The first pair I am looking at this week is the EUR/JPY . Given the prolonged weakness in the EURO , and an incomplete recovery of the JPY against a lot of pairs, I am looking at this pair to provide some in the near terms.
Most important pattern for us here, is the Di-Napoli Double Repo Sell. The pair has had a steady up trend since 135.20 without a minimum retracement of even the .23 FIb all the way until the psychological of 150. The first area where it showed some pull back was at 149.00 so that will be the high we are considering for the DRPO.
Now, for the DRPO confirmation, we must have a close above the high and a close below. Currently, we have both the factors and I have described it on the chart. Now, the minimum target for this pattern is the 50% Fib support which is at 142.50. I think it is a very logical area the currency pair must retrace to.
We still do not have any reasons to believe that this is a reversal but we have enough reasons to look at a retracement.
There are two possible entries on this trade. Either you can go short at the recent minor at around 146.75 or you can enter at the break out as shown in the graph at around 145.90. Either ways, our Stop loss must be around 147.30 and the profit is at 142.50.
Hope this gives us a good kick in to the holidays!
Happy trading and happy pippin!