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EUR/JPY looks interesting for a short play ahead of a potentially volatile European Central Bank event this week.
EUR/JPY Resistance at Fibs?
Looking to take a shot this week on EUR/JPY as volatility is likely to stay high with the European Central Bank’s latest monetary policy decision ahead.
Of course, we won’t know until we get there, but I think the odds are pretty high that we are going to get some dovish rhetoric from the ECB and that we could see pressure on the euro not too long after the meeting.
So, I’m looking to be short euros this week, and doing it against the Japanese yen, which has benefited greatly from the spike in risk aversion sentiment after oil’s plunge and rising coronavirus fears this weekend.
EUR/JPY dropped right at the open with the other yen pairs, breaking below the recent swing low around 118.50 to nearly hit the 116.00 handle before finding buying support.
My stop will be one weekly ATR from my average entry area to give the trade room to breathe given the big pick up in volatility, and my target will be the recent swing lows for a good short-term potential return-on-risk. Here’s what I’m going to do:
Short half position EUR/JPY at 117.95, max stop at 120.35 with 0.50% risk, max target at 116.00
Short half position EUR/JPY at 118.95, max stop at 120.35 with 0.50% risk, max target at 116.00
If the ECB cuts and the euro falls, I’ll look to adjust my position to reduce my risk / lock in profits if that scenario plays out. And if the ECB makes no change to policy and the euro pops, I’ll likely close the position out depending on the price action.
If the ECB cuts and the euro still pops, I’ll have to reassess and adjust at the that point based on whether or not I’m in a short position and where the market is at after the event.
What do you guys think? Are you watching EUR/JPY for a potential short position as well? Let me know in the comments section below!
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Read more about this trade idea's development over time.
EUR/JPY looks interesting for a short play ahead of a potentially volatile European Central Bank event this week. Check it out!
EUR/JPY hit my short orders at the Fibs before dropping ahead of the ECB meeting. Decided to adjust my trade after the event, which was quickly closed at my new stop on today’s high volatility.
Thursday, November 8, 2018