Cross-Eyeing: EUR/JPY – Close Trade

Close Trade: 2009-07-24 15:18

Good afternoon friends! While we didn’t see much of a push higher in EURJPY this week, it has gained a bit as traders have focused on the the idea that fundamentals are getting “less bad.” Are we at the end of the recession? Is it time for a recovery?

I don’t know, but it looks like EURJPY bears didn’t have a chance as investors decided to come back into the markets and buy riskier assets. My short play triggered at 133.45, came close to stopping out, but managed to come back down below 135.00.

Since it’s the end of the week, it’s time to close out my position for a small loss to avoid weekend event risk.

Close at market 134.65.

Total: -120 pips/ -0.55% loss

EURJPY is looking a bit toppy here around 135.00, so I think I’m going to sit back for a minute and watch where the markets take us before jumping back in. Earnings season in the US is making price action a little more erratic in the global, so it may be a good idea sit back and wait for earnings season to pass before making longer term swing trades. Shorter term ideas may be the way to go for now. That’s friends. Thanks for reading my blog. Stay tuned and have a great weekend!

Trade Idea: 2009-07-21 16:38

crosseyed chart

Are we seeing a shift in EURJPY? We may be as the pair has broken a rising trendline on the one hour chart. Is this a false breakout or a sign that the pair will move lower?

It is a pretty simple setup as the break lower indicates that sellers are beginning to take control as the rising trendline failed to hold. The break was fast and strong, and came after testimony from US Fed Chairman Ben Bernanke testified that the economy is showing “tentative signs of stabilization.” There were no mentions of an “exit plan” as some have speculated, and Bernanke also stated that dangers still remain and that a sustained recovery has not taken hold.

Traders took this as a sign to take a bit of risk off of the table as equities sold off and bonds rose. Risk tolerance also took a hit today as CIT Group takes the spotlight once again as a company that may be of systemic risk to millions of businesses around the US. Finally, the fact that earnings have been positive on cost cutting and not revenue growth may finally sink into investors that earnings may not be as rosy in the third and fourth quarter.

So, I continue to remain bearish on the economy until we see not just a bottom, but a new trend towards growth in jobs and housing prices. I believe risk aversion is slipping back into sentiment, and with this trendline break, there are indications both technical and risk sentiment pointing towards a move lower in EURJPY.

Since the move was fast, I think we may see a retracement before a move lower. I drew a Fibonacci retracement tool on the chart, and we can see potential resistance area between 133.20 and 133.70. This also happens to line up with last week’s high around 133.50, which has been an area of minor support and resistance since then. I’d like to go short around there and my stop will be above this week’s highs and the average daily range for EURJPY. My ultimate target will be in the area of last week’s lows around 127.00 Here’s what I am going to do:

Short EURJPY at 133.45, stop at 135.65, pt1 at 131.25, pt2 at 127.00

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

My stops are wide and profit targets are huge, so I may be riding this one for a while. Let’s see how it goes. Stay tuned and good luck!

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  • egg

    all the best, ill be watchin to see how you go.

  • pipsprof.

    Hello Cyclopip,This is a very good call,however the retracement might find it difficult getting to your entry level,why not sell @133.20,SL @135.20 and TP@127.00, we just risk 200pips and our stop is well above the last downtrend line from 139.22.and also the rising uptrend from late Jan@112.06,this way,we are sure of getting into the market at a fair price,Thanks for all your hardwork,pls i want to know if Happypip lady [Comdols] trade her blogs live,her results are very poor,and not encouraging for newb’s.Hope we win this trade

  • cyclopip

    Thanks for the comments guys! pipsprof – I usually scale in orders at all three fib levels, but for simplicity for this blog, I use one simple entry order.

    Happypip does trade live, and yes her blog results have been poor lately. We stay pretty busy watching our own accounts amongst other things, so most of our trades don’t make it onto the site. She has great ideas, but she’s just run into bad luck as many of her losers are posted on here. We’ll push her to do a bit better ;)

    Remember, we post for educational purposes and to share what we’re thinking and how we look at the markets in hopes it helps you find your own way. Good luck and good trading!

  • egg

    all the best, ill be watchin to see how you go.

  • pipsprof.

    Hello Cyclopip,This is a very good call,however the retracement might find it difficult getting to your entry level,why not sell @133.20,SL @135.20 and TP@127.00, we just risk 200pips and our stop is well above the last downtrend line from 139.22.and also the rising uptrend from late Jan@112.06,this way,we are sure of getting into the market at a fair price,Thanks for all your hardwork,pls i want to know if Happypip lady [Comdols] trade her blogs live,her results are very poor,and not encouraging for newb’s.Hope we win this trade

  • cyclopip

    Thanks for the comments guys! pipsprof – I usually scale in orders at all three fib levels, but for simplicity for this blog, I use one simple entry order.

    Happypip does trade live, and yes her blog results have been poor lately. We stay pretty busy watching our own accounts amongst other things, so most of our trades don’t make it onto the site. She has great ideas, but she’s just run into bad luck as many of her losers are posted on here. We’ll push her to do a bit better ;)

    Remember, we post for educational purposes and to share what we’re thinking and how we look at the markets in hopes it helps you find your own way. Good luck and good trading!

  • pipsprof.

    Thanks,Big Cyclopip.My trade has already triggered and price is sort of consolidating now,forming a pennant on the H4 chart.I can see the pair dropping forcefully southwards after this consolidation phase.I plan to adjust my stop once I get 150pips to breakeven and trail my stop with 150pips.Would want to trade a bit conservatively.I just noticed that happypips problems include following the noise in currency pair while ignoring the bigger pix,not correlating Gold and Oil prices with her currency pair.At times oil will be busting a major uptrend line downwards and Happypip will be buying Aud/USD,relying solely on her technical setup.I hate criticising,in order not to discourage her,thats why i never comment directly on her blog.I learnt from the best,I learnt from you.Thanks

  • pipsprof.

    Thanks,Big Cyclopip.My trade has already triggered and price is sort of consolidating now,forming a pennant on the H4 chart.I can see the pair dropping forcefully southwards after this consolidation phase.I plan to adjust my stop once I get 150pips to breakeven and trail my stop with 150pips.Would want to trade a bit conservatively.I just noticed that happypips problems include following the noise in currency pair while ignoring the bigger pix,not correlating Gold and Oil prices with her currency pair.At times oil will be busting a major uptrend line downwards and Happypip will be buying Aud/USD,relying solely on her technical setup.I hate criticising,in order not to discourage her,thats why i never comment directly on her blog.I learnt from the best,I learnt from you.Thanks

  • camelman

    Hi Cyclopip, Just wondering what dealer you are using because my stop was triggered at GFT at 135.65
    Should I check on the price and dispute it?
    Thanks

  • Cyclopip

    The market barely hit 135.65 and not for very long. So, depending on which banks your broker/dealer trades with, the liquidity, how many buy orders they had at that price, and where you were in the order flow, you may or may not have been triggered.

    It wouldn’t hurt to call and ask….

  • camelman

    Hi Cyclopip, Just wondering what dealer you are using because my stop was triggered at GFT at 135.65
    Should I check on the price and dispute it?
    Thanks

  • Cyclopip

    The market barely hit 135.65 and not for very long. So, depending on which banks your broker/dealer trades with, the liquidity, how many buy orders they had at that price, and where you were in the order flow, you may or may not have been triggered.

    It wouldn’t hurt to call and ask….

  • JohnStarlo

    After all is said and done i think its clear to see the short is coming for the pair, look at the indicators.

    I think short unit at 136.25 with stop at 136.90 is a very goog trade.

    I just start to follow your blog so I’m waiying for a possitive trade.

    Do you have a particular time of the day that you make your post?

  • JohnStarlo

    After all is said and done i think its clear to see the short is coming for the pair, look at the indicators.

    I think short unit at 136.25 with stop at 136.90 is a very goog trade.

    I just start to follow your blog so I’m waiying for a possitive trade.

    Do you have a particular time of the day that you make your post?