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Trade Idea: 2011-02-11 02:13:21

EUR/JPY chart

EUR/JPY, I’ve got my eye on you!

The pair has been trending up lately, but I have a feeling it may change directions soon…

The question is, where?!

I’m eyeing the break of the trend line below 113.00 as a potential entry point. But at the same time, I know there’s a chance the pair may continue to rise and it might not meet resistance until it hits 114.00 again. I think the area of the former low at around 111.00 seems like the next destination if the pair takes a dive.

As for fundamentals, we’re seeing a familiar theme resurfacing. Sovereign debt fears are rearing their ugly heads again in the euro zone, and I believe this has the potential to spur a huge turnaround in the euro. Apparently, policymakers can’t seem to come to an agreement over the EFSF debt strategy, and this has contributed to a rise in Portuguese and Spanish bond yields.

Aside from that, rumors have it that one of the most respected and more hawkish members of the ECB, Axel Weber, recently turned down the role of ECB head. Who’s gonna fill in my boy Trichet’s shoes now? Chances are a less hawkish member will end up heading the central bank.

Hmm… I ain’t setting orders for this trade just yet. For now I’ll sit this one out and keep a close watch on it. I’m still waiting for a bearish marubozu to signal a clean break of the trend line. But if the pair continues to rally, then I might have to wait a bit longer and take my cue from reversal candlesticks around 114.00 instead.

That’s it for now folks. Time for me to retire… for the week that is! Speaking of retirements, Jerry Sloan FINALLY stepped down as head coach of the Utah Jazz yesterday. For those of you who don’t know him, Sloan has been coaching the Jazz for the past 23 years!

Anyway, since Coach Sloan doesn’t have Twitter , I’ll pay my respects here. Hope you enjoy retirement Jerry!

Thanks for checking out my blog and stay tuned for Monday, when I’ll be posting my first Weekly Winner! Peace out homies!

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