Pair: EUR/JPY
Time frame: 4-hour
Long or short: Short
Trade rationale:
I’m still fundamentally bearish on EUR because of the ongoing debt problems in the euro zone. I think the recent BOJ announcement only made room for a huge retracement since this pair has been oversold for quite a while. However, I don’t think this pair can go very far beyond the 100.00 mark and I believe the downtrend will resume sooner or later.
On the 4-hour chart, I spotted a potential retracement play as the pair pulled up to the 100.50 area of interest. This is closely in line with the 61.8% Fibonacci level, which could act as resistance. Also, stochastic just crossed down from the overbought region, which means that euro bears could be ready to push the pair down again.
I’m aiming for the previous lows at 95.70 for my target and I’ll be adding to my initial position every 100 pips. Of course I’ll trail my stop also by 100 pips in order to manage my risk.
Chart:
Trade details:
Short EUR/JPY at 99.70 (Add at 98.70, 97.70, and 96.70), initial stop at 100.70 to be trailed by 100 pips. PT at 95.70.