Once again, EUR/JPY is showing another textbook downtrend forex setup as the pair retests and bounces off of previously broken support.
At the beginning of March, we already saw the pair retest the broken support line around the 127.00 handle, at which point the sellers took back control.
It’s been a near-even battle between buyers and sellers since then, but the market has been in a slow grind lower, coinciding with the longer-term trend to the downside.
This is enough technical confirmation for me to play the downtrend now, but with the market still broadly “risk-onish” (is that a word?), I’m going with small max risk and a nibbler to start off this trade at the market. If the top of the Fibonacci area is retested, that’s when I’ll put in my full position.
Here’s my plan:
Short quarter position at market (125.46), max stop at 129.25, max profit target at 119.00
Short quarter position at 128.40, max stop at 129.25, max profit target at 119.00
I’ll be risking 0.5% of my account on this one so don’t forget to check out our risk disclosure and follow me on my social media accounts for quick updates!As far as catalysts for further declines, the ECB’s recent extension of QE and negative deposit rates may provide more support to euro bears in the medium-term, but as far as news events, the calendar is looking light for now. Stay tuned for updates and adjustments as the news and markets develop!
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.