Hello Traders! I will be off the next couple of weeks for vacation and 4th of July celebrations. I haven't posted anything in a little while, but I wanted to make you all aware of a weekly time frame chart on the EURJPY. Yes, the EUR JPY has been on a tear the last few weeks, as all EUR pairs have been jacked up by TALK from Draghi. Talking points from central bank leaders can and do drive the market in the short term, however, unless there are economical sparks that keep these short term fires lit, they do tend to fizzle and sputter. I don't know if that's going to happen. Like you, I don't have a crystal ball for prognosticating future price action.
What I do have is Technical Analysis. Mr. John J. Murphy in his seminal work, "Technical Analysis of the Financial Markets", defines Technical Analysis on page 1 of his book. He writes, "Technical Analysis is the study of market action, primarily through the use of charts, for the purpose of forecasting future price trends." In essence, history repeats itself over and over again. I'm not predicting that EUR JPY will stall out when it approaches the GAP area. I'm just saying that the probability of this happening is more likely than a continued climb higher. HOWEVER, should this pair indeed break this level, (essentially, the neckline of the Inverse Head & Shoulders pattern), and stay aloft - then this significantly increases the possibility that the upward trend in EURJPY continues. Heck, I'm not even sure if price will reach the GAP at all. Just left of center on the chart is a cluster of resistance highlighted by an ellipse. We are basically at that level of price right now. Side note - This chart is from FXCM. Forex.com's charts begin at 2000 hours Sunday evening, EST. I want to take my signals off of a New York close chart that begins printing the week at 1700 EST.
My outlook is to watch and see. I want to see how price reacts to the GAP, if and when it reaches that area. I want to see if price can take out the immediate cluster of resistance and the double top from two previous weekly highs. I'm going to pretend that I'm from Missouri...not Pennsylvania. (Missouri is nicknamed the "Show Me" state), I want price action to SHOW ME what is going to happen, and then I will react to that situation. I won't step in front of a LONG 6 weeks straight EUR JPY train. My account is a pickup truck. Pickup trucks do not survive collisions with trains.
I want to wish everyone who reads this profitable trading. I know I don't post much, but if I see something I believe has possibility, I will share it. What you do with the information is up to you. I want to give a shout out to Trade Wonk and JoJoFang...these two traders are from the U.K. and Canada respectively. Happy 4th of July to both of you. Both of your nations were involved in our independence...and that of course, is an understatement.
