The Weekly Update: Analyzing the Dip in Euro Yen

The Japanese yen (JPY) enjoyed moderate gains following the Japanese stimulus that was revealed on Thursday. The Government introduced fiscal measures, which were deemed as positive for the yen. On Friday Japan hurried to correct that it is holding 2 separate polices, fiscal and monetary in an effort to prevent stronger JPY gains.

As we emailed last week, the Japanese yen is likely to weaken overtime as a result of the stimulus. A coordinated intervention in JPY pairs and crosses is likely at lower levels. We have missed an entry in AUDJPY as we favored GBPUSD last week.

We could not discover an entry in all JPY pairs and crosses, we have decided to place out attention on EURJPY.

EURJPY Daily Chart

Please click on the chart to enlarge:

EURJPY Daily Chart 07/08/16

EURJPY Daily Chart 07/08/16

Although we are displaying the daily chart it is a weekly entry. By the book the protective stop loss order should be layered below 110.85, however, we may opt for a tighter stop in the long trade. We are very cautious in our approach to JPY pairs and crosses as we are not targeting the Euro. We are aware there is likely to be an intervention if the USDJP Y will continue leaking lower, which is why the market may pressure Dollar yen in order to spring central banks into action.

Focusing on the Euro, Italy is likely to heard for a referendum in several months to amend the Italian Constitution. The referendum is set to be approved by the Italian court system before the official date for the referendum is released. Similar to the UK, the polls will be the key driver for the Euro, which may suggest EURUSD will finally breakout of its range. Japan is also likely to head for a referendum in 2017, which is expected to have a significant impact on multiple markets.

The upcoming referendums are irrelevant to our potential entry in Euro yen but they do suggest the market will be more volatile within the next quarter. We are aware the RBNZ is expected to slash rates this week. The charts are currently indicating further NZD weakness but we choose to remain on hold.

EURJPY trade alert will be released after the opening of the Forex market.

EURJPY Trade Alert

Please click on the chart to enlarge:

EURJPY Daily Chart II 07/08/16

EURJPY Daily Chart II 07/08/16

EURJPY long at market price (112.91)
Take profit: 116.90
Protective stop: 111.38
Risk Ratio (RR): 1 : 2.7 (approx.)
Estimated duration: 14 days

Note: Due to the gap there may be a minor retracement that we are willing to absorb. Such retracements are not guaranteed.

08/08/16 UPDATE: EURJPY is trading at 113.52 at time of this writing.

Please click on the chart to enlarge:

EURJPY Daily Chart 08/08/16

EURJPY Daily Chart 08/08/16

We are closing 20% of the long trade at market price and shift the protective stop to the entry.

14/08/16 UPDATE: EURJPY was unable to sustain its gains in the market, triggering the protective stop loss order that was shifted to the entry. We have ended the trade with a minor profit due to the partial’s realization.

The Weekly Update: Analyzing the Dip in Euro Yen

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The Weekly Update: Analyzing the Dip in Euro Yen

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The Weekly Update: Analyzing the Dip in Euro Yen

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The Weekly Update: Analyzing the Dip in Euro Yen