Nope, Dovish Draghi ain’t in town today! As it turned out, the ECB head honcho started acknowledging the positive developments in the region, causing EUR/JPY to break past that channel I was watching. In case you missed it, check out my initial trade idea first!
When I was looking at this channel pre-ECB statement, price was just testing the resistance at the 121.00 major psychological level near the PWH and week open price. To be honest, I considered hopping in at market since I was a bit confident that the announcement would be another downbeat one.
Thank goodness I held back and opted for a more prudent entry that would’ve sacrificed a bit of R:R but would have bearish confirmation on my side. As it turned out, this decision saved me from a loss as the ECB press conference turned out differently from what I expected. Not only did the central bank upgrade their growth and inflation forecasts, but Draghi also mentioned that there was no longer any sense of urgency in easing since deflation risks are lower.
With that, I’m taking off my sell stop orders below the 120.00 handle and thinking of switching to a bullish euro bias. I’m still slightly bullish on the Japanese yen, though, so I’ll probably pit this currency against the weaker ones like the comdolls. As always, don’t risk more than 1% of your account on a single trade and make sure you read our risk disclosure if you’re thinking of taking the same setups.
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