Trading the trend: long USD/JPY
Since USD/JPY might have ended its Elliott wave ABC correction at this week’s ¥146.23 low and since a Harami buy signal has been given, we would like to buy USD/JPY with a stop loss at ¥146.20.
(Video Transcript)
Robusta coffee trade made a small loss
Good morning and welcome to this week's trading the trend on Wednesday 6 December 2023. Last week, we went short coffee Robusta for technical reasons as we headed towards key resistance and we're seeing a reversal to the downside on the daily chart. And you can see that here on this chart.
But since then, unfortunately, we did get stopped out because we had a daily chart close above the October high above which we placed our stop loss. So that trade basically got us a small loss. And this happens, obviously, when you trade.
The important thing is to make sure that you have small losses on average and higher, bigger gains in order to make money over time.
Sarami pattern is a short-term signal to buy
Now, what I would like to do for this week is to go long US dollar/Japanese yen, as you can see here in this long term uptrend in dollar yen and dollar yen could be in the process of forming what is called an ABC edit wave correction.
But irrespective of that, we also have here the Sarami pattern, which we formed yesterday on the daily chart. And today we're breaking out of it to the upside.
Long USD/JP with a small risk
So, for me, that's a short-term buy signal. And we can go long USD/JPY with a relatively small risk with a stop loss being placed below the current December low and a potential upside target, which is two or three times greater.
And this is what we try to do to get the odds in our favour and then also to basically have a reward to risk ratio, which is in our favour. So, this week's trading the trend is to buy dollar yen and put a stop loss below the December low at around 146.20, with an upside target of between 150 and 151.
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