Trade Setup for USD/JPY
Smart Money Strategy
The movement from 150.049 (Mar 06) to 147.020 (Mar 09) signifies a potential Market Structure Break (MSB) to the downside, indicating a shift in market sentiment.
Looking at the decline, the level around 150.049 to 150.656 (Feb 29 to Mar 06) could act as an order block or area of interest for potential re-entry.
Based on Seasonal Tendencies, March often witnesses increased market volatility due to fiscal year-end for many companies, especially in Japan. This could lead to larger-than-usual movements in JPY pairs.
Look for a potential retracement back to the order block area (150.049 to 150.656) as an opportunity to enter a short position, anticipating further JPY weakness.
Entry Point
A pullback to around 150.300, mid-point of the identified order block, could serve as a high probability entry point.
Stop Loss
Just above the high of the order block at 150.700 to protect against a reversal in the trend.
Take Profit
First target at recent lows around 147.020, with a further target potentially set at extended levels such as 145.000, observing historical support levels and psychological barriers.
Smart Money Considerations
Prelim Machine Tool Orders
A worse-than-expected figure could further weaken JPY, making the short setup more viable. Conversely, better-than-expected data might cause temporary JPY strength, necessitating careful risk management.
Risk Management
It’s crucial to manage risk, considering the volatile nature of Forex markets. Adjust position size accordingly to ensure the risk per trade does not exceed 1-2% of the trading capital.
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