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Trade Closed: 2011-05-18 02:00

Ack. Well that didn’t go well. My trade got bashed from both sides of the equation!

EUR/JPY 1-hour chart

The euro was a lot more resilient than I thought it would be. Even with the ZEW economic survey falling well below forecast, it managed to march on up! I guess the sharp euro selloff we’d seen in the past few days called for a bigger retracement than I had anticipated.

As for the yen, well, it caught me off guard with how puny it was yesterday! BOJ Governor Shirakawa, I’m blaming this on you! If you hadn’t made such pessimistic remarks about the economy, the yen probably wouldn’t have weakened so much.

After price popped up and broke the WATR, 115.50 resistance, and falling trend line, I was stopped out at 115.97. In EUR/JPY’s wake, I also found this staring me in the face:

P/L: -50 pips / -1.0%.

Drat. That makes it three losses in a row for me. I think I may need a bit of help getting out of this rut. If you have any trade ideas involving crosses, I’d really appreciate it if you throw ’em my way. Just hit me up with some comments below or through Twitter and Facebook. Thanks, fellas!

Trade Idea: 2011-05-17 02:35

EUR/JPY 15-min chart

Just like that, EUR/JPY is now hitting the top WATR! In my experience, it’s rare to see the pair approach the top or bottom WATR so early into the week, especially since we haven’t seen any catalysts drive the market.

I think we may see a reversal at this point. Looking back, the 115.50 area held as strong resistance over the latter half of last week. In addition, Stochastic is also showing overbought conditions, so sellers may jump in soon.

I’ve already shorted at 115.47. I’ve set a tight stop of 50 pips since this is just a day trade and I’m aiming for the 114.50, near the day’s open.

We do have some event risk later in the form of the German ZEW report coming out in a couple of hours. Expectations are that the report will come in at 4.8, which still indicates optimism.

One thing to note though is that the report has failed to hit expectations the last three months and has been on a steady decline. I wouldn’t be surprised if we see today’s report come in worse than expected and see a ton of euro selling!

Again, here’s the game plan:

Short EUR/JPY at 115.47, stop loss at 115.97, take profit at 114.50.

This should get me a decent 2:1 reward on risk, which ain’t too shabby for a day trade. Hopefully everything pans out well for me. I’ll give y’all an update tomorrow on how my trade goes. Peace!

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