Cross-Eyeing: EUR/JPY Testing Former Channel Support? – Trade Update

Trade Closed: 2010-12-09 02:20

EUR/JPY 4-hour Chart

It turns out that it was a good decision on my part to move my stop to my initial entry point (110.70) when I had the chance. The yen has taken some hits across the board, while the euro has regained its bearing the past couple of days. Apparently, the news that Hungary may be in trouble wasn’t enough to send the the euro lower.

The pair has now broken past the resistance at 111.00, as well as the potential neckline of the inverse head and shoulders formation. I wonder if that 50% Fib is gonna hold. In any case, this trade is done for me.

Adjusted stop loss hit at 110.70.

So, a lil disheartening after being up most than 100 pips on this trade, but I guess breakeven is better than losing. No harm, no foul. Time to move on and find another trade!

Trade Update: 2010-12-07 01:20

EUR/JPY 4-hour Chart

Price tested the channel support and 38.2% Fib level several times, and luckily for me, it held pretty nicely. After dropping strongly yesterday, EUR/JPY seemed poised to finally break through key support at 110.00. However, that doesn’t seem to be the case now, as the pair has popped up a little bit, and Stochastic has just crossed over. Could this be making a new move up?

With that said, I am a little concerned, especially with the ECOFIN meeting due to start today, as well as the Ireland’s scheduled release of its budget plans.

Honestly, I am very bearish on the euro. It turns out that Hungary, even though it ain’t even part of the euro zone, may also need a bailout (it’s part of the EU). In addition to that, word is that the IMF will be pushing European leaders to add to the EFSF program, just in case more bailout funds are necessary.

While this may be taken as a sign that the IMF believes that a larger economy like Spain may need a bailout, it could also be a move to help ease market tensions. After all, that was what EU and IMF officials had wanted to do when they first presented the EFSF program. They didn’t exactly think that after Greece, another nation would need a bailout. But we all know how that story ended (or rather, on going).

In any case, we could be in a for a wild ride this week, as the markets have been acting very weird. I want to avoid getting chopped up, so I’m going to make a trade adjustment. I’m moving my stop to my original entry point at 110.70. This means that I have no risk on the table, while I could benefit if the markets react negatively to the ECOFIN meeting or Ireland’s budget plan release.

So for now, I just gotta wait and see how the markets react. If you guys have any open positions, be careful trading this week!

Trade Idea: 2010-12-02 21:25

EUR/JPY 4-hour Chart

Raaaawwrrr!!! I’m extra hungry for some pips this week! Since I canceled my last trade and it has been an eternity since my last Thanksgiving dinner, I decided to play it big with EUR/JPY.

The euro enjoyed a nice boost from the markets over the past couple of days on a slight improvement in risk appetite. Too bad that the European Central Bank‘s press conference yesterday is turning out to be a game-changer for the euro! Aside from keeping its interest rates steady at 1.00%, the ECB decided yesterday to continue its stimulus measures. This signals to me that the ECB recognizes that there is still weakness in the euro zone.

In my opinion, I think that sovereign debt fears are still weighing heavily in the markets, and the recent rebound by the euro was merely a retracement. That’s why I’m still looking to short the euro, despite its nice run the past two days.

For the technical hoopla of my trade, my single eye zoomed in on the sweet-looking Fibonacci action. The 38.2% Fibonacci retracement level and former channel support seems to be holding, Stochastic is in the overbought region, and there’s a tight bearish divergence on the 4-hour chart. I shorted at market, baby!

The 112.70 handle 200 pips away is my game-over level since it’s above the 61.8% Fib. I plan on closing half of my position at 108.40, right around the previous low. I will let the remaining half ride and use the Fib extension tool to help me spot a nice area to get out.

So here’s the gameplan:

Short EUR/JPY at market (110.70), stop loss at 112.70, take profit at 108.40.

This leaves with a more than 1:1 reward to risk ratio, with potential to make even more. As usual, I’ll be risking 1% of my account on this trade, so even if things don’t work out, it won’t hurt (too much). Besides, you know what they say – you gotta risk it to get the bunnies. Hey, don’t judge – that’s just who I am!

Anyway, I’m catching the Cavs – Heat game right now. Pretty intense, with all the police escort s and what not. Clearly, Cavs fans are still hurting from “The Decision.” I wonder though if its one that Lebron will end up regretting.