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In addition to my regular analysis of different pairs and the Indian markets, from time to time I'm going to post various references to my methodology. There are a couple of points I want to make:
1. It is not designed to get anyone to copy any part of my methodology, but is designed as a learning tool for newbies, as well as a possible means for a dialogue with everyone. OTOH, if there are parts of my methodology that you would find beneficial, then go for it. My thing is I want all to be sure it is correct for them on a personal basis, and not just because it was copied.
2. The first time around I started a thread for TL's and another for requests. I'm going to try and eliminate that, and make this thread the place to post all of my personal material. After all my methodology is what makes my forecasts. Also, I don't think I need to go to another thread for a market someone wants me to forecast
Now on to the USD/JPY with respect to the TL.
My platform is pretty much loaded up right now. I have a long on the EUR/CHF and will be adding to it, and will be adding the USD/CAD to the mix once the week starts. The USD/JPY is something I am looking to for a short, and it should be ready once my other trades run the gamut.
Notice how the USD/JPY broke the blue (daily) TL. Once a TL has been broken there is a strong breakout move that accompanies it. What is going to happen is that we will get a move back to at least the point it was broken, which is 80.44. This is a point where there tenken and kijun will effect the move but not contain it because of the rules of the TL. Once arrived there, then it reverses back in the trend and most likely goes lower than the low already established.
Here's another point. Many people like to trade breakouts. After all, who would not want to participate in that long candle that broke the TL and the subsequent one. The question is, what if the the candle that broke the TL was only a spike, then quickly reverse and took off north? How would anyone have known the next candle would have made the powerful move it did? This is the kind of stuff that e-books are sold on, but pips are not made.
The rule of the TL is a sharp break through it, then price corrects back to at least the point of the break, and then reverts back to the trend.
Do you see the advantage. This gives the trade time to set up for the position. Here's the test. Set 80.44 to go short on your demo, then go back after it was hit and see the result.
The big difference is that with calmness you wait for the setup then initiate your position. The other way is the anxious moment of chasing the break, jumping in, and hoping it was not just a spike through.
