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EUR/JPY missed my short entry orders by a mere four pips on Tuesday, and as it looks like the market is on its way to continue I have decided to close my open orders to short at 131.00

Close Open Orders. No trade.

A bit frustrating as the pair has moved over 600 pips lower since my post, but that’s the game. I will continue to look to short Yen crosses as traders return their focus to the global recession and the credit crunch. Stay tuned!

Trade Idea: 2008-11-04 11:57

crosseyed chart

What’s Up! It looks like today’s rally in risk is giving me an opportunity to play a Fibonacci setup on EUR/JPY today. A return to the downside this week?

My idea is based on both a technical setup and a fundamental setup, but we’ll take a look at the technicals first. I have a 4-hour chart up and using the Fibonacci tool, we can see the pair found resistance just a few trading sessions ago at the 61% Fibonacci retracement level.

Will that level hold again? It may and stochastics are indicating the run-up may be running out of steam as it approaches 131.00

Fundamentally, I think after the US election event, the focus will return to the weak economy and the upcoming rate cuts coming from the European Central Bank this week.

Now, this may old news to the markets that we may see further rate cuts, but we are in a downtrend and de-leveraging phase that may not be over yet, and this rally we’re currently seeing is just another opportunity for players to revisit that sentiment.

I think that 130.00 – 131.00 will be the battleground for bulls and bears in the short term, so I think I’ll play the top of that range. I’ll be using a wide stop once again, in case volatility rises, so gonna have to gear down my position sizing. Here’s what I’m gonna do:

Short EUR/JPY at 131.00, stop at 133.50, pt1 at 128.50, pt2 at 115.00

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

So, I’m going for the gusto with this one as I target just above the previous low at 115.00. If my first profit target is hit I am going to trailing my stop by 250 pips from there. Stay tuned!

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