Technical Analysis: Identifying a sustained uptrend in USD/JPY on the daily chart. Bearish Engulfing Pattern: Observing a bearish engulfing pattern where a larger bearish candle fully engulfs the previous smaller bullish candle, signaling a potential trend reversal. Execution:
Entry Point: Initiate a short position (sell) after the confirmation of the bearish engulfing pattern. Ensure the second candle closes below the low of the previous bullish candle.
Stop-Loss: Set a stop-loss order just above the high of the bearish engulfing pattern to manage risk in case of a false reversal.
Take-Profit: Establish a take-profit level based on a risk-reward ratio, targeting a recent support level or using technical analysis tools like Fibonacci retracement levels.
Risk Management:
Position Size: Determine the position size based on the percentage of total capital at risk. Avoid risking more than 1-2% of the trading capital on a single trade. Monitoring: Regularly monitor the trade for any signs of reversal failure or unexpected market events. Additional Considerations:
Market Sentiment: Keep an eye on overall market sentiment and potential influences on the USD or JPY. News Events: Be aware of any upcoming economic releases or events that might impact the currency pair. Remember, this is a hypothetical idea, and actual trading involves uncertainties. Always conduct thorough research and consider multiple factors before making trading decisions.
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