FX Exclusive Trader Cat's Pound-Yen Trade Commentary 0410

Today, since the Western markets are closed, volatility is small and the tendency to range is increasing.

If you enter forcibly in this market, it should be a contrarian trade.

Follow the Band upper and lower limits, or the Grandville's rule with moving averages.

Let’s look at the daily chart.

The middle band is rising to the upside and the price sits above it, so bullish, but the upper band has also started to close following the opposite band. The momentum has completely disappeared.

Let's look at the weekly chart.

The band expansion has not yet closed, the middle band and the moving average angle have not cooled, and the price is below the moving average, so bearish. Moreover, it has pierced the 1-sigma line which can be regarded as a downward resistance. With this chart pattern, there is a high probability of a pullback once. Considering both the daily and weekly charts together makes the next scenario easier to think about.

Next, the monthly chart.

It's hard to get a sense of the direction. Momentum isn't that strong, the moving average angle is gentle, and the previous bar is a pin bar. Volatility hasn't actually expanded either.

4-hour chart

In one word, a grueling range-bound market. The middle band was rising to the upside but flattened, and the expansion failed.

More precisely, about 80% of the market is range-bound, so it's natural that most expansions fail. In this situation, chasing will lead to many losses. In this scenario, the only viable moves are to take profits at the upper band via Grandville from the middle band, or to go contrarian from the upper band. When you're uncomfortable or unsure, waiting is the best option.

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