About Pick of the Day

Each day, I will try to find what I believe is the best looking short term trade setup for the upcoming trading day or week. If you're a forex newbie, it can be tricky in the beginning trying to figure out how to look at charts and draw lines. My goal is help you understand the psychology of price movements so you can learn to analyze your own charts and trade on your very own. I will post my ideas and/or reviews through out each session right here, on Twitter and on Facebook.

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August 2006

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Pick of the Day: EUR/JPY

Posted 19:34 02 August 2006 | Comments

I still like a short play for the simple fact that we have a rate hike decision from the ECB tomorrow morning at 7:45 am EST. A short entry order??? Aren’t you supposed to go long on a currency when interest rates are raised. Well, I’m looking to go short for two reasons:

After the previous rate hike from the ECB the euro actually dropped. This is probably due to traders taking profits from the rise in value leading up to the interest rate decision.
ECB president Trichet is expected to leave the markets guessing on future rate hikes to maintain a gradual appreciation in the euro.

Now, I will also have a long entry order in the highly unlikely case of Trichet coming out with hawkish comments after the rate decision. Well, here we go:

Short EUR/JPY at 145.95, stop at 146.15, pt1 at 145.70, pt2 at 145.50

Long EUR/JPY at 147.10, stop at 146.90, pt1 at 147.25, pt2 at 147.50

Please be cautious for whipsaws around the interest statement. Good luck and good trading!