I don't usually trade EURJPY but this time, everything is beautifully aligned, so we'll see.
Fundamentals:
EUR (will be) getting stronger:
Restrictions start to ease in Germany and in other Eurozone regions. The economy looks like it reached a turnaround point and has now a positive outlook for the next months, and this is only if the pandemic news stay positive. We still have to see a good performing vaccine rollout everywhere in Europe. If there is a shift in those fundamentals, I will cancel this setup idea.
JPY weak:
First of all, as the global economy (including US economy) is getting better and better, the Yen loses its safe-haven role as the investors are not interest in putting their money in a safe-haven. They have now a growing appetite for risk. Secondly, China's recovery is accelerating and its economic datas are overall in great expansion. As we know, Japan and China have a negative correlation, so when China is performing, the opposite happens for Japan. Finally, the pandemic state is not getting better as a vast majority of the biggest regions of Japan is under emergency state.
Other elements to note:
- BoJ members are very dovish right now and as usual.
- Q1 2021 GDP came out negative at -1,0% (prior +2,8%). It means that the Japan economy is in contraction.
- Commodity prices are getting higher. This is a negative for Japan because its economy relies on raw material imports (iron ore...)
- Olympics may be cancelled = less tourists = worsening in retail sales
- Divergence between monetary policies of other countries vs. Japan.
- Tokyo may lose electricity in the next weeks, months and maybe for the winter. This will be very bad for the economy.
Market sentiment:
Retail noobs will see a beautiful and completed head and shoulder as EJ is very high. Supports will be broken. 132.50 will be broken. 132.00 will be broken. Buyers will become sellers.
Then we will buy their positions.
PURPLE CIRCLE OR NOTHING.
Fundamentals:
EUR (will be) getting stronger:
Restrictions start to ease in Germany and in other Eurozone regions. The economy looks like it reached a turnaround point and has now a positive outlook for the next months, and this is only if the pandemic news stay positive. We still have to see a good performing vaccine rollout everywhere in Europe. If there is a shift in those fundamentals, I will cancel this setup idea.
JPY weak:
First of all, as the global economy (including US economy) is getting better and better, the Yen loses its safe-haven role as the investors are not interest in putting their money in a safe-haven. They have now a growing appetite for risk. Secondly, China's recovery is accelerating and its economic datas are overall in great expansion. As we know, Japan and China have a negative correlation, so when China is performing, the opposite happens for Japan. Finally, the pandemic state is not getting better as a vast majority of the biggest regions of Japan is under emergency state.
Other elements to note:
- BoJ members are very dovish right now and as usual.
- Q1 2021 GDP came out negative at -1,0% (prior +2,8%). It means that the Japan economy is in contraction.
- Commodity prices are getting higher. This is a negative for Japan because its economy relies on raw material imports (iron ore...)
- Olympics may be cancelled = less tourists = worsening in retail sales
- Divergence between monetary policies of other countries vs. Japan.
- Tokyo may lose electricity in the next weeks, months and maybe for the winter. This will be very bad for the economy.
Market sentiment:
Retail noobs will see a beautiful and completed head and shoulder as EJ is very high. Supports will be broken. 132.50 will be broken. 132.00 will be broken. Buyers will become sellers.
Then we will buy their positions.
PURPLE CIRCLE OR NOTHING.
Order cancelled:
Just deleted my buy limit order. This setup is no longer valid for me. On to the next.