USD/JPY has been lacking inspiration lately. USD/JPY has been unable to penetrate the resistance trend line formed since 2015. As a result, the market may be trading on its heels for the first part of 2018.
The sentiment reading for USD/JPY is currently +1.5 that means 60% of traders are currently long. Sentiment is a good contrarian signal in that if most traders are long, we will look for a short trade.
The Elliott Wave model we are following illustrates we are in the middle of a zigzag pattern. Under the current pattern, we are looking for price to drop down towards 108 while holding below 114.
Get started learning about Elliott Wave. Grab the beginner and advanced Elliott Wave trading guide
USD/JPY Elliott Wave Count Jan 3, 2018
A nice support shelf has formed at 111.99 on the past three dips (see image below). As a result, we will look to initiate a breakout trade at 111.98 while placing risk on the trade near 113.80. The first target is 110 where half of the trade is closed out. A secondary target is at 108.
If price is successful on reaching 111.00, then we will move the stop loss to break even.
This trade yields a positive risk to reward ratio. Read why that is important in our Traits of Successful Traders research.
New to FX trading? We created this guide just for you.
—Written by Jeremy Wagner, CEWA-M
Jeremy Wagner is a Certified Elliott Wave Analyst with a Master’s designation. Jeremy provides Elliott Wave analysis on key markets as well as Elliott Wave educational resources. Read more of Jeremy’s Elliott Wave reports via his bio page.
Discuss this market with Jeremy in Monday’s US Opening Bell webinar.
Follow on twitter @JWagnerFXTrader .
Join Jeremy’s distribution list.
Recent Elliott Wave articles by Jeremy: