Pick of the Day: EUR/JPY – Trade Closed

Trade Close – 2007-01-23 11:05:00

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As expected, currencies broke out of their trading ranges today and we managed to catch a reversal with today’s trade. As soon as EUR/JPY hit pt1 the pair shot back up and triggered our break even stop. So, we have locked in 20 pips with half a position and broke even on the other half. Congrats to those who caught some pips!

Trade Update: 2007-01-22 07:49:00

Our short trade was triggered late morning in the Euro session. Our first profit target was hit. Closed half of our position to lock in +20 pips. Moving stop to breakeven on the second half of our position and go for second profit target. Good luck and good trading!

Trade Idea: 2007-01-22 23:49:23

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EUR/JPY has been in a consolidation pattern for quite a while, which is usually a setup for a breakout move. We may see a move pretty soon, especially with the Bank of Japan Meeting minutes coming out at any moment, but with no significant data coming out tomorrow we will look for a range trade instead of a trend or breakout.

If a strong move occurs to the downside, I see it as a good opportunity to jump in this pair – which is trending higher in the longer term – at a great price. The 38% Fib retracement line always makes a great entry point in my book. With fundamentals looking weaker, speculation that the BoJ won’t raise rates is running through traders minds, thus weakening the Yen against most other currencies.

If a strong move occurs to the upside, we may see resistance soon after on profit taking. We’ve seen a pretty good run of the Euro against the Yen, and with Yen futures at an extreme net short again, resistance at 158.00 may spark a short term correction.

So, there’s a couple ways to go with this pair tonight. Here’s a couple of trade ideas:

Long EUR/JPY at 156.85, stop at 156.40, pt1 at 157.05, pt2 at 156.50

or

Short EUR/JPY at 158.05, stop at 158.50, pt1 at 157.85, pt2 at 157.50

Remember to never risk more that 1% of your account on any single trade, so please adjust your position sizes accordingly.

Good luck and good trading!