Short

CADJPY - Overshoot Ratios Short

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This is happening now, but i'll open the thread here so you can see where it was and i'll update shortly. Its right in the fibs here.

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Ok so here is a minor top and I have entered a short position at the close of the wicked retracement candle hitting 0.618. Its just shy of 0.74 long term retracement and also a bit more shy of 1.13 extension that I set as a limit for expected overshoot. I did think it would hit but seeing the fast breakdown structure I have entered here instead.

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Formed a contracting capitulation pattern and fell through 5min 20MA

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Now rejected from 1:0.618 extension.

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JPY futures up 1% today.

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Big bounce here and could see a higher high, this is somewhat to be expected trading the reversal on such a long trend. That said I think it will top here in the 107-108 area.

Just as I'm writing looks like it may be reversing. Interesting a previous retracement topped at 0.81 which is quite high. Perhaps it will happen again.

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Also this is not advice. I'm just showing my trade live. Trade at your own risk.

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If it can break below the 1:0.618 and the 5min 100 MA then a lower low should be coming, if not then perhaps a distributive UT UpThrust is coming. Either way this is building downside cause and I will hold my position.

Also following the bounce there is now also possibility that this can become a larger contracting breakdown pattern. Lots of possibilities, will wait and see.

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Upper has now become supply trendline. If it breaks expect a bounce, if not then obviously it will fall.

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5 min dump pump happened in all JPY pairs. I though that only happens in crypto 😄.

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Ok so in a nutshell - what I'm doing now is i'm using fibonacci ratios to make target price bands.

Longer range fibs such as the yellow fibs taken from significant pivots from 2016 2017 and 2020 show the approximate range where in this instance phi - 1.618 is the anchoring fib, but this will unlikely be the topping area. 1.786 sets the lower band and 1.89 sets the extremity. Anything above 1.89 and then 1.618 was probably not the correct anchoring fib. So that sets the longer range.

Then taken from within the trend from the lows I have a band of 3 extensions. The first is the 1:1 and just like the long range 1.618 it is unlikely for the trend to top there, but because it is of shorter range it is closer to my banded area where I expect the reversal to happen. And then 1:1.13 sets the approximate top of where I would like to trade. This is the extension equivalent of magic number 0.75 retracement if you follow my ratios on other ideas. Then at the top there is the 1.174 which sets the extremity for that fib and it is similar area to long range extremity.

Then the next shorter range is the 1:0.618 from within the trend. And this lands right in the middle of my preferred area for reversal that I've highlighted green. There is no overshoot ratio currently as it is short range and also I havent worked out if I need an overshoot ratio yet.

Then you can see 0.72 and 0.76 set the 2007 high to 2009 low. Its not exact, sometimes FX can reverse at 0.7, sometimes 0.77 but generally they tend to reverse in this area I have found, assuming it is a retracement. On a longer time frame once it starts moving above 0.76 then the odds start to favour that its not a retracement and its heading for the highs.

And so I've highlighted green and red. Green is probable reversal area according to the fibs, but considering the resistance it was more likely to probe above. The Red area is still ok, but moving above not so much.

Ideally it will top at 1.13 or slightly higher to have less stop area.

Its a work in progress.

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And it may probe up to that 1.13 still or higher, this is not at all concluded yet.

But looking at the monthly RSI it is the highest reading ever and so I think i've got my fibs correct. We'll see.

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From here all kinds of shenanigans can happen and I have to sleep, and thats why I like this ratios method. Hopefully it will work out like my Natural Gas trade. That said good chance it breaks the top I think, but there will be enormous downside if I'm correct here so I will hold and it is good RR. Currently above 0.81 and so it will probably break the top at some point although ascending channel is bearish. I could close here but who knows what can happen while i sleep. These tops are designed to shake you out and so I will stick with my method and we'll see.

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Well this was pleasant to wake up to.

The bounce upward collapsed before the top which is quite unusual to get as high as 0.95 but not go higher - that could be considered an early LPSY Last Point Of Supply.

Then the collapse prints the 3 candle Evening Star Pattern to fall back through the supply trendline back under 1:0.618 and now for the first time under long term resistance from the 2007 high.

Through the (my) night there have been shakeout reversal patterns both through the supply trendline and the lower trendline which once passed became the Demand trendline.

Now that it has fallen below the long term resistance there is a high probability this is the top I think, however it can still bounce and even find a higher high, but I will be holding my position regardless as described before unless it exceeds my red band.

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Worth noting also that 6J1! is just about to touch a low from 2002 which is also just shy of a 1:0.618 extension from the top, so could be a bounce coming which would of course be good for this trade.

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💖

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Tumbling down and now just printed this big star on the 1H chart and there is enormous volume here. Should be quite a lot more downside before a bounce I think.

Either way I am just holding my position long term.

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Well bounce it did and now heading for the supply trendline. Same as before - if it breaks it then expect a decent bounce, if not then not. But for me this is a long term hold so im not messing around for a few pips. I will just hold unless I get stopped out as described before, but dont think that will happen now. We'll see what happens next week.

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This is where you decide your strategy because the supply line has been cross and this could go all the way back up to resistance @ 106.515. But yet it is potentially the top of a mountain. I'm holding, hopefully in a year or so i'll close it.

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CADJPY has bounce into SRZ shakeout reversal zone up to 0.786. If it goes higher then I will start to question whats going on but for now its a typical crash structure.

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6J1! has now passed support and in hitting the 1:0.618 extension will most likely form an SRP shakeout reversal pattern back above support. Could drop a bit more first though, but then expecting a real bounce.

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Also 1M RSI hitting 17 is ATL.

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6J1! has had an impulsive bounce from under 1:0.618 and long term support back above to potentially print a SRP. Descending channel is corrective so momentum may be switching to the upside. I'm expecting a big bounce sooner or later and that should so CADJPY fall. 6C1! also looking bearish currently but not in such extreme circumstance as the Yen.

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Well... CADJY came back a long way. The ratios have been quite unusual in this up-move I have plenty of notes to take. Anyhow more importantly 6J1! is bottoming and a big bounce is coming that will be realised in MASSIVE downside for CADJPY.

And so right here would be a good entry however we got in at the top so not to worry !

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I wanted to hold this one but the yen has capitulated through the 1:0.618 down 0.75% in just a few hours so I exit with small profit

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It makes no sense to hold and "see how it goes" after a capitulation through a fib like this and could be a long way down from here.

As for the fibs I think they did find a top of a significant wave and time will tell but there may be another wave up.

Nothing lost and small gain anyhow and I'll watch and see how things develop.

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After a long time out of position i've re-entered CADJPY today.

The Yen looks like its bottoming and see my thread on it. I did enter USDJPY but i've decided its just too risky and CADJPY seems to be the safer play. Aim is as before to hold a very long time.

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