April 4 – April 8, 2011 Weekly Winner: EUR/JPY Rocked the Charts!

Looking back at last week’s price action, I see that the best moves came from EUR/JPY. Since I already had a long EUR/JPY trade on, I wanna talk about how I could have used my framework to help me add to my position.

If you aren’t familiar with my framework, I suggest you go through my introductory post to familiarize yourself.

April 4 – April 8, 2011: EUR/JPY Price Action Review

EUR/JPY Hourly Chart

The main theme that everyone focused on last week was what would happen during the ECB rate decision. After consolidating and finding resistance at the psychologically round 120.00 mark, EUR/JPY broke through and rose more than 250 pips on Tuesday and Wednesday. The pair broke through all key resistance levels (MiPs, MaPs, and WATR) like Lebron James on a fastbreak. It seemed like everyone was pricing in a rate hike and expecting more hawkish comments from the ECB.

So what happened once Thursday rolled around? EUR/JPY dipped a little bite on not-so-hawkish comments by ECB President Jean-Claude Trichet, who didn’t commit to further rate hikes down the road. We also saw a small round of risk aversion as Japan got hit with another earthquake. But these losses were erased on Friday as overall euro strength and yen weakness sent the pair to as high as 123.00. Overall, the pair rose nearly 300 pips from its weekly opening price of 119.82.

After reviewing the past week’s price action, I see that I could have used my framework to help me find two good entry spots to add to my position.

First, I could have added on the break of 120.00 since this seemed to be a strong resistance point. I missed out on adding on the break of this level — had I went long at 120.20, I probably would be up another 1% right now.

The second setup was probably more legit, as it was a retracement setup. This would have been a higher probability trade because:

  1. the pair hadn’t really retraced much over the past two weeks
  2. and bullish divergence had formed.

Looking at the chart, you can see that EUR/JPY struggled to move past the 38.2% Fib (which lined up with the top WATR and served as good support) and the 50.0% (which coincided with the psychological 121.00 level).

This shows that the framework isn’t only helpful for finding intraweek setups, but it can also be used to help add to established positions, allowing me to find better entry points.

Hopefully, my EUR/JPY trade works out well. I’ll hit y’all with another update soon! If you have any questions about my trades or my framework, you can also hit me up on MeetPips.com, Facebook, or Twitter!

  • Packygee

    are you still holding on? i made the biggest mistake of my career by getting in today. Went long this morning at 123.80 and decided to risk way too much. Cross is looking way way overbought and im hanging on by a thread. Currently appears to be consolidating on a down channel on the 15 minute chart. pray it jumps up, im down like 80pips. boo hoo….

  • 010beto010

    did u mean to write at 122.80?? If you look at the chart on the 4hr or the 240, It’s definitely an uptrednd that shows no signs of reversal..I wanted to go short below 122.05, however, it seems to me like it’s heading back up..The MACD is not showing a down trend and the EMA’s were barely and not any longer..If you haven’t dropped your pips, maybe hang on to them and you might very well make your money back..

  • Packygee

    are you still holding on? i made the biggest mistake of my career by getting in today. Went long this morning at 123.80 and decided to risk way too much. Cross is looking way way overbought and im hanging on by a thread. Currently appears to be consolidating on a down channel on the 15 minute chart. pray it jumps up, im down like 80pips. boo hoo….

  • 010beto010

    did u mean to write at 122.80?? If you look at the chart on the 4hr or the 240, It’s definitely an uptrednd that shows no signs of reversal..I wanted to go short below 122.05, however, it seems to me like it’s heading back up..The MACD is not showing a down trend and the EMA’s were barely and not any longer..If you haven’t dropped your pips, maybe hang on to them and you might very well make your money back..

  • Packygee

    @beto heres what happened and yes i meant 123.80. Last night after killing a 30 stone with some of my friends, i decided to throw 50% of my margin at eurjpy going long. It dropped a good 120 pips today and almost wiped me half clean. Im on my ipad right now and cant view the charts but i believe on the daily stoch, i saw an extreme overbought signal. Now in my drunken stuper, i might have been completely wrong. Anyways its a demo account so not a big deal. Haha

  • Packygee

    @beto heres what happened and yes i meant 123.80. Last night after killing a 30 stone with some of my friends, i decided to throw 50% of my margin at eurjpy going long. It dropped a good 120 pips today and almost wiped me half clean. Im on my ipad right now and cant view the charts but i believe on the daily stoch, i saw an extreme overbought signal. Now in my drunken stuper, i might have been completely wrong. Anyways its a demo account so not a big deal. Haha

  • Cyclopip

    @Packygee

    Nah, my adjusted stop was hit when the pair dipped down yesterday. It happened right after I added my fourth position, too! Luckily, my other positions were well in the green by then so I was still able to walk away with a handsome return. I’ll update y’all on what happened in a while.

    Sad to hear about your trade, buddy. Maybe next time you’ll think twice about trading under the influence! Haha

  • Cyclopip

    @Packygee

    Nah, my adjusted stop was hit when the pair dipped down yesterday. It happened right after I added my fourth position, too! Luckily, my other positions were well in the green by then so I was still able to walk away with a handsome return. I’ll update y’all on what happened in a while.

    Sad to hear about your trade, buddy. Maybe next time you’ll think twice about trading under the influence! Haha

  • ariahills

    I was very encouraged to find this site. I wanted to thank you for this special read. I definitely savored every little bit of it.

  • ariahills

    I was very encouraged to find this site. I wanted to thank you for this special read. I definitely savored every little bit of it.