It's time to Sell EURJPY

Oct 4, 2019

Technicals: EURJPY in a downtrend since the beginning of 2019

 

The technicals are generally well defined here, with a large channel inside of which the downtrend has traded for the whole year of 2019. 

 Switching to the 4-hour chart, we can see more details of the price action. There is a smaller bearish 14-day channel within the larger (more significant) yearly channel, which is also well-defined, as shown on the chart below. 

 Judging by the overall fundamentals and technicals, it’s quite possible that this smaller bearish channel will be broken to the downside - accelerating the bearish trend. Hence, looking to sell EURJPY toward the resistance trendline of this smaller channel (118.00 area) could offer excellent opportunities to position for potentially large bearish moves.


Entry:

1st: Look to sell a rally toward 118.00; likely to allow a tighter stop

2nd: Enter short on a bearish breakout of the small channel (currently that is below 117.00); likely will need a larger stop and will require more confirmation from fundamentals and technicals against a fake breakout.

Stop loss:

1st: Above 118.00 in the 1st scenario

2nd: Above breakout point in the 2nd scenario; the 117.50 - 60 area looks interesting in this regard. Still, however, this stop level needs to be considered at the time of entry, so a different level might be more appropriate according to the situation.

Targets:

1st: - At the 117.00 support trendline of the small channel - This could be an initial target in the 1st scenario (of entry around 118)

2nd: Main target toward the support trendline of the channel (presently around 115.00 - 114.50 area);