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Contributors Top Trade Idea for August 11th & 12th, 2013 – EUR/JPY

liquid marketsWill the current ‘calmness’ in the euro zone give way to a renewed turmoil after the August holidays?

Despite the quiet months of August, I am particularly weary of the fact that as traders, we shouldn’t be assuming that because there is no smoke, hence there will be no fire. The reason I say this, is due to a false sense of ‘calmness’ that is at present sweeping across the markets. Adding to the so called comforting normality, several European officials have also conveyed their views or sentiments on the current economic situation with optimistic pronouncements.

It’s crucial for us to not forget that some important initiatives concerning countries like Greece, Cyprus, Spain & Portugal has simply been put on hold by government officials until the beginning of September. One the other hand, it has been rumored that one of the contributing factors of putting major decisions until later in the months to come and to keep things fairly positive for now,  is due to the upcoming German elections. However, think tanks that could be responsible for restarting and completing the European economic and political initiatives should first be aware of the major problems that need to be countered and reversed in order to address the economic challenges in a more comprehensive manner. The current upheaval in the euro zone could be categorized into four major problems which consists of; 1) the ever increasing and shocking unemployment rate; 2) the long-term unemployed in countries like Portugal and Greece resulting in adjustment fatigue; 3) bailout fatigue where stronger economies losing their willingness to provide financial support to their struggling neighbors and 4) lack of cash flow to the private sectors which is made evident by the lack of financial intermediation for small and medium sized enterprises.

Screen shot 2013-08-11 at 5.35.41 PM

As for the EUR/JPY illustrated above and from a harmonic pattern’s point of view, there seemed to be a bullish ‘M’ pattern with sellers still finding a stopping point potentially close to the 127.75 area with 127.90 be an ideal Take Profit (TP) level if prices were to still persist downwards. To do that, prices has to go below the significant support resistance level of 128.23 before having more room to go lower. Once the ‘M’ pattern is believed to have completed anywhere between 128.20 to 127.60 area then an ideal buying point could probably be at above the 128.64 area. When a Buy order has been placed for the EUR/JPY, the ideal Stop Loss (SL) level should be just below the 128.00 level perhaps at 127.90.

Happy Pipping !

About Kenny Simon

kennysimonKenny Simon is Head of FX Training at Liquid Markets. He is a contributor for the Technical Analysis section of LQD ‘s Blog. Being a fan of the wonders of nature, he  believes that trading in-harmony with the market’s natural ebb and flow could potentially increase one’s success in obtaining Low Risk, High Probability Trades. Besides the technical aspects of his analysis, Kenny emphasizes the importance of understanding and applying Fundamental Analysis, Money & Emotions Management into one’s approach to trading the markets.

 

 

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