We’re back to another wonderful week of forex trading, but unfortunately, it’s going to be a short and possibly boring one. We have a light economic release schedule this week, and with the US markets on vacation from Thursday on, we will probably see low volatility and maybe a spike here or there…pretty much tough trading conditions. Don’t worry though, I’ve managed to come up with any idea or two this week, and for tonight we will be taking a look at EUR/JPY.
We have a couple of events this evening which will hopefully cause a stir in EUR/JPY. First, we have the release of the Bank of Japan meeting minutes at 12:00 am EST. There is speculation that the minutes will show no hurry for the BOJ to raise rates and that the Yen will weaken leading up to the report. This may setup a classic “buy the rumor, sell the fact” trade if the pair reaches the previous high near 151.70.
Also, ECB Pres. Jean-Claude Trichet will be speaking later today, in which he may reiterate the ECB’S idea that higher borrowing costs are needed to keep inflation in check.
So, we have a couple of fundamental reasons for the pair to drift higher. So, we will have a sell order at 151.70 for this possibility.
Of course, we will have a long trade ready in case the pair drifts lower in which it may meet resistance or reverse at the 151.00 – 151.10 area. This would be a good long area as the pair is showing higher lows on the longer term charts. We may possibly get in an uptrend at a good price.
If either trade is triggered, please close the other entry orders to avoid the open position closing
Long EUR/JPY @ 151.10, stop @ 150.90, pt1 @ 151.30, pt2 @ 151.65
Short EUR/JPY @ 151.70, stop @ 151.90, pt1 @ 151.50, pt2 @151.30
By the way – there’s an article on the current low volatility environment in the forex market at
DailyFX. It’s definitely an eye opener and gets ya thinking on what may lay ahead for us in 2007. Check it out!