What's crackalackin! I am eyeing a potential swing in EURJPY as the pair is throwing a couple indications that support may push the pair higher from its current levels. Time for me to long EURJPY?
My trade is based on the Daily chart above and I have highlighted a few technical signals that support a potential move higher. First, the pair has run into a rising trendline where it has found previous support and now consolidating price action. Stochastics are in oversold territory indicating that the move lower may be running out of steam and running out of sellers. Lastly, we can see bullish divergence as the pair creates lower "lows" while stochastics are creating higher "lows" - highlighted with the red lines on the chart.
So, plenty of technical arguments for a rally in the pair, but I will wait to see if the psychological level of 130.00 is retested before going long. My stop will be 150 pips, the average daily range of EURJPY, and I will ultimately target 135.00 as it is the previous swing high and a psychological number itself. Here is what I am going to do:
Long EURJPY at 130.00, stop at 128.50, pt1 at 131.50, pt2 at 135.00
Remember to never risk more than 1% of a trading account on any single trade. Adjust position sizes accordingly.
Not much on the Forex calendar in the way of major events with the exception of the ECB interest rate decision on Thursday. Also, US third earnings are set to be released this month and they have the potential to affect global risk sentiment if we see worse than expected earnings data.
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