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The markets have been in risk-on mode over the last couple of weeks, which means moves were made in two of my recent ideas: AUD/JPY & EUR/JPY

Another Short Setup Forming on AUD/JPY?


The global markets went into risk-on mode in the last couple of weeks thanks to improving U.S.-China trade relationship rhetoric, pushing AUD/JPY higher to the falling ‘highs’ pattern where my short order (81.50 was triggered).

That positive sentiment continued into this week to push the pair even higher, and AUD/JPY likely got a little boost from the Reserve Bank of Australia this week as they upgrade their GDP forecast and possibly their CPI forecast.

With the lower ‘highs’ pattern essentially invalidated with strong fundamental support and strong bullish momentum, I decided to close the trade down manually yesterday (82.87) for a very small loss:

Total: -137 pips / -0.34% on 0.50% risk

It looks like risk sentiment is back in aversion mode today, so it’s quite possible I got out at the latest swing high. I’m still slightly more biased in favor of the yen if risk-off flows continue, so this pair will stay on my watchlist for a possible re-entry in the near term.

130.00 Still Resistance on EUR/JPY?

EUR/JPY 4-Hour
EUR/JPY 4-Hour

In the past couple of weeks, EUR/JPY made a quick trip lower to the 127.00 handle before riding the risk-on wave back higher. The trip up was enough to trigger my short position at 130.00, an area that saw big time resistance and is now currently move lower with the broad financial markets today.

No major economic catalysts ahead coming from either Europe or Japan, so it’s likely price action will continue to be driven by global risk sentiment for the rest of the month. And with Eurozone business sentiment seemingly topping out recently, I think the euro will continue to be punished as we’ll potentially see an anticipation of weaker data ahead be priced in.

So, I’m holding onto this trade and I’ll look to add to the position to maximize my potential profit (while tightening my stop), possibly if the pair can break below and hold under the 128.00 handle.

Stay tuned for future adjustments, and remember to never risk more than 1% of a trading account on any single trade. Adjust position sizes accordingly. Create your own ideas and don’t simply follow what I do.

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.