Good morning traders,
Well, it’s Monday Asian session and we have got some nice price action offering opportunity for savvy traders who were ready for the open!
Do you remember back in August, we were talking about the different ways to draw your GBP/JPY trend lines? Well although the first subjective trend line broke to the downside, price has since been following it back up and respecting the level on both sides.
Just think how often these trend line breakouts fail and price action just follows the line back in the direction of the original trend. Not something that the trading textbooks will tell you, but something worth thinking about when you’re trading those sorts of setups.
There is no subjectivity however in horizontal zones like the obvious one we’ve had marked on the daily chart here:
As you can seem price has come back down to test the previous resistance zone as support, but as there was zero intraday bounce, there was no reason for us to be blindly buying it.
However, now that price has gone straight through the zone, it doesn’t mean that it’s lost its power. It just simply means that we can now possibly look for it to act as resistance with any short term retests on the intraday chart being shorted:
As you can see on the 15 minute chart, price gapped up 25 pips or so, right into the previous short term support level and then was rejected as it was turned to resistance. A beautiful little trade if you were at your charts for the open!
There hasn’t been any follow through but keep an eye on the @VantageFX Twitter account as we head forward.
Best of probabilities to you.
Dane Williams – Vantage FX
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Source: Vantage FX Blog