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Closed out my EUR/JPY short as a big shift in risk sentiment bias changed and an unexpected reaction to the ECB statement. Here’s a quick review.

Triangle Breakdown in EUR/JPY?

EUR/JPY 4-Hour Forex Chart
EUR/JPY 4-Hour Forex Chart

A couple of weeks ago, I decided to short EUR/JPY on continued risk-off sentiment (geopolitical fears) and weak economic sentiment on Europe, and the breakdown of the descending triangle was the perfect technical setup to play that.

Well, we did see the descending triangle breakdown, but the market didn’t get much further lower as global risk sentiment shifted to less negative.  This was on speculation that we’d see more stimulative efforts from central banks this year, which shifted traders back to selling the Japanese yen last week.

And the ECB did come out dovish at its latest monetary policy meeting, but it wasn’t as dovish as expected.  Traders were expecting rate cuts soon, but instead the ECB set expectations that interest rates would be on hold until 2020. This is likely why we saw the euro rally on the event which didn’t help my EUR/JPY short at all.

Given those two developments, I decided that I didn’t want to be short EUR/JPY for now, so I closed the trade manually on Friday (122.71), as well as my second set of orders at 123.00.

Total: -60 pips / -0.16% loss on 0.50% original risk 

Overall, it’s tough to see winners turn into losing trades, but I was still so close to my entry that I didn’t want to decrease my chances of weathering any volatility for a bigger win by locking in a very tiny profit. So, I have no problem on how this trade ended up.

Looking forward, the constant shifts due to global trade issues and continued decline in volatility is making this market pretty tough to trade, so I’ll look to take profit sooner for now until we see either conditions change. Stay tuned!

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.