Last week I had a short play on EUR/JPY that didn’t pan out too well. In hindsight, it was definitely a good idea to go short, but on a longer term basis with a wider stop. So, we’re going to jump back into this pair, hoping we’re getting in at the beginning of a larger move. Now, I like a short play here for a few reasons.
- The COT report has been showing an extreme oversold position on the Yen for a few weeks now. All the sellers are in the market, so who’s left to sell?
- In price action, we’re seeing lower lows, and a strong break of a previous support level.
- The better than expected Capex report (18.4% versus a consensus of 15.0%) sparked a rally in the Yen, which may continue as traders come back from holidays and vacations to bring liquidity to the market.
So, here are a couple of short ideas, and since I may turn these into longer term trades I will have a wider than usual stop.
Short EUR/JPY at 149.10, stop at 149.50, pt1 at 148.90, pt2 at 148.50
Short EUR/JPY at 148.30, stop at 148.60, pt1 at 148.10, pt2 at 147.80
We do have event risk at 4:00 am EST and 5:00 am EST with the release of Euro PMI and Euro Retail Sales respectively. Please be very cautious and stick with the stops recommended.