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Trade Closed: 2009-07-08 13:06

Risk aversion is back in a big way! Commodities and equities sold off during the morning US trading session, and where did all that cash go? Into the Japanese Yen!

The Yen benefited from fears that the economy recovery may not be here just yet and on fears that US earnings will be weaker than forecasts. This sent the Yen pairs down in a big way: EURJPY dropped almost 700 pips, nearly touching 127.00 this morning, since yesterday’s morning US trading session. Needless to say, this benefited my short EURJPY play and closed my position at full profit.

1st Half: +180 pips
2nd Half: +360 pips
Total: +1.5% gain

This risk sentiment may be the main theme for the next quarter and volatility may continue to be high for the Yen, especially with so much uncertainty. Be safe and stick to your best strategies. Remember to focus on risk management first and foremost, and stay tuned!

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Trade Update: 2009-07-07 11:03

Good morning! EURJPY has seen some see-saw action today as the pair has moved between 132.00 and 134.00 throughout the Asian and European trading session.

On its way higher, the pair did hit my short orders at 133.60, and after stalling just under 134.00, it dropped once again where it is currently testing 133.00.

So, just gotta wait and see for now, but tomorrow we have Eurozone GDP coming out and it could potentially give a reason for traders to push the markets around. Risk should also be watched, especially as we head into earnings season in the equity markets. A drop in earnings and earnings outlook may bring another round of risk aversion actions across global markets.

Stay tuned!

Trade Idea: 2009-07-06 16:55

crosseyed chart

Good Afternoon! I’ve the usual technical setup on EURJPY as it looks like the pair may creep a bit lower. Is risk aversion back? No more “greenshoots” to prop up the market?

On the hourly chart, it looks like EURJPY is in a short term down trend, and after starting the week with a strong 180 point move lower, the pair is now retracing higher. I used the Fibonacci tool to pinpoint some potential shorting levels, and I do like the 61% Fib level for my short orders. My stop will be above the previous swing high and I will target previous support around 131.75 and beyond.

This week’s economic calendar is light for both the Eurozone and Japan, so global risk tolerance moves may be the big movers of price this week. And how is global risk? It’s been back in “risk aversion mode, and with US job unemployment continuing to rise and affecting the global economy, risk aversion may be here to stay for the summer! Other than that, Eurozone GDP may be the big event for the week for EURJPY, so be careful around that event.

So, I am hoping the downward trend is my friend this week as I hope to short EURJPY during the retracement. Here’s what I am going to do:

Short EURJPY at 133.60, stop at 135.40, pt1 at 131.80, pt2 at 130.00

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

Stay tuned and good luck!

This content is strictly for informational purposes only and does not constitute as investment advice. Trading any financial market involves risk. Please read our Risk Disclosure to make sure you understand the risks involved.