NZD JPY- ABC SIGNAL GIVEN, BUT TO WEAK TO TRADE
We were a bit tempted to enter long on this pair yesterday when it gave us an ABC Bull Signal above the broken Downtrend Line. This could have been the signal needed to take us up to the Resistance of the Range being formed and capture some Pips in the process. However, like many of the signals in the Forex Market these days, this was too weak to justify taking a position. As such, we will either have to wait for a stronger Bullish signal, or look to another pair altogether.
The last few weeks have seen the pair gradually moving sideways towards the Inner Uptrend Line.
In doing so, the currency pair has moved in waves of Uptrends and Downtrends to slowly form a large Range pattern.
The Resistance has already been formed with only the 2nd Support price point needed to complete the Consolidation. This was expected to be started with a Bull signal to break the Counter Trend Line (CTL), following the break of the Downtrend Line (DTL).
The Bull Candle appeared and broke the CTL setup as expected. Unfortunately, the size of the candle given was below what we are accustomed to for ABC signals and candles in general that start trends. A candle similar to that on the right would have been better and is the type that usually leads to strong breakouts, without hesitation.
ABC setups can be thought of as spring boards- the greater the force applied/the larger the candle, the greater the distance traveled.
DAILY CHART - EURO AUD
If the candle is not strong enough, the market either reverses or provides another setup and signal. In some cases, the market actually moves in response to the weaker signal, but this rarely happens. When it does, the trend tends to be volatile and take a much longer time to reach its target, with unexpected price spikes along the way.
Nevertheless, for those who have chosen to trade this setup, let's hope that I am wrong- for those opting not to trade, let's hope that I am right.
Happy (no) Trading.
RECENT EMAIL FROM CLIENT