Long or Short: Short
Entry Point: 110.70
Stop Loss: 111.20 (just above the symmetrical triangle and 111.00 major level)
Profit Target/s: 109.30 (bottom of symmetrical triangle)
Reward-to-risk Ratio: 2.8:1
Risk percentage: 1%
Indicators used: Stochastics (14,3,3)
I believe that the euro’s strength on Friday was just the impact of profit-taking by the end of the first quarter. On a fundamental level, the euro region is still in trouble, especially when the firewall increase disappointed expectations, Spain is heading towards a recession, and Greece could still collapse. I’m buying the yen against the euro because I believe that recent improvements in the Japanese economy and the yen’s safe-haven reputation would push the currency higher against riskier currencies.
I’m planning to wait for Stochastics to reach the overbought territory, but I can also enter at market and place a similar stop size if the pair encounters resistance at a slightly lower level. I’m initially targeting the bottom of the symmetrical triangle (109.30), but I could also place my stop loss at break even and let the pair run if the pair breaks the triangle to the downside.