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My trade closed at a profit yesterday as the pair rallied up to my adjusted stop at 127.00 in afternoon US trading.

1st Half: +200 pips
2nd Half: +400 pips
Total: +1.5% gain

So, it’s a nice profit, but adjusting my stop took me out of a strong move to the downside where we saw the pair hit around 122.25. It has rallied higher since then after the Bank of Japan lowered interest rates by 20 basis points to 0.3%.

This is probably another opportunity to go short, but I think I’ll save that idea for next week. Hope everyone had a good trading week and has a great weekend!

Trade Adjustment: 2008-10-30 10:35

My short entry orders were triggered during the morning European trading session and it looks like sellers were ready to jump all in as the pair dropped from 131.00 to its current level around 127.00

My first profit target was hit at 129.00, where half of my position was closed. Time to make some adjustments.

Half position closed at 129.00. Adjust stop on remaining position to 129.00 and trail stop by 200 pips to create a risk-free trade and lock in profits.

So, I’ll continue to ride this bad boy further. Stay tuned!

Trade Idea: 2008-10-30 22:58

crosseyed chart

Greetings Forex Friends! Just thought I’d quickly share another technical trade opportunity on EUR/JPY.

It looks like a return to Yen selling after the Bank of Japan started doing a bit of currency intervention to stop the rapid change in exchange rates – the strengthening of the Yen was beginning to hurt its exporting competitiveness.

So, the pair has rallied for the past three sessions. Is this a shift in sentiment or just a correction? I’m in the camp that this is a correction and that EUR/JPY will return to the downside.

There may be more deleveraging to go and we have yet to see the ECB begin its own string of rate cuts to fight recession in the Eurozone. The only thing I think may propel a further rally is if the Bank of Japan cuts its own interest rates. This could bring an influx of more carry trade buying.

At the moment though, the pair does look ripe for a swing lower based on technicals. On the 4 hour chart, we can see the pair has made it all the way back up to the 61% Fibonacci retracement level and that stochastics are indicating overbought conditions in the short term. So, I look to short, but I’ll be ready to cut this trade-off quick if it continues to rally higher. Here’s what I’m going to do:

Short EUR/JPY at 131.00, stop at 133.00, pt1 at 129.00, pt2 at 115.00

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

Because of the heightened volatility, we still have wide stops, but my profit target is the previous low at 115.00 – a nice 8:1 reward-to-risk ratio. So, let’s see if sellers are ready to jump back in….stay tuned!

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