar on the USDJPY bullish idea I wrote a few days back, but with a different approach in terms of entry level. Usually the entry levels that I wrote are designed on a simple breakout basis.
In here I will described another slightly more advanced method for entry.
By all means, advanced entry may not necessary mean that the trade will be more profitable.
It just means that the entry involves slightly more consideration and simply diversify a trader's method to entering a trade.
(1) USDJPY is generally trading in a Bullish Environment Since Oct 2013.
(2) We note a very clear immediate Elliott Wave formation developing.
Currently price is in Corrective Wave 4 with possible Wave 5 projected in the future.
Seasoned Elliotticians should be able to spot a bigger Elliott wave at a higher level.
They will understand that this trade is all about capturing "Wave 5 of III"(not illustrated, for simplicity's sake).
(3) We also observed that current price action is a potential Triangle continuation pattern, which will be confirmed upon break out on the upside.
(Projection)
Based on reasons (1), (2) & (3), we project that price is likely to breakout upwards, once the current consolidation is over.
(Pre-Emptive Entry (A) )
Enter Long as price trades downwards to within the blue box and the moment signs of a price rebound starts coming in. Essentially, this is a "Have Faith in the 116.00 Support Level" entry method.
The advantage is that the stop loss is much tighter with Pre-Emptive Entry, versus simple entry above 119.90.
Also since the entry is pre-emptive, there will be more profit to made if the trade works out, leading to a better risk reward ratio.
(Stop Loss)
A tighter stop loss at just below 115.40
(Taking Profit)
Long term traders can look at 129.00 as a general objective.
Medium Traders can generally look at taking profit partially bit by bit, as price reaches the following levels:
Take Profit Level 1: 121.00
Take Profit Level 2: 123.00
Take Profit Level 3: 125.00
(Risk)
Probability of a having a winning trade is lesser with this entry method.
This is because downwards price action does not indicate with high certainty price will trade higher.
Trader will have to enter long against natural instinct, when prices are falling towards 116.00.
Also trader may face the risk of a bearish breakout on the downside too.
When using pre-emptive entry we are essentially taking on a slightly higher probability of a losing trade, in exchange for a higher risk reward ratio.
There is also the risk of averse price movement due to unexpected announcements by Central Banks.
A classic example will be the recent Swiss National Bank's decision to remove EUR/CHF Cap.
(Shoutout)
dojitrader raised a discussion on the different types of entry a passive or agressive trader might use.
So I decided to write this idea with a slightly different approach to entry, to illustrate we can have many methods of entry based on the same idea.
brandon.ward.56863221 also illustrated in the comments section the possibility of price breaking below 116.00
(References)
Elliott Wave> elliottwave.com/freeupdates/archives/2011/07/06/Using-Elliott-Waves-As-Simple-As-A-B-C.aspx
Descending Triangle> thepatternsite.com/dt.html
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Trading View: BreakOutArtist
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Twitter: twitter.com/BrkOutArtist
This idea is similar on the USDJPY bullish idea I wrote a few days back, but with a different approach in terms of entry level. Usually the entry levels that I wrote are designed on a simple breakout basis.
In here I will described another slightly more advanced method for entry.
By all means, advanced entry may not necessary mean that the trade will be more profitable.
It just means that the entry involves slightly more consideration and simply diversify a trader's method to entering a trade.
(1) USDJPY is generally trading in a Bullish Environment Since Oct 2013.
(2) We note a very clear immediate Elliott Wave formation developing.
Currently price is in Corrective Wave 4 with possible Wave 5 projected in the future.
Seasoned Elliotticians should be able to spot a bigger Elliott wave at a higher level.
They will understand that this trade is all about capturing "Wave 5 of III"(not illustrated, for simplicity's sake).
(3) We also observed that current price action is a potential Triangle continuation pattern, which will be confirmed upon break out on the upside.
(Projection)
Based on reasons (1), (2) & (3), we project that price is likely to breakout upwards, once the current consolidation is over.
(Pre-Emptive Entry (A) )
Enter Long as price trades downwards to within the blue box and the moment signs of a price rebound starts coming in. Essentially, this is a "Have Faith in the 116.00 Support Level" entry method.
The advantage is that the stop loss is much tighter with Pre-Emptive Entry, versus simple entry above 119.90.
Also since the entry is pre-emptive, there will be more profit to made if the trade works out, leading to a better risk reward ratio.
(Stop Loss)
A tighter stop loss at just below 115.40
(Taking Profit)
Long term traders can look at 129.00 as a general objective.
Medium Traders can generally look at taking profit partially bit by bit, as price reaches the following levels:
Take Profit Level 1: 121.00
Take Profit Level 2: 123.00
Take Profit Level 3: 125.00
(Risk)
Probability of a having a winning trade is lesser with this entry method.
This is because downwards price action does not indicate with high certainty price will trade higher.
Trader will have to enter long against natural instinct, when prices are falling towards 116.00.
Also trader may face the risk of a bearish breakout on the downside too.
When using pre-emptive entry we are essentially taking on a slightly higher probability of a losing trade, in exchange for a higher risk reward ratio.
There is also the risk of averse price movement due to unexpected announcements by Central Banks.
A classic example will be the recent Swiss National Bank's decision to remove EUR/CHF Cap.
(Shoutout)
dojitrader raised a discussion on the different types of entry a passive or agressive trader might use.
So I decided to write this idea with a slightly different approach to entry, to illustrate we can have many methods of entry based on the same idea.
brandon.ward.56863221 also illustrated in the comments section the possibility of price breaking below 116.00
(References)
Elliott Wave> elliottwave.com/freeupdates/archives/2011/07/06/Using-Elliott-Waves-As-Simple-As-A-B-C.aspx
Descending Triangle> thepatternsite.com/dt.html
Like it, Share it, Follow it~
Trading View: BreakOutArtist
StockTwits: stocktwits.com/BreakOutArtist
Twitter: twitter.com/BrkOutArtist
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