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Trade Closed: 2009-12-03 15:50

crosseyed chart

As we can see from the chart above, resistance at previous support and the falling trendline was short lived. Japanese Yen weakness was spurred by the announcement from the Bank of Japan of a 10 trillion-yen credit program. WTH! It was only a day before when Prime Minister Yukio Hatoyama didn’t think further monetary policy easing was needed. Shows how quickly situations can change in a recession!

EURJPY pretty much straight shot it to my entry point, then stopping out my position at 133.45.

Stopped out at 133.45

Total: -175 pips/ -1.0% loss

So, I took a small loss for the week and probably won’t be putting any further orders in as the weekend approaches and US jobs data coming out tomorrow. It could be a doozy of a report and influence sentiment on the crosses significantly. I’m staying away and starting my weekend early! Until next week, good luck and good trading!

Trade Idea: 2009-12-01 21:30

crosseyed chart

Good evening everyone! Volatility is back in a big way after the Dubai debt default scare last week. We saw big moves in the Yen crosses over the last few sessions, with the pair moving down then up to its current levels. Is another move down around the corner?

On the charts, it looks like the upswing in EURJPY may be coming to a close as the pair consolidates around 131.00 after hitting lows around 127.00 last week. It appears that the pair is hitting a previously broken support level – will it turn to resistance and push the pair back down? Stochastics are indicating the pair may be short-term overbought and that buyers have run out of steam. Are sellers ready to take control again?

That may be the case as worries that the Bank of Japan would intervene in Yen appreciation are back off the table, and traders are reminded by the Dubai debt situation that global credit risk is still a reality.

Big moves may be lurking around the corner as we heading into potentially volatile trading session. On today’s Forex calendar, we have eurozone PPI set to be released, which could be a factor in the ECB interest rate decision later this week. Also, US jobs data (ADP employment report and Challenger Job cuts) could affect risk tolerance and push EURJPY strongly if we see surprise numbers.

I like a short trade based on the chart above, but with potentially volatile events coming out later today, I am going to set a conservative trade at the top of the support-turned-resistance area marked by the blue boxes. My stop will be the daily average true range (around 175 pips), and I will ultimately target last week’s low and hopefully take some profits along the way. Here’s what I am going to do:

Short EURJPY at 131.70, stop at 133.45, pt1 at 130.00, pt2 at 127.00

Remember to never risk more than 1% of a trading account on any single trade. Adjust position sizes accordingly.

Thanks for checking out my blog and hopefully I’ll get triggered this time. Stay tuned!

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