Another Trade Idea

There is one set-up I like to call crocodile claws: it is when a price is stuck between 21MA and 50MA or 50MA and 200MA. One is above and another is below or vice versa. Then a price breaks out of crocodile claws and flies away to freedom, to express metaphorically. In terms of direction of the flight, it is either continuation or reversal or flat L. You can see and trade this set up at any time-frame. But it is always good to use this set up in conjunction with some other signal to get the odds on your side.

Four chart of EURJPY shows that the price is 150 pip consolidation range while daily chart of EURJPY shows that it is capped by 50MA from above and 21MA from below. Finally, daily downtrend line has been broken, which by itself is not necessarily a trading signal but at least markets are giving us a cue. Thus, we are getting enough confidence that this pair looks like set up for the upside.

Trading wise, the safest way is to wait for the pair to close above the range (4h chart). Aggressive stop loss is 105.50 and conservative stop loss is 105.00. If it breaks to the upside, the pair may stall at 1.0750/60 level and even fall back down. Should that happen, one has to view it as an opportunity to buy more. The first target is 109.00.

However, if this pair falls back down from the range, it is more likely to fall to 103.50 if not 102.60. But beware, 10460/70 level, where daily 21MA or 4 hourly 200MA (red) are, will act as a support. Then, the price first falls to those moving averages, bounces back to the range where a short can be initiated, and then it falls back down. Daily close below 21MA will confirm the move down.