Close Trade: 2010-01-15 3:42:07
Whoa! Things were looking fine and dandy when price shot up from my entry point. And then the US retail sales were released last night and came out worse than expected. It triggered a sell off in the USDJPY pair, which brought other yen pairs along for the ride!
Things were made worse when a head and shoulders pattern developed on the 4-hour chart. Needless to say, price action eventually broke through the neckline and last week’s low. I think it’s time to close shop and cut my losses.
Cut losses at 130.62
Total: -138 pips/ -0.69% loss
Trade Idea: 2010-01-12 21:48
Good evening forex folk! After a month-long vacation, I’m back and ready to trade! Looking at the EURJPY chart, I noticed that the yen rallied strongly against the euro yesterday due to China’s additional contractionary policy measures. Investors moved to the safety of the yen as China aimed to dampen excessive lending in their economy. As a result, the EURJPY dipped by more than 200 pips! This move, however, could be overdone already.
Based on the chart above, I’ll be taking a long EURJPY trade. There appears to be a lot of interest around the 131.50 price area, which lines up closely with last week’s low. Stochastics are in the oversold territory, indicating that this recent down move may be overdone. Not to mention, price action is nearing the bottom weekly average true range. With a couple of long-legged dojis forming on the 4-hour chart, could we be in line for a reversal?
That could depend on today’s release of Germany’s annualized real GDP growth for the period ending December 31. Germany’s economy is projected to post a dismal negative growth of 4.8% during 2009. Of course, we could be in for an upside surprise here since Germany, along with France, was one of the few countries to escape the recession during the second quarter of 2009. Germany recorded a 0.4% growth during the second quarter and a 0.7% expansion in the third.
With the ECB rate decision coming out tomorrow, I’m going to set a wide stop loss (between 150 and 200 pips) just in case we see some volatile movement. My first take profit point will be near this week’s high at 134.00, ultimately targeting previous highs at 136.00. Here’s what I’m going to do:
Long EURJPY at market (132.00), stop at 130.00, pt1 at 134.00, pt2 at 136.00
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. Stay tuned!