The price of GBP / JPY has consolidated at a compelling level for a bullish trading opportunity.
As can be seen from the hourly chart below, the price cobbled together an extension until it was on the upside for a 1: 2 risk rationing opportunity to reward.
More information on this below …
In the meantime, here is an overview of positioning the market on a longer-term timescale to help assess trading potential and risks.
As can be seen, the price is bullish above, bearish below, which makes this long trade set up a slightly higher risk and a reduced risk level should be applied, maybe half .
So while the trader typically risks 1%, 0.5% might be more appropriate up to the breakeven point where additional risk can be added to the target.
In the chart below, a 4-hour image shows how the price falls down on a convincing retest of the outer trendline, and then an inverted head and shoulder pattern will be in the works.
The price can target the neckline of the W formation (the head of the head and shoulders). More on this to follow … see below …
Set up long trade on a 15 minute chart
At the time of writing this article, the price has actually fallen below the trendline, which now makes long entry into the market less likely until the price returns above the support of the trendline, now countertrend or resistance, and above the 21 moving average with a positive RSI. .
Entry can occur if the upward structure is broken and then retested on entry.
The stop stays below the structure and moves to break even as soon as a new upward restriction turns into support, forms when the price moves towards the target.
However, trading down towards a head and shoulder competition will look something like this …
More soon ….