Nice Downtrend for USDJPY

Welcome to the brainyforex newsletter special commentary.

This week we take a look at USDJPY

In our forecast for USDJPY we believed that price would continue lower as long as the natural square level of 96.00 was not breached to the upside. Refer forecast Forecast USDJPY

The 2 day swing chart shown by the arrows, shows downward zig zag wave. We wanted price to break below the 96.00 natural square level. This would further show that price was weak. This did happen on the 23rd June.

USDJPY Daily Chart 24 June 2009, showing 2 day swings.

We now turn our attention to the '1 day swing chart' or 'every swing'. We see additional swing points shown by the arrows. See chart below.

Of interest is the 50% level shown at 'C'. Half point between A and B. This level based on the last swing of the 1 day swing move. WD Gann would go short at this 50% level when he was trading with the 1 day swing chart.

Notice too that this 50% level is also the natural square level of 96.00. We now have an additional pressure point, indicating that we have the odds in our favor that price will not exceed the 96.00 level. Notice that the odds are in our favor, it does not guarantee that price will not exceed this level. WD Gann's approach was not 100% accurate. Nothing out there will be or has been 100% accurate.

I have also checked the higher time frame charts and can see that on the weekly chart the vibration level is broken to the downside, indicating further price weakness.

I will now go and place my short order with a protective stop at 97.00. I will move this stop loss lower at the end of each day assuming it is not triggered.

Price is currently at 96.27, which means I will place a conditional short order to be picked up ONLY IF price moves down to 95.80 within the next day or so. If price keeps moving upwards at this stage my conditional order will not be activated as I do not want to place a short order above the 96.00 natural square level.

USDJPY Daily Chart 24 June 2009, showing 1 day swings.

Next week we will see if the trade was successful or not?