In USD/JPY analysis at first I would like to discuss H4 timeframe. After the shake-out which was also a stopping volume for mark-down movement, the price started to move sideways within trading range. This was a wide trading range. Therefore trading strategy was to wait price reversal near the resistance/support of the trading range and open a trade after the necessary signals from VSA setup. With VSA and Reversal indicators it is very easy to find a good entry and exit place. This pattern has been valid for 2.5 months until we had very strong signal (Major Demand) + Reversal signal. As a result there was a break-out from this trading range.
More recent picture we can see in M15 timeframe. Now the price has drawn two key levels:
- Long term support – on the above picture you can see how this support was established after several strong signals detected by VSA indicator. What is more important – the support has already shown itself twice when the price turned direction near this line (every time we had strong signals before price reversal).
- Long term resistance – this is the level which has also shown itself. Very remarkable setup here – up-thrust, which was also a stopping volume for mark-up movement. The up-thrust is a wide spread up-bar on very high volume which closed on the lows. The high of this bar is slightly higher than previous top (not shown in this picture). Weak Holders went long in this point and smart money used this liquidity to open short positions. VSA indicator also detected a very weak signal (Major Supply) on this bar.
Look carefully when the price is approaching these levels. VSA and Reversal indicators will help you to understand next price movement.