USD/JPY D1 – Bullish momentum might continue - a retrospective d

As these market analysis scenarios are for educational purposes, a previous possible setup will be reviewed.

On 28th of October 2019 a scenario in the USD/JPY currency pair, on the Daily time frame, was discussed where upward momentum was building with a possible new uptrend in progress.

Later the same day the critical resistance level at 108.958 was broken and a long position ensued with possible targets envisioned as well as a possible capital protection level. It is critical to know all these levels BEFORE any position is taken as no one knows what the market will really do. Market structure simply indicated a possible initial stage of a new tend and a calculated risk was taken there.

It is critical that a small percentage of trading capital is used with each calculated risk as this keeps the mental pressure low. Too much mental pressure causes almost uncontrollable emotions that wreaks havoc in trading accounts.

Initially the market moved the position towards the targets but not enough to trigger the first target at 109.399. On the 30th of October a Shooting Star Candle formed, indicating that bullish pressure was not sustainable and for whatever reason sellers were entering the market.

The very next day a surge of sellers flooded the market and the capital protection level was triggered, liquidating the long position and protecting the account from further losses.

We are never ever trying to predict what the market is going to do (the mental ramifications of doing that is disastrous). What we are doing is simply taking a calculated risk when there is an early stage of a new trend. Therefore, it is essential to protect trading capital in case unexpected market movements happen.

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