The Dilemma With Technical Analysis- USDJPY This is the dilemma with technical analysis, here we have a situation where we have technicals supporting a move upward and downwards. This situation is very common with technical analysis, in most cases there are technicals supporting both the bulls and the bears and hence making decisions solely based on technicals is 50/50 in most cases.
We have the 50 fib bounce and the trend line break suggesting a higher USDJPY while on the other hand we have a head and shoulder pattern and also a 50 fib bounce suggesting a lower USDJPY. So which way will the market move?
This is where knowledge of the fundamentals will prove beneficial, analyzing the fundamentals can help in deciphering which way the market will most likely go. Understanding what is driving the USDJPY and what the market is currently focused on combined with the technicals is one of the safest ways to trade.
Now for this trade if you are trading based on the technicals it would be best to wait for the USDJPY to break above or below the broken lines in the chart before looking to place a trade. If you understand how to read volumes then you can base your entry on signs of supply/demand.
