The pound jumped 40 pips higher after the release of the UK consumer price index (CPI) numbers, but that move was capped by a number of moving averages which were standing at around 1.2440-50.
The jump was followed by a 40 pip dive, so the trade idea we presented in the first market update today must have gone pretty well for those who followed it.
Right now we are back up at the top (1.2440s). The move higher, which has taken place in the last several hours, has stalled now once again, so we decided to take that forex trade we missed earlier on.
Of course, nothing repeats itself in forex exactly in the same way, but stochastic is almost overbought on the H1 forex chart, the moving averages are still there and providing resistance, while the last hour´s candlestick closed as an upside down hammer.
This is the 6th attempt in three weeks
That is a dovish signal, so it´s three indicators pointing down. We pulled the trigger so let´s hope this chart setup works out. By the way, our AUD/USD signal is going pretty well at the moment since the price is only a few pips above TP.
Shifting to USD/JPY, this pair is trading close to 110 after stochastic became overbought on early Tuesday morning on the H4 chart. Do you think we should open a long term buy forex signal here?
It surely looks very tempting, but the problem is that we´ve come back here quite quickly, which means that the sellers are very active on this forex pair. Besides that, the buyers might get cold feet after fighting off so many attempts by the sellers to break 110.
Risk/reward ratio is great down here, we have to place SL a dozen pips below 110, while the TP target must be at least 100 pips.
The odds of us taking a shot at this opportunity are equal to staying on the sidelines, but if we don´t, then this is another trade idea which you have to make the decision for yourself, guys. So, what is it going to be?