Pick of the Day: EUR/JPY – Trade Closed

Trade Closed: 2007-02-22 17:25

It looks like it was all about the carry trade today as the Yen continued to sell off through out the day against all the of the majors. Our position in EUR/JPY kept going up, but unfortunately, we were short on the pair. So, we were stopped out for a minor loss of -48 pips.

1st half: -33 pips
2nd half: -15 pips
Total: -48 pips

Trade Idea: 2007-02-22 09:15

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EUR/JPY is looking a bit oversold at the moment as it has made a run up from 156.21 and now finding resistance at 159.00. It may be time for traders to take some profits off the table. From here we may see a retracement back down to 158.50 before carry traders jump back on the boat.

On the chart, we see resistance from 159.00 as the pair has touched it twice before. RSI and Stochastics. Fundamentally, we saw weak components in German GDP and a better than expected Japan Trade Balance, so there is a short-term bearish bias on the pair right now. So here’s a short trade idea:

Short half position EUR/JPY at market (currently 158.92), stop at 159.25, pt at 158.55

Short half position EUR/JPY at 159.10, stop at 159.25, pt at 158.80

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

Good luck and good trading!

  • mdetlh

    Hi,
    I’m developing a philosophy with the yen, sell it til it’s worthless, except in the USD/JPY. Won’t the carry trade rule in all the other majors while the BOJ takes a gradual approach. My general approach is developing into buy/sell the interest rate favorable major out of the pair. With the commodities rebounding the best place for shorting the pair is AUD and NZD, CAD too?. While these these pairs are part of the carry trade, don’t expect to see too much USD headway as American investors swing more USD into these currencies as more officials warn about the trade. The Europeans while complaining about the BOJ need to ask, “Where’s the sushi?” about a real interest rate hike that will kill this type of trading that they dread. Only option volatilities may indicate a reversal, which 4cast news service does not see happening as of Thursday or Friday of last week.

  • mdetlh

    OOps
    Not shorting the pair but best place for shorting the yen may be in the commodity currencies, AUD, NZD, CAD

  • mdetlh

    Hi,
    I’m developing a philosophy with the yen, sell it til it’s worthless, except in the USD/JPY. Won’t the carry trade rule in all the other majors while the BOJ takes a gradual approach. My general approach is developing into buy/sell the interest rate favorable major out of the pair. With the commodities rebounding the best place for shorting the pair is AUD and NZD, CAD too?. While these these pairs are part of the carry trade, don’t expect to see too much USD headway as American investors swing more USD into these currencies as more officials warn about the trade. The Europeans while complaining about the BOJ need to ask, “Where’s the sushi?” about a real interest rate hike that will kill this type of trading that they dread. Only option volatilities may indicate a reversal, which 4cast news service does not see happening as of Thursday or Friday of last week.

  • mdetlh

    OOps
    Not shorting the pair but best place for shorting the yen may be in the commodity currencies, AUD, NZD, CAD