Cross-Eyeing: EURJPY – Trade Closed

Trade Closed: 2009-12-03 15:50

crosseyed chart

As we can see from the chart above, resistance at previous support and the falling trendline was short lived. Japanese Yen weakness was spurred by the announcement from the Bank of Japan of a 10 trillion-yen credit program. WTH! It was only a day before when Prime Minister Yukio Hatoyama didn’t think further monetary policy easing was needed. Shows how quickly situations can change in a recession!

EURJPY pretty much straight shot it to my entry point, then stopping out my position at 133.45.

Stopped out at 133.45

Total: -175 pips/ -1.0% loss

So, I took a small loss for the week and probably won’t be putting any further orders in as the weekend approaches and US jobs data coming out tomorrow. It could be a doozy of a report and influence sentiment on the crosses significantly. I’m staying away and starting my weekend early! Until next week, good luck and good trading!

Trade Idea: 2009-12-01 21:30

crosseyed chart

Good evening everyone! Volatility is back in a big way after the Dubai debt default scare last week. We saw big moves in the Yen crosses over the last few sessions, with the pair moving down then up to its current levels. Is another move down around the corner?

On the charts, it looks like the upswing in EURJPY may be coming to a close as the pair consolidates around 131.00 after hitting lows around 127.00 last week. It appears that the pair is hitting a previously broken support level – will it turn to resistance and push the pair back down? Stochastics are indicating the pair may be short-term overbought and that buyers have run out of steam. Are sellers ready to take control again?

That may be the case as worries that the Bank of Japan would intervene in Yen appreciation are back off the table, and traders are reminded by the Dubai debt situation that global credit risk is still a reality.

Big moves may be lurking around the corner as we heading into potentially volatile trading session. On today’s Forex calendar, we have eurozone PPI set to be released, which could be a factor in the ECB interest rate decision later this week. Also, US jobs data (ADP employment report and Challenger Job cuts) could affect risk tolerance and push EURJPY strongly if we see surprise numbers.

I like a short trade based on the chart above, but with potentially volatile events coming out later today, I am going to set a conservative trade at the top of the support-turned-resistance area marked by the blue boxes. My stop will be the daily average true range (around 175 pips), and I will ultimately target last week’s low and hopefully take some profits along the way. Here’s what I am going to do:

Short EURJPY at 131.70, stop at 133.45, pt1 at 130.00, pt2 at 127.00

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

Thanks for checking out my blog and hopefully I’ll get triggered this time. Stay tuned!

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10 comments

  1. Nibilly

    Hi Cyclopip, first off I’d like to thank you for your wonderful insights into the world of currency trading, it truly is of great help to us novice traders. I was reading through some of your previous entries, and am just wondering where do you get all your information for your fundamental analysis? Currently I am just reading Reuters and keeping an EYE out for the major news events from forexfactory.com – do you have any other recommendations?

    Reply
  2. Nibilly

    Hi Cyclopip, first off I’d like to thank you for your wonderful insights into the world of currency trading, it truly is of great help to us novice traders. I was reading through some of your previous entries, and am just wondering where do you get all your information for your fundamental analysis? Currently I am just reading Reuters and keeping an EYE out for the major news events from forexfactory.com – do you have any other recommendations?

    Reply
  3. nbernal

    Hi again Cyclopip, Thank you for your brilliant posts. You called the GBP/JPY going to 150.00 (now at 149.00) from the bottom you called, 140.00. Doesn’t the EUR/JPY follow the GBP/JPY? They both went up. You have given me a general idea of what’s going to happen, and it always does. Maybe not on your exact number, but you know your FOREX. Looking forward to your next post. Thank you so very much.NB

    Reply
  4. nbernal

    Hi again Cyclopip, Thank you for your brilliant posts. You called the GBP/JPY going to 150.00 (now at 149.00) from the bottom you called, 140.00. Doesn’t the EUR/JPY follow the GBP/JPY? They both went up. You have given me a general idea of what’s going to happen, and it always does. Maybe not on your exact number, but you know your FOREX. Looking forward to your next post. Thank you so very much.NB

    Reply
  5. NutterButter

    It looks like the initial entry was a good one. From the green candle that breaks higher, if you go three to the left you have a shooting star which was a nice bounce off that resistance from the down trend line -very clean. The next two candles are hanging men and then you have the move higher. My thinking is that with the shooting star you have a nice short term level of resistance to trade from in the event the trend line does not hold. The top of that shooting star marks a swing point for the down trend so a break higher is a collapse of the trend thus a higher high at that point. This would definitely entice buyers, at the very least wake them up. Would it not then be better to reverse your position at this point? The signal that short positions are drying up seems fairly strong in that when the breaking green candle closes it has now broken the trend line and is sitting at the top of the gravestone from three candles ago. A follow through in the price there would trigger all sorts of buying and a clear target now on the buy at the location of the upper red line. The previous trend line and short term support gives you a new place to put a stop and you have opportunity now to at least recoup your minimal loss from the short and then in this case make some profit. The overall risk of 175 pips can be turned around and put into the new long position. Just my thoughts about strategy.

    Reply
  6. NutterButter

    It looks like the initial entry was a good one. From the green candle that breaks higher, if you go three to the left you have a shooting star which was a nice bounce off that resistance from the down trend line -very clean. The next two candles are hanging men and then you have the move higher. My thinking is that with the shooting star you have a nice short term level of resistance to trade from in the event the trend line does not hold. The top of that shooting star marks a swing point for the down trend so a break higher is a collapse of the trend thus a higher high at that point. This would definitely entice buyers, at the very least wake them up. Would it not then be better to reverse your position at this point? The signal that short positions are drying up seems fairly strong in that when the breaking green candle closes it has now broken the trend line and is sitting at the top of the gravestone from three candles ago. A follow through in the price there would trigger all sorts of buying and a clear target now on the buy at the location of the upper red line. The previous trend line and short term support gives you a new place to put a stop and you have opportunity now to at least recoup your minimal loss from the short and then in this case make some profit. The overall risk of 175 pips can be turned around and put into the new long position. Just my thoughts about strategy.

    Reply

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