We entered a short position on the USD/JPY, because we saw an impulsive move down on the daily chart followed by a correction (flag pattern), which was accompanied by significant RSI divergence suggesting that the correction had run out of steam.
So we dropped down to the one hour chart and noticed that price action had just formed a double top near to the top of our ascending trend line (flag), which was then followed by the break and close below the shorter term ascending trend line we drew on the one hour chart.
So our aim to short the market down, firstly to the lower tip of the shorter term ascending trend line we drew on the one hour chart for a 1.44:1 reward to risk and then hopefully see it make it all the way down to the lower tip of the ascending trend line we drew on the daily chart where the longer term correction began for a 17.66:1 risk/reward, with a tight stop loss 25 pips from our entry price and 3 pips above our shorter term descending trend line.
We will move our stop loss to break even once price action has earned us more than we stood to lose and then we'll trail it down to 3 pips above the high of each new ascending which forms above our current market price.
So we dropped down to the one hour chart and noticed that price action had just formed a double top near to the top of our ascending trend line (flag), which was then followed by the break and close below the shorter term ascending trend line we drew on the one hour chart.
So our aim to short the market down, firstly to the lower tip of the shorter term ascending trend line we drew on the one hour chart for a 1.44:1 reward to risk and then hopefully see it make it all the way down to the lower tip of the ascending trend line we drew on the daily chart where the longer term correction began for a 17.66:1 risk/reward, with a tight stop loss 25 pips from our entry price and 3 pips above our shorter term descending trend line.
We will move our stop loss to break even once price action has earned us more than we stood to lose and then we'll trail it down to 3 pips above the high of each new ascending which forms above our current market price.