Buying into the EUR/JPY Uptrend – Closed

Trade Closed: 2013-10-29 3:30 ET

I closed my long EUR/JPY trade for a small gain after the pair failed to break 135.00 and on some recent yen strength.

EUR/JPY 1 hour chart review

EUR/JPY 1 hour chart review

I’ve got the one our chart above (with this week’s updated lines to watch) to show recent price action.  It looks like sellers are back in control after a failed retest of 135.00 and broad yen strength we’re seeing amongst the majors.  For me, it looks like the market may now be in favor of the yen, or may be going into consolidation mode.  Either way, it looks like the strong trend higher may be over for now, which is why I closed manually at 134.48.

Total: +26 pips/ +0.15% gain

The broad yen strength seems to be coming from recent positive Japanese data (employment and consumption data), which lessons the probability of additional stimulus from the BOJ.  This is a short-term game changer, but I’ll still be watching EUR/JPY closely to see if 135.00 breaks or if 133.00 – 134.00 is retest and holds.  Until then, it’s watch mode for now, especially on currency pairs like EUR/AUD and GBP/NZD.  Stay tuned!

Trade Idea: 2013-10-23 4:15 ET

Got a sweet trend setup on one of my favorite pairs to trade forex: EURJPY! Is the Asia session pullback a chance for more bulls to jump in?

EUR/JPY trending higher.

EUR/JPY trending higher.

EUR/JPY has been trending for the past couple of weeks, and it looks like that trend may continue higher on positive risk sentiment currently propping up the markets. This is on the idea that the Fed won’t taper, keeping the same level of liquidity pumping into the market beyond 2013.

At the moment, we are seeing risk-off flows thanks to fresh speculation that China may tighten. This sparked a jump in China’s money-market rates, and a big, broad Yen rally. Since it’s only speculation, I feel this will have a short-term effect, actually giving me a better price to jump in the uptrend. With the market testing the broken resistance area (also Fibs) I decided to go long at market. My stop is below the Fibonacci retracment area and my target is the recent swing high. Here’s what I am doing:

Long half position EUR/JPY at market (134.22), stop at 133. 40, profit target at 135.50

Remember to focus on the process, manage yo risk through correct position sizing, and don’t forget to journal everything you do!

With this trade structure, it’s a little over 1.50:1 potential return-on-risk with only 0.50% risk. I could be wrong that the Chinese rate news is short-term speculative, but if not and the market moves higher I may add to my position if it goes my way.

What do you guys think? Will the trend higher continue on after this pullback? Leave comments below!

  • George

    Hey, what points are you basing your fibs on ?
    I’m currently on my phone with tiny screen

  • George

    Hey what points are you basing your fibs on ?
    on a tiny phone screen here… can’t see the chart!
    looks like a good trade setup 🙂

    • cyclopip

      132.65 to about 132.50. It was a beautiful chart setup, but China data is bringing some unexpected volatility. Probably going to close this ahead of the weekend and reassess next week.

  • Jeff

    Based on the Daily Time Frame, I think you should be net Short. With heavy resistance at around 134.955, price should slowly continue to drop to around 132.00 over the next few weeks.

    I’m doubtful that the spike upwards will be that great. Wait for it and then sell the pair once resistance is encountered.

    • cyclopip

      Thanks for your thoughts Jeff. You’re probably right since we see some stalling now. Gotta give credit to China for pulling some liquidity from the markets. You gonna short here?

      • Jeff

        Yes, it’s very likely I’ll be selling but a move upwards is not out f the question so I’ll wait for now.

        If you draw Fibs between 135.500 (100%) and 133.595(0%), you find that price is finding resistance for the second time at the 61.8 Level which is approximately 134.765.

        I think this forms a small crude double top.

        I’ll be watching the hourly candlesticks and waiting for Stochastics (12,3,3) on the 4H chart to give a clear signal and then I’ll short.

        • Jeff

          I see why you had to close, too little volatility. 🙁

          I ended up selling the GBPJPY instead at 158.190 (50% Fib) so that got me a few pips in. 🙂

  • sherman

    hey cyclops, saw the eur/jpy short forming yesterday. looked really cool as it slowly edged down from its highs.

    “… and down reached “the finger of God”, giving the cyclops a window to sneak away with a bag-o-pips (hopefully!)”

    • cyclopip

      Haha, with the way price action has been over the last two sessions, it probably would take an act of God to walk away with a decent amount of pips (or any) ahead of the weekend.

  • sherman

    Looks like God has favored the cyclops this day!!!!!

    Banzai pips, Banzai!

    • cyclopip

      Looks like it was a quick burst higher. That China news may be a legitimate killer of this trend higher. Looking to close ahead of the weekend. Stay tuned!

  • so we can consider the current uptrend movement in the price right now as consolidation to be able to continue in the uptrend ?