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Japanese Yen Recent Price Action; Technicals and Fundamentals in Agreement
Japan intervened into the forex market on Wednesday for the first time in six years, they did this by buying dollars to weaken the surging yen that is harming Japanese manufactures like Toyota and Sony after the yen spiked to 15-year highs.
Taking a look at the recent price action in the GBPJPY we can see a fakey / pin bar combo setup that formed Tuesday. This price action setup showed rejection of support near 128.00 and also a false break of 3 inside bars that preceded it.
Most traders would not have taken this setup simply because it was counter to the recent bearish momentum. However, the setup was valid counter-trend setup due to the simple fact that it formed at a very significant support level. The fundamental news out of Japan on Wednesday set off a huge 500+ pip run up that made trader’s who took this price action setup some serious pips.
This is a clear case of the technicals tipping traders off to a strong move based on fundamental data. Can we say that the technicals ALWAYS predict the fundamentals? Not really. But, this is a clear demonstration of why it is pointless to try and analyze all the fundamental factors when you can simply look at a price chart and read the price action instead.
GBPJPY:
EURJPY:
The EURJPY recent price action also gave traders a good chance to take advantage of today’s aggressive price movement. We can see an inside bar setup that formed just above support near 106.00, price then drifting slightly higher over the next couple of days and then yesterday it formed a bullish pin bar candle just before today’s huge bullish move as a result of the fundamental data out of Japan.
To find out more about price action trading and how to successfully trade price action setups in the forex market check out my forex trading course.
howtoconfidence said,
April 27, 2012 @ 11:59 pmNice Graphic really great author and really great video