Cross-Eyeing: EURJPY – Trade Closed

Trade Closed: 2009-10-30 17:30

crosseyed chart

EURJPY couldn’t find a bid today as sellers came in and pushed the pair lower throughout the three major trading sessions on concerns the economy wouldn’t be able to sustain itself once stimulus is withdrawn. This reduced the demand for riskier plays, and pushed EURJPY lower – eventually finding a bottom for the day around 132.30. My first and second profit targets along the way.

1st Half: +150 pips
2nd Half: +280 pips
Total: +1.43% gain

Looks like I got a bit lucky and was able to end the week strong on a return to risk aversion in the financial markets.

It’s the weekend now so it’s time to take a break, but on Monday I look for new entry points to jump in the new found risk aversion sentiment. Until then, thanks for checking out my blog and have a great weekend!

Trade Idea: 2009-10-29 12:45

crosseyed chart

Looks like some nice price action in the currency markets today as the first read of third quarter GDP during the morning US trading session. Expectations were for a read of around 3.1% growth, but actual numbers came in at 3.5%. This brought back the “recovery story” into traders minds and pushed risk tolerance higher.

In my opinion, this is another opportunity to jump into the recent downtrend we saw in EURJPY and over all risk tolerance sentiment. Third quarter GDP is in the past folks, and what I see in the future is a US government between a rock and a hard place. They either spend more money to hold up the economy, which increases the deficit and pushes the US that much closer to bankruptcy, or they stop stimulus programs at a time when jobs and consumer spending levels are not yet strong enough to sustain the economy. Much more recent data like housing and consumer confidence is a better gauge for what is happening now and in the near future – and it’s not looking to good. Again, just my humble opinion.

So, we see a nice retracement of about 50% on the one hour chart, and stochastics are indicating this fast move may be a bit overdone. I like a short term trade, probably won’t hold this longer than a day or so, going short in the area between the 38% to 61% Fibonacci retracement levels. My stop will be 150 pips (daily average true range) and I will ultimately target the previous swing lows just below 133.00. Here’s what I am going to do:

Short EURJPY at market (135.60), stop at 137.10, pt1 at 134.10, pt2 at 132.80

Remember to never risk more than 1% of a trading account on any single trade. Adjust position sizes accordingly.

Quite a few bits of data in the Forex calendar to get through before the end of the week, including Tokyo CPI, as well as some Eurozone inflation data. Stay tuned and thanks for checking out my blog!

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  • shjalilian68

    Hello, It seems wave 4 in 4 Hr chart is forming, if so we can not expect price action under 133.00. So use trend line from 129.00 to 132.80 then you can find where to close your trade. Therefore there is other opportunity to trade in long side just above the trend line. Good Luck

  • shjalilian68

    Hello, It seems wave 4 in 4 Hr chart is forming, if so we can not expect price action under 133.00. So use trend line from 129.00 to 132.80 then you can find where to close your trade. Therefore there is other opportunity to trade in long side just above the trend line. Good Luck

  • Cyclopip

    Thanks for checking out my blog and for your views shjalilian68 – much appreciated! It’s definitely nice to get everyone’s opinions on the markets, whether agree or disagree. We all can use different perspectives. Good luck to you as well!

  • Cyclopip

    Thanks for checking out my blog and for your views shjalilian68 – much appreciated! It’s definitely nice to get everyone’s opinions on the markets, whether agree or disagree. We all can use different perspectives. Good luck to you as well!

  • fed

    first entry is hit and form here on it is a free ride. usd/jpy had a similar set up as well, I don’t if you guys took the trade or not but it was also a great trade to be on as well…

  • simonjf77

    Great set up so far, Pt1 just been hit. Thanks

  • PipEater

    Hello visionary :) , how you doing!? Which parameters do you set for stochs? Nice trade so far!

  • fed

    first entry is hit and form here on it is a free ride. usd/jpy had a similar set up as well, I don’t if you guys took the trade or not but it was also a great trade to be on as well…

  • simonjf77

    Great set up so far, Pt1 just been hit. Thanks

  • PipEater

    Hello visionary :) , how you doing!? Which parameters do you set for stochs? Nice trade so far!

  • Cyclopip

    Thanks for the comments! My stochastic settings are 14,3,3. I hope that helps.

  • Cyclopip

    Thanks for the comments! My stochastic settings are 14,3,3. I hope that helps.

  • Pipster4lyphe

    This was an excellent trade set up…I went on it the day before…but didn’t wait till the mkt bounced…so I was stopped out…however I gained from your trade idea…thanks for the hard work…By the way…do you think risk aversion is back and do you expect the pair to trend lower. Based on my weekly chart a nice bearish engulfing pattern has formed and I believe that’s the end of the short term uptrend and the mkt will reverse at this point and con’t on it’s long term downward trend. On the H4 it has also broke the upward trend and that to me is a good sign of a reversal. So I’m looking forward to your next post to see if we’ll be on the same page.

  • Pipster4lyphe

    This was an excellent trade set up…I went on it the day before…but didn’t wait till the mkt bounced…so I was stopped out…however I gained from your trade idea…thanks for the hard work…By the way…do you think risk aversion is back and do you expect the pair to trend lower. Based on my weekly chart a nice bearish engulfing pattern has formed and I believe that’s the end of the short term uptrend and the mkt will reverse at this point and con’t on it’s long term downward trend. On the H4 it has also broke the upward trend and that to me is a good sign of a reversal. So I’m looking forward to your next post to see if we’ll be on the same page.