Shorting the Falling Trend Line on EUR/JPY – Trade Closed

Trade Closed: 2012-01-20 01:37

EUR/JPY 4-hour Chart

Who would’ve thought that the euro would perform the way it did this week IN SPITE of rising concerns and threats to the euro zone and the euro?! They’ve been saying that a Greek default is inevitable and that the ECB will have to ease its monetary policy further, but even with all that, the euro was able to score wins four days in a row! !@#$%!

Oh well, that’s just how the cookie crumbles I guess. The previous week low (PWL) and the weekly open (WO) that I marked out earlier this week in the Weekly Watch turned out to be the low for the week. Sadly, all this euro bullishness caused EUR/JPY to break its long-term falling trend line and kill my trade.

Stopped out at 99.00: – 116 pips / -0.75%

On a more positive note, I think I did a good job in placing my stop loss. It took a while for price to tap the 99.00 handle and it actually consolidated just below that level for about half a day.

Anyway, I’m not gonna let this loss get the best of me. After all, I’m still positive for the year. Of course, it helped that I limited my risk exposure on my two losing trades. It just goes to show that you don’t necessarily need more wins than losses to stay in the green. Proper risk management can do wonders for your account!

Thanks for following and enjoy the weekend, fellas!

Trade Idea: 2012-01-18 01:35

EUR/JPY 4-hour Chart

Even with the euro’s resurgence yesterday following better-than-expected ZEW results, I can’t look past all the mounting problems that the euro zone is encountering. It’s a bigger stinker than a Lebron 4th quarter “performance!”

Just last Friday, the S&P downgraded FIVE EU members. That’s more than one for each finger on my hand! Meanwhile, cat calls for a Hungarian bailout are getting louder, while Greece is also in talks with private holders regarding its debt. I think the threat of an imminent Greek default may easily spark another round of euro selling.

Looking at the charts, we can see that EUR/JPY has been on a nice downtrend ever since it spiked up to as high as 111.00 last Halloween. After consistently making lower highs and lower lows, the pair is now sitting over 1,000 pips lower!

With the pair now close to the falling trend line, I’ve decided to give it a shot and shorted at market!

Short EUR/JPY at 97.84, stop loss at 99.00, take profit at 96.00 (tentative).

Like last week, I’ve decided to scale down my risk a bit, and will be risking just 0.75% of my account on the trade.

I’ve put my stop at the 99.00 handle, because if price reaches that point, it would most likely signal that we’re about to see a larger retracement and it would be time to get out.

As for my profit target, I’m currently aiming for the 96.00 handle, which lines up with the bottom WATR.

Of course, anything may happen, so I’ll be ready to adjust should circumstances change.

What do you guys think? Will the downtrend on EUR/JPY continue?


  • George Mavreas

    I am very afraid of the Bank of Japan intervantion. They talk about it very often lately.

    • Costarica

      honestly man..i’m not worry about BOJ..but more worried about other’s national bank..

  • DanteA31

    Another good short by this simpleton analysis which most are a bust. 

  • Craig N.

    Hey Cyclopip. I find it interesting that you still are expecting the EUR/JPY to drop.. I will concede to your greater experience, for I am still new at this, but I noticed that a few of my indicators are signalling a large retracement.  
    http://i.imgur.com/BTnKO.png
    On the daily chart, it seems like Stoch, RSI, Macd, and Parabolic Sar are all acting like there will be some strong bull action.. Even ADX is indicating the trend is weakening.

    • Craig N.

      Forgot to mention that also the 5 SMA and 10 SMA have made a clear crossover and the 10 SMA and 20 SMA are nearing a crossover.