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Contributors Top Trade Idea For October 27th and 28th – EUR/JPY

liquid marketsJust as we were about to assume that no news may mean good news for the euro zone, we may have noticed that the recent conundrums could have morphed from being in an ongoing ‘traumatic & emergency’ state to one that requires intensive care meaning, not at all cute but rather, an acute crisis. However, this seemed to be an all too common scenario repeating itself over and over again like a broken record, which would make us wonder whether there lies a real solution or simply a smoke screen to a far messier backdrop.

EUR JPY 27TH oct 2013

By me providing some trade ideas here, based on technical analysis on the EUR/JPY, I am hoping for traders to not forget weighing in the catalysts from the fundamentals perspective especially for the Euro as well as the Yen as a cautious conformation measure of trend directions before trading this pair.

As seen on the chart above, it took less than 24hrs for the EUR/JPY since the 22nd of October 2013 to have plunged from a high of 135.50 to the lower areas of 133.58 which is close to a 200 pips movement. From a harmonics chart pattern’s point of view, this X to A downward move followed by a subsequent corrective move in the form of an ABCD pattern, have formed a probable bearish ‘W’ pattern.

Next, I proceeded to confirming the validity of the W pattern by pulling the Fibonacci retracement from X to A in order to confirm the fibs level that it had touched which indeed it did, at the 61.8% fibs retracement of X to A. I was rather pleased with that and moved on with more confirmations using several other technical indicators. The reversal zone marked with the green rectangular box points out the probable area in which prices could potentially travel to from the C point but could begin to reverse after. One of the levels we could aim at as a possible Take profit level if one is to place a buy order from the C point is at the 161.8% Fibs Extension of B to C which is at the 135.00 area.  If I was to trade the bullish C to D leg, my point of entry would potentially be just above the B point. The stop loss level ideally could be based on your risk to reward ratio whether 1:2 up to 1:3.

Upon completion of the W pattern ad the D point an ideal entry point I see fit place a Sell order could either be at the 134.70 area or the 135.10 depending on how high the prices have rallied to. The TP level for the sell order would be based on 38.2% to the 50% Fibonacci level of C to D.

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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