I shorted GBPJPY from 21EMA on H4 yesterday.
It was a good spot trade.
If you are trend traders, you should continue to short from 21EMA (Daily, H4, H1 charts).
However, let’s zoom out, and see the bigger picture to see where we are.
The above is the weekly chart. Obviously something is going on at 170.00 level. Also the price is touching 200 EMA now, while Stochastic is in Oversold zone.
Thus I am not 100% positive to short this pair.
What’s more, on H4 chart, I now see Bullish divergence on Stochastic. I know I know. The price is still under 21EMA right?
Yup. Of course you can sell from 21EMA again. Nobody would blame you.
However, I love Stochastic Divergence as much as I love 21EMA.
So I could consider to buy this pair.
On M15, the price formed Double Bottom and the price jumped up to the next resistance (170.30 ish) while Stochastic has crossed down to Normal trading range (75%).
Thus I may consider to buy this pair from Fib38.2-61.8%, when Stochastic start the next up cycle.
Stop should be below Double Bottom (168.75).
Hope you find this setup interesting.
YJ Baik – Forex.Today @ Tokyo