Inside Day and Head & Shoulders
by Trader Rich
UPDATE: It looks like I won't be keeping my eye on this any longer. The news out of Japan last night (CPI) was not favorable for the Yen as the chances of an interest rate hike later in the year decline.
I haven't talked much about my trading because there really isn't much going on. I've got my finger off the trigger and I'm being picky and somewhat cautious with my trades. I'm up a big 3 pips this week, after making only 17 last week. I'm not complaining because being up a little is much better than being down.
I've been trying to study only 3 currency pairs, the GBP/USD, EUR/USD, and USD/JPY over 3 time frames, 60 minute, 240 minute, and Daily. I just don't want to get overwhelmed by 12 different pairs and 8 different time periods. It's just too much for a beginner.
I wanted to bring up a trade that I'm waiting on since this is a trading blog and there haven't been many posts in the way of charts lately. Take a look at the daily chart for the USD/JPY first.
I've clearly marked the head and the two shoulders. I'm waiting for a break below the neckline. In addition, I've drawn 2 parallel lines at 116.83 and 115.90. This is to indicate the high and low from Tuesday. Since Tuesday's candle, we've had 2 inside days and another inside day is in the works for now. Ideally, I would look to take a short at the break of the low from Tuesday at 115.90 with the thoughts that another 400 pips move down could follow if the head and shoulder pattern holds true. I'm not saying this will happen tomorrow but I'm keeping my eye on it.