Forex Recap: EUR/JPY Poised for Major Price Correction
EUR/JPY is looking good! Currently, we’re looking for negative space to fill in the market on this Euro cross. I don’t see any major announcements we need to be worried about this week that could shake this pair up. However, I have seen negative trade balance numbers, (in the case the Euro Central Bank), or bad auction numbers, (like Germany this week) considerably move the market. To see the most profit potential from these movements, I want to focus on a technical trade strategy.
If you look at the 2-hour chart below, you can see what I believe to be a crown. The potential right tip lies close to where we have strong past support/resistance. The location of the support/resistance and the unit monthly target are not in their prospective areas by sheer coincidence. If this is indeed a crown, and we’ve broken the counter trend line, we would not logically be forming the bottom of the center tip — that is a long way on the 2-hour, (about 275 pips from the point of entry I like at this time.) The nice thing about the 2-hour chart is we need the market to come to us, that way we don’t have to make any snap decisions to enter. I plan on waiting for a nice buy low price at support here soon and letting this run its course.
So, all we need here in addition to the market structure and pattern we’ve seen get us to the past price targets, would be some sort of buy low price in this expected run-up in price over the next 1-3 weeks. I would look to get in buying to the unit monthly target from April as my first position exit, and then look to buy in again at another buy low price. Based on my analysis, I’m thinking the next week could look something like this:
Now, I just need some good risk versus reward. As long as the price is on the right side of our trend line and above support, we don’t touch our stop. To simply put it, we let the plan pan out. If we open this trade an order should be placed in our accounts only if the market makes it above the 117.00, pulls back and bounces off support. Here’s what that might look like:
In this scenario, we are looking at putting our stop in around 116.00 and looking to enter around 117.290 and looking to exit at the unit monthly target at 120.061.
Best of luck and hope this helps!