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Breakout alert! A reversal may be underway for EUR/JPY as the pair busted through the top of its descending channel. Should I wait for a pullback first?

Long EUR/JPY Idea

After trading inside a descending channel since February, EUR/JPY finally made an upside break to confirm that the downtrend is hover. This also represents an upside break from a short-term symmetrical triangle since May.

I gotta admit… I’m tempted to just jump in a long position at market and set a wide stop back inside the channel for a breakout play. However, as I learned (and got burned) in some of my Q2 2018 trades, I’d probably be much better off waiting for a quick pullback.

EUR/JPY 4-hour Forex Chart
EUR/JPY 4-hour Forex Chart

I’m euro bullish mostly due to strengthening ECB tightening expectations, even as head honcho Draghi has tried to downplay the bias. Besides, the shared currency has also been able to rake in anti-dollar flows when trade tensions heat up.

To top it all off, excitement for the French soccer team possibly pulling off a World Cup championship could also lift euro bulls’ spirits!

Still, I’ll sit tight for now and wait for a retest of the area of interest before jumping in. That way, I could potentially get a better R:R with a decent-sized stop.

As for my profit target, I’ve got my eye locked on the next resistance at 133.00 initially, but I’m open to aiming higher if market factors support further gains. What do you guys think?

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