A bit overdue, but better late than never! It’s about time to update my EUR/JPY day trade, eh?
As I had tweeted, I decided to make some on-the-fly adjustments to my EUR/JPY trade. And boy, did I dodge a bullet by doing so!
Now, there were several reasons why I decided to make changes.
After getting triggered at 111.00 on Thursday, I noticed that price was having a tough time breaking the WO. I knew that for my trade to hit my profit target, this level had to give way.
Also, at that point in time, I was already up quite a number of pips and I didn’t like the ominous higher lows on EUR/JPY’s 1-hour chart.
Furthermore, we were seeing a broad risk rally on that particular day, so I decided to close half my position at a small profit while moving the stop of my remaining position to breakeven.
As it turns out, this was a very wise choice since the price eventually would’ve hit my stop loss had I not made the appropriate adjustments. So instead of crawling away with a 1% loser, I was able to walk away with a little somethin’ somethin’!
1st position closed at 110.82 : +0.25% / +18 pips
2nd position closed at 111.00 : +0.00% / +0 pips
Not bad for a day trade, eh? And well-managed, if I may toot my own horn! Hope you guys were able to make a few pips off of this, too!
Judging by this week’s market environment, I think we could see a lot of ranging, at least until Friday.
There’s a lot of uncertainty surrounding the markets right now, and with the Jackson Hole symposium scheduled on Friday, I don’t think anyone wants to jump the gun and commit to big positions until then.
Remember, the last time finance officials met in Jackson Hole, U.S. Fed President Ben Bernanke hinted at QE2 and crazy moves across the board took place.
Furthermore, the yen has been on a tear as of late, and even the announcement of new plans to curb the yen’s strength doesn’t seem to be having an effect on the markets. It seems to me like EUR/JPY is not destined to rise much higher.
The technical setup on this bad boy is about as simple and clean as it gets. 111.00 has proven itself to be a solid resistance level many times already. As a matter of fact, it was pretty much last week’s high.
So here’s what I’m looking to do:
Short EUR/JPY at 111.00, stop loss at 111.35, profit target at 110.15.
As you can see, this makes for a sexy reward-to-risk ratio of about 2.5:1. I set my stop 35 pips away because the way I see it if the price can tap 111.35, the range will clearly have been broken.
As for my profit target, I’m going for the full 85-pip range and aiming for 110.15. As usual, I’ll be risking 1.0% on this day trade.
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