Touchdown baby! Close Trade: 2010-01-28 22:03
Good day everyone! It was a really good trading day for me since I caught a bunch of pips on this EURJPY short trade. My two entry points got triggered right after the release of the German unemployment change, which printed better than expected results. The pair did retest the falling trend line, right at my second entry order at 127.00.
However, thanks to the resurfacing of Greece’s debt problems, risk aversion remained the dominant theme in the market action, pushing the safe-haven JPY higher. Aside from that, strong economic reports released from Japan also pushed the EURJPY towards the 125.50 level. Although deflation was still a cause of concern for the Asian nation, an improvement in labor conditions and in consumer spending were reported.
Now, if only the Saints could pull of another miracle next week at the Superbowl. I have faith in them. Peyton Manning? WHO DAT!
Profit targets hit at 125.35.
1st half: +110 pips / +0.44%
2nd half: +165 pips / +1.18%
Total: +280 pips / +1.62%
Trade Idea: 2010-01-27 21:14
Now, I’ve got my one good eye locked onto the EURJPY. The pair has been bouncing around the past couple of days and it looks like I’ve got an opportunity to jump in the recent downtrend. I popped up the Fibonacci tool and saw that the 61.8% Fibonacci retracement level intersects with the falling trendline. I’ve placed a short order here. However, I also notice that price seems to be consolidating just below the 38.2% Fibonacci level, which just happens to line up closely to last week’s low. Support turned resistance perhaps? I’ve decided to jump the gun and put half my position here as well.
I put my stop loss at 127.70, which is way above the trend line. If prices reaches this high, it would invalidate my trade idea. I’m aiming for the recent swing low, so I’ve placed my take profit at 125.35.
Fundamentally, we seem to be in the middle of a major “risk” battle. We saw this in the last couple days when a wave of risk aversion came crashing down on the markets, helping the dollar and the yen push the euro to new yearly lows. In fact, as I am writing this, the euro just sunk under 1.4000 against the dollar…
Euro zone is just simply plagued with problems, most notably the problem of uneven growth. While some nations are clamoring for a tightening of monetary policy, others want the ECB to keep rates low. Investor confidence has been dropping consistently, with the ZEW economic expectations posting a lower reading month after month. There was also the news that one ECB member believes that an unwanted rally in the euro’s value could prove hazardous to the ongoing growth and recovery in the euro zone.
Although Japan isn’t doing very well either, it seems that currency traders prefer the yen to anything else during these times of uncertainty. It has been on a good run since the beginning of the year, posting significant gains against the dollar, the pound and the euro.
To summarize, here is my master plan -
Short 0.5% of my account balance at 126.45 and another 0.5% at 127.00, stop loss at 127.70, take profit at 125.35