Introduction:
Please read the full post before considering taking action. This is a risky setup, so adjust positions accordingly. The reason why this trade is marked as long can be found throughout the text, although we are playing it both ways.
These past couple of weeks have been quite a ride for anyone involved in the forex markets. To an extent, it showcased the necessity of allying our technical analysis with a more proper assessment of the political landscape. While a stable market provides us with reasonably well-determined supply and demand zones for each currency, facilitating our job in forecasting zones of interest, the immediacy of moves caused by governmental agents' announcements sometimes blow it out of the water.
We called for a correction in EURJPY's price on May the 5th, but Trump escalated his trade war with China and triggered a risk-off sentiment in the both the forex and stocks markets. As is well known, a risk-off sentiment usually favors safehaven currencies, so a JPY rally occured and, despite Bank of Japan's incessant calls for quantitative easing and dovish depiction of the japanese economy, JPY still outperformed most major currencies.
In the charts we see a broader downtrend that started with March the 1st swing high at 127.500. By then, we witnessed well-defined lower highs and lower lows, until May the 21st, when the first higher high was printed. That could possibly be not enough to call a reversal, but if one is patient to hold this position for a while, the risk rewards here could be great.
The lines in the chart are a good guide to price action and this tight channel is key. We are playing this in every possible way here: inner moves, trendline interactions and the broader setup.
How to Proceed:
As a bearish case is comprehensibly plausible here, we are hedging with both a long and a short position. A minor long was already opened, with two more pending orders waiting in the lower trendline.
Take Profit:
We are playing waves here as well, but our main targets are 1.58 and 1.57. Those targets, however, can be dynamically changed, i.e., according to live price action, should circumstances vary.
Stop-loss (Invalidation of Analysis):
The stop-loss for all of our long orders is set in the 121.500 area.
Risks Involved and Key Events to Tune Yourselves to:
A resolution on the US-China trade wars would be highly bearish for the JPY. There are elections in Europe soon and some economic releases. Keeping track of a forex calendar is also extreme importance here.
Side-notes:
Please keep in mind that the markets have been reacting strongly to news these days, which could further create instability. We are trading the whole forex system here, not only a pair. These positions should be watched closely.
Please leave your comments below to inspire us to continue our work and don't forget to follow us! Feel free to send us a direct message with any doubts you might have and experience a great trading session!
Please read the full post before considering taking action. This is a risky setup, so adjust positions accordingly. The reason why this trade is marked as long can be found throughout the text, although we are playing it both ways.
These past couple of weeks have been quite a ride for anyone involved in the forex markets. To an extent, it showcased the necessity of allying our technical analysis with a more proper assessment of the political landscape. While a stable market provides us with reasonably well-determined supply and demand zones for each currency, facilitating our job in forecasting zones of interest, the immediacy of moves caused by governmental agents' announcements sometimes blow it out of the water.
We called for a correction in EURJPY's price on May the 5th, but Trump escalated his trade war with China and triggered a risk-off sentiment in the both the forex and stocks markets. As is well known, a risk-off sentiment usually favors safehaven currencies, so a JPY rally occured and, despite Bank of Japan's incessant calls for quantitative easing and dovish depiction of the japanese economy, JPY still outperformed most major currencies.
In the charts we see a broader downtrend that started with March the 1st swing high at 127.500. By then, we witnessed well-defined lower highs and lower lows, until May the 21st, when the first higher high was printed. That could possibly be not enough to call a reversal, but if one is patient to hold this position for a while, the risk rewards here could be great.
The lines in the chart are a good guide to price action and this tight channel is key. We are playing this in every possible way here: inner moves, trendline interactions and the broader setup.
How to Proceed:
As a bearish case is comprehensibly plausible here, we are hedging with both a long and a short position. A minor long was already opened, with two more pending orders waiting in the lower trendline.
Take Profit:
We are playing waves here as well, but our main targets are 1.58 and 1.57. Those targets, however, can be dynamically changed, i.e., according to live price action, should circumstances vary.
Stop-loss (Invalidation of Analysis):
The stop-loss for all of our long orders is set in the 121.500 area.
Risks Involved and Key Events to Tune Yourselves to:
A resolution on the US-China trade wars would be highly bearish for the JPY. There are elections in Europe soon and some economic releases. Keeping track of a forex calendar is also extreme importance here.
Side-notes:
Please keep in mind that the markets have been reacting strongly to news these days, which could further create instability. We are trading the whole forex system here, not only a pair. These positions should be watched closely.
Please leave your comments below to inspire us to continue our work and don't forget to follow us! Feel free to send us a direct message with any doubts you might have and experience a great trading session!