Before you take a look at this beautiful setup, I suggest y’all check out my introductory post on the Weekly Winner to guide you with my trading framework.
July 18 to July 22, 2011: EUR/JPY Price Action Review
At the start of the week, the euro was still weak and limping about as sentiment for the shared currency was still bearish in light of the euro debt crisis. But as the week wore on, the market gradually stabilized and turned in favor of the euro.
Thursday was when the euro really picked up its game. After dipping back down to the WO on poor PMI data, the pair headed skywards faster than you can say “Pop goes the weasel!” A broad risk rally ensued as a result of the EU’s pledge to create a European Monetary Fund as a permanent solution to its debt problems, which helped ease investors’ concerns.
Needless to say, EUR/JPY, which is often considered a barometer of risk, popped up and rose about 200 pips within a span of 24 hours.
And catching that big move up is that’s exactly how we could’ve made a killing last week.
All the signals were there. We had Stochastic showing a slight bullish divergence, and price had just formed a solid long-legged hammer above the WO and 111.50 minor psychological handle. All we had to do was go long at the WO (111.60), use a 50-pip stop, and aim for the upper WATR or 113.00 major psychological handle, and we’d have a quick 3:1 reward-to-risk ratio trade in the bag!
See, sometimes patience does pay off. There wasn’t really much we could’ve money on earlier in the week, but all that changed on Thursday. If we had caught this single move, we would’ve been done for the week, and laughing straight to the bank, too!
So did any of y’all get a piece of the euro’s bull run last week? What cross pairs are you eyeing this week? Hit me up with some comments below or on Facebook and Twitter and maybe we can get a brainstorming session going. Peace out and thanks for following, hommes!