Ah, the power of confluence!
We were watching this confluence of resistance on EUR/JPY on the blog mid last week and I wanted to bring it back up again:
EUR/JPY Daily Chart
Here you can see the higher time frame confluence of resistance that I’m talking about on the daily chart. Price has not only hit the pretty obvious trend line resistance, but also the horizontal resistance zone.
Both are pretty obvious levels, with the trend line resistance speaking for itself and the horizontal zone formed by a retest of previous swing lows.
Moving to today’s start to the week, we can see that the level held:
EUR/JPY Hourly Chart
From here, I just wanted to highlight a few things with the 2 markings on the chart.
1. While price pulled back above the little swing high, the higher time frame resistance still held. This shows the importance of trading in the direction of the higher time frame level.
2. Now that the higher time frame level has been reactivated and has held, we look to trade short term pullbacks into previous support turned possible resistance. This is a nice area of interest.
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