Is SGDJPY finally ready to tilt south?

While our previous trade idea: NZDJPY thankfully invalidated itself (on the 7^th Dec) before we entered the trade, the SGDJPY, in our opinion, is looking good for a long-term sell – even if it is going against the seasonality....after all, nothing works the whole time and seasonality too has proven that.

Damned if we use the seasonals as a reason not to get into a trade and it goes in our favour – damned if we use it and it supports a trade decision which goes against us. 

Either way, Wednesday’s bearish pin bar reversal on the daily of SGDJPY rejecting the 69.40 level has not seen this price extremity since May 2010, where it last met and rejected sharply, signifying this is a strong zone of supply where bears will be creeping back into the market. Price action has not been above this level since 2008 so technically we can call it a ‘hard level’.

So, we took the break of Wednesday’s low with a stoploss above the high. The reward to risk makes sense to, with a target at 64.47 – three quarters to the bottom of the range. 

Trading the bounce short in this instance will be more lucrative than trading the breakout long.