Double zero and round number.

When trading intraday, it is impossible to look for bounces off every support and resistance level. Trading of psychological level such as double zero or round numbers is one way of identifying such opportunities.

The double zero represent where the last two digits are zero. For example, 90.00 in USDJPY or 1.2800 in EURUSD. Round numbers are currency that have zero for the last digit such as 90.80.  The “80” and “20” round numbers are minor level, which means the support (or resistance) they create is not as solid as the “00” and “50”, but they are relevant, nonetheless. Careful placement of stop loss and profit target orders at round number and double zero levels enables the trader to execute trades with a strongly positive risk/reward factor.

For the past few months, USDJPY have many times bounces off from the double zero support and resistance. We could notice that the bounces from the double zero level have a bigger bounces and much more relevant than rallies off other areas.

Why are such double zero level have more bounces?

Market participants as a whole tend to put conditional orders near or around the same levels while stops loss orders are normally placed beyond the double zero or round numbers. Traders will cluster their take-profit orders at the double zero or round number. The reason why this occur is because traders are human, and human tends to think in round number. As a result, take profit order have a very high tendency of being placed at the double zero level.

The psychological round number or double zero levels have great significant if they coincide with a key technical level. Therefore the strategy tends to have an even higher probability of success when other important level converge at the figure, such as moving average, pivot points, fibo levels and Bollinger Band.

We refer to the chart below.

On the 12^th, USDJPY close above the open- daily white candle and above the pivot point. This indicates a possibility of bullish sentiment on the 13^th. It is also widely believed that the earlier week moved in Asia will be reversed by the end of the week. As early in the week, USDJPY was in the downtrend, Thursday and Friday it is expected that the cross will be moving upward. I am expected that on the 13^th, the price range will be the low  at S1 or pivot point with the high R2.

On the 13^th, early Japanese session market went southward after the doji evening star formed late in US session. The fall was supported at  pivot point (the magenta line) at 00:15 GMT and at round number of  90.50. The 15 min Stealth LCD indicated a buy (green color) at 00:30 GMT. The immediate target is at 31.8% retracement at 90.75 but with a bullish sentiment price could touch the 50% retracement at 91.08 which is near the double zero level of 91.00.

Using the above information, my early morning session my 1 min scalp netted about 35 pips.

For American session I make a preparation to enter the market at 14:00 GMT when USDJPY touch the lower uptrend channel at price above the round number 91.20. I was waiting price to breach 61.8% retracement and the S1 to initiate my long position. At 14:15 GMT price went above those level and I entered long at 91.45. My target is at S2 at 91.89. USDJPY do touch the double zero level of 92.00 and than bouncing between 91.80 - the 76.4% retracement, the S2 level and 92.00 for five hours before closing the market for the week.