Cross-Eyeing: Fib Play on EUR/JPY – Trade Closed

Trade Closed: 2010-10-21 21:10

Fib Play on EUR/JPY

And just like that, I got stopped out on my EUR/JPY trade. Looks like I was wrong as traders saw Tuesday’s drop as another opportunity to buy the euro cheap!

As it turns out, that wave of risk aversion we saw earlier this week had no momentum, as higher yielding currencies have remained steady. With the euro rising across the board, I got stopped out early yesterday during Asian session.

Total: – 78 pips / -1.0%

The markets are pretty wacky right now and it’s keeping me from getting any solid profits. One thing I noticed is that I have lost my last few trades where I have tried to scale in. In the next couple of weeks, I’m going to look to trade shorter time frames and maybe go with some day trading. This should limit my overnight risk and hopefully, I can grab some pips.

That’s all for now. Thanks for reading my blog and I’ll catch y’all next week!

Trade Idea: 2010-10-20 04:08

Fib Play on EUR/JPY

China’s central bank officials surprised the markets yesterday by raising interest rates. Nobody expected this as the markets saw that last week’s move to raise reserve requirements was all the PBOC would do. Well, apparently not. I guess they have been reading the Art of War again. Ha!

Traders reacted to the news by closing off their positions in higher yielding currencies like the euro and bought up safe havens like the dollar and the yen. Could this be a turning point and will risk aversion take over?

Well, I’m willing to take some risk so I can get the biscuit!

After hitting a peak earlier this month at around 115.50, EUR/JPY has given back some of its gains. If you ask me, this could be a top in the making and I’m looking to get in on a retracement.

I popped up the Fibonacci retracement tool to find a sweet entry spot and I see that the 38.2% and 61.8% Fib levels line up with former support levels at 112.40 and 112.85. The 112.40 price level also happens to lineup closely with the daily pivot point, so we may find resistance at all these areas.

I’ve placed my stop at 113.40, which is way past the 61.8% FIb level, while I’ll be aiming to take profit at today’s lows at 111.60 and beyond.

Now, I ain’t too sure if I’ll get triggered on this trade, but with PMI reports coming out from the euro zone tomorrow, we may see enough volatility for my trade to get triggered.

Again, here’s the gameplan:

Short EUR/JPY at 112.40 and 112.84, stop loss at 113.40, take profit at 111.60.

As usual, I’ll be risking .50% on each of my positions. Hopefully I come out of this trade smoking hot like the Texas Rangers pitcher Cliff Lee!

  • mennzz

    I think that EUR/JPY will reach 113.20 and then continue downwards till 110.30, which on the daily time-frame, if it reaches 110.30 would be a bullish Fibonacci retracement on the daily time-frame. After the retracement, it would probably continue upwards till 119.32 or higher and then make a another Fib retracement.

  • mennzz

    I think that EUR/JPY will reach 113.20 and then continue downwards till 110.30, which on the daily time-frame, if it reaches 110.30 would be a bullish Fibonacci retracement on the daily time-frame. After the retracement, it would probably continue upwards till 119.32 or higher and then make a another Fib retracement.