Trade Idea: 2013-02-20 02:54
How’s it hangin’, fellow cross fanatics?
I hope the markets have been treating you well. As for me, I’ve been chilling on the sidelines, waiting for a setup to materialize. I was starting to lose patience, but then I spotted this setup. Here’s what I’m looking to trade this week:
From a technical standpoint, going long at around 96.00 makes a lot of sense because:
- It’s a hard, round number that’s no stranger to acting as support.
- It intersects almost perfectly with the pair’s rising trend line.
Basically, I want to buy on a pullback because I feel the uptrend will stay intact. Why? For one, it looks as though an ascending channel is forming, and as we learned from the School of Pipsology, such formations usually precede strong bullish moves.
But more importantly, I think the markets will keep yen pairs propped up because I feel that the outlook for BOJ monetary policy remains very dovish (and therefore, bearish for the yen).
Here’s how I set up my trade:
Buy at 96.00, stop loss at 95.40, profit target at 97.00.
All in all, this makes for a cool potential 1.67:1 return on risk. Since I’m risking 0.5% of my account, this could boost my account by 0.83% if all goes well.