Price Action Setups – GBPUSD, USDCHF and USDJPY

by Justin Bennett  · 

May 19, 2014

by Justin Bennett  · 

May 19, 2014

by Justin Bennett  · 

May 19, 2014

The market has been fairly indecisive lately, and today was no exception. With these market conditions, the best decision can often be to stay on the sidelines and wait for a clear signal.

Although today was quiet, there were a few interesting moves today…

The GBPUSD has struggled over the last two sessions to close above the 1.682 level and today’s price action formed a bearish pin bar. This may look tempting to trade, however there are a few reasons why I’ll remain on the sidelines at least for now.

  1. The risk to reward ratio isn’t favorable considering the next potential support comes in at 1.676
  2. The overall trend is still up
  3. The tail of the pin bar is too small relative to the surround price action

If the market does rotate lower to the 1.676 level, it might provide a good area to look for price action buy signals.

gbpusd daily chart

The USDCHF continues to hover around the .892 level since forming the bearish pin bar last week. At this point I’m not overly convinced that the market is going to rotate lower, at least not significantly. The market is looking well supported at the moment.

I wanted to highlight both pin bars that have formed at this level recently to point a couple things out. Notice how the market dropped fairly quickly after forming the first pin bar had formed. This bearish signal also occurred at trend line resistance from July 2013, adding additional confluence to the trade.

The second pin bar also formed at the .892 level, however the market has since broken through the trend line. Furthermore the market has been hovering at this level over the last two sessions. Not only has it been hovering, but each of the last two sessions has closed near the high of day.

This isn’t to say that the second pin bar won’t play out. But the trade setup does begin to lose some steam for every day the market closes around this level. Of course every trader has their own threshold when it comes to this.

gbpaud daily price action chart

The USDJPY made a scramble to close above the 101.40 level today. Although we did get a bullish pin bar out of today’s price action, the lower highs as illustrated in the chart below aren’t so convincing that a significant push higher is on the horizon.

I’ll be on the sidelines to wait for a better signal…

gbpaud daily price action chart

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  1. Hi Justin Bennett Your yesterday USD/JPY chart impress me too much but I have little confusion,
    That is it was not range trade setup and bullish pin bar candle was in bottom of range.

    Here is my chart screen short Thanks

    1. Thanks for your comment.

      This pin bar wasn’t a valid setup for me because the pair had been making lower highs as illustrated by the chart. USDJPY has also been “hugging” that lower support for weeks. All in all, recent price action for this pair hasn’t look very constructive, despite the bullish pin bar.

      I was just pointing out the pin bar because it occurred at a key level. However there wasn’t enough confluence to call it a valid setup…at least not for me.

      Hope that helps.

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