Eur/jpy

[mntrdr4x]

Is anybody stalking the EUR/JPY? This is my pair to stalk and has given me many days of frustration and fascination. How can we use the four majors that we are receiving alerts on to trade the EUR/JPY? This is a bit more of an advanced pair but can be a good pair to trade in the Asain session if that is your primary time to trade as it is mine. Please post what you know about this pair.

Troy

[mntrdr4x]

One way to take the information that we are recieving in the alerts is to look for the tops and bottoms of the channels and use parallel and inverse to trade the EUR/JPY. I use the parallel pairs USD/JPY and EUR/USD to find a confluence of events in the EUR/JPY. Both the USD/JPY and EUR/USD are parallel pairs of the EUR/JPY while they are inverse pairs to each other. Is this a little confusing?
EUR/USD USD/JPY
EUR/JPY EUR/JPY

The EURO is the base currency on both the EUR/USD and EUR/JPY and the Yen is the cross currency on both the USD/JPY making the EUR/USD and USD/JPY parallel pairs to the EUR/JPY.

Using that knowledge, we can look for the EUR/USD and USD/JPY to be at the top or bottom of their respective channels and if they both break through than we can expect a break in the EUR/JPY as well. If they both bounce at the top or bottom of their channels than we can expect the EUR/JPY to do the same. We can use what ever channel we want , the break out channel, wide channel, or compressed channel as long as we are using the same channel on all three pairs.

Knowing what the EUR/USD and USD/JPY are doing gives us and advantage in the EUR/JPY. Having the USD/JPY and EUR/USD at the top or bottom of their channels at the same time does not happen all the time but when it does, it can be really beneficial.

Troy

[mntrdr4x]

Break out channel: 126.40-137.40
Wide channel: 130.94-137.40
Compressed channel: 130.94-133.15

The EUR/JPY tested the 131.04 channel bottom but did not close below this level giving confidence to the continued uptrend. 131.04 was the previous channel top which now is a major support area. A break of this could bring the test of the 127.00 which is why I have a sell plan along with the buy plan. Looking at the parallel pairs, The EUR/USD is having difficulty closing below 1.3200 and the USD/JPY closed right at the 99.67 previous channel top. After testing the bottom of the current channel at 1.3145, the EUR/USD quickly bounced back above 1.3200 giving an indication that the EUR/JPY could at the very least cycle back up. If the USD/JPY breaks below 99.67 or the EUR/USD breaks below 1.3090 to test 1.3000, the EUR/JPY will break the 130.55 sell point.

Pair: EUR/JPY
Entry: Buy @ 132.55 Stop: 132.29
TP1: 132.90 TP2: 133.65
R/R ratio: 4:1 Stop in pips 26 B.E. +1: 132.56

My buy entry is just above the recent channel formed with in the last couple of time frames putting my stop at a bias number. TP1 is just below 133.00 which the EUR/JPY had difficulty breaking through for the last 22 hours. TP2 is at another bias number and just below the ST21 Hi giving this trade a good reward/risk ratio.


Pair: EUR/JPY
Entry: Sell @ 130.55 Stop: 130.95
TP1: 130.00 TP2: 129.44
R/R ratio: 2.75:1 Stop in pips 40 B.E. +1: 130.54

The sell entry is at another bias number and significantly below 131.00 making sure the pair does more than just break 131.00 by a few pips and then cycle back up. My stop is placed at the ST21 Lo with TP1 at a key number at the bottom of a congestion area on April 1 and TP2 at another key number near the bottom of a congestion area at the end of March. The reward/risk is not as good on this trade but still better than 2:1 making the trade acceptable.

Troy

[ForexJoe]

Great analysis Troy

Thanks for effort and nice return of pips

[mntrdr4x]

Break out channel 126.06-140.42 midpoint 133.24
Wide channel 128.81-137.40 midpoint 133.11
Compressed channel 128.81-129.70 midpoint 129.26

After testing the 200 day SMA at 137.40 on April 5th, the EUR/JPY has began moving with the overall bearish trend. With the USD/JPY seeking the next direction, the EUR/USD is the driving force behind the bearish move. Now that the EUR/USD has closed below the 1.3094 channel bottom, we look for more downside in the EUR/JPY. The next support area is 126.06 followed by 121.71. A move back above 131.56 MT CTR brings resistance at 134.51, then the 200 day SMA at 135.77, and the wide channel top of 137.40. My trading plans are as follows:

Entry: buy @ 131.56 Stop: 131.18
TP1: 132.00 TP2: 133.65
R/R: 5/1 Stop is 38 pips B.E.+1: 131.57

Entry: sell @ 128.54 Stop: 128.82
TP1: 127.90 TP2: 126.40
R/R: 7/1 Stop is 28 pips B.E.+1: 128.53

The buy plan entry is at the MT CTR with the stop at the 131.18 key number which is also below the ST 21 Hi. TP1 is at the 132.00 key number which is just above the LT CTR and an area that has been resistance recently while TP2 is well below the 134.00-134.51 area the has become the next major resistance area.

The sell plan entry is at a bias number just below the ST21 Lo indicating a further bearish move would be underway. The stop is at a key number 1 pip above the current ST21 Lo. TP1 is at a key number just above M1 predicted daily low and TP2 is at the ST Lo.

The reward to risk on both of these trades is excellent with entries at significant areas giving some great potential trades.

****Update: The sell plan executed and was stopped out by 2 pips before taking off in the direction planned. I was unable to be at the computer for a second execution so did not catch this move. That's o.k. I will continue to look for more entries and continue to watch the 131.00 area and 126.00 area as these are the tops and bottoms of the current channel.

[mntrdr4x]

A quick update on the 4-8 plans. The buy plan executed but was stopped out as pair oscillated for a few days. The sell plan executed several days later and reached TP1 before being stopped out. I reset this plan after being stopped out and reached TP2 the second time. I reset this plan again a third time and currently have TP2 with a gravy train running. So, to tally the pips at this point

first trade stopped out: -26 pips * 3 lots
second trade Tp1: 55 pips + 1 pip * 2 lots
third trade TP2: 55 pips +111 pips + 1 pip
fourth trade TP2 +: 55 pips + 111 pips + gravy train(currently 121 pips)

without counting the gravy train pips as this trade is still open and could stop out at +1 or continue for more pips, these plans banked 364 pips. This is why I don't care about the losing trade and also why I don't give up on a trade as long as the indicators are still in place to justify that trade. I know this does not happen all of the time and I was fortunate the market gave me pips each time I sold at this price. What will the next plans produce?

Troy

[mntrdr4x]

Joe asked if I would place a trading plan here ahead of FOMC today. Please forgive me for not doing so. My reasoning is something that is important for all traders to understand. I have been unable to get a sense of direction on Monday and Tuesday in the EUR/JPY after going through my daily regiment as the charts gave me conflicting information. Because of this, I understand that I need to stop trading until I can get a feel for the markets again. This does not mean that I stopped demo trading. One thing that I have found is demo trading can be critical to re-gaining a sense of direction in a pair or pairs. Parallel and inverse analysis is a huge tool in my trading and I had conflicting analysis on different pairs indicating that I needed to stay out until they were easier for me to read. Even with the numbers I struggled to get a sense of direction. In addition, I saw a hammer on both the EUR/JPY and USD/JPY on daily candlestick charts indicating a relative bottom so I should be looking for buys. After looking over the numbers and charts further I could not see a place for a good entry. My point in all of this is that knowing when not to trade is as important as when to trade.

What do I do when this occurs other than stop trading. I continue to manage any open trades according to my rules. Then I look at larger channel tops and bottoms such as the wide channel and/or the break out channel to find out where I am in the channel of very significant numbers. Demo trade, demo trade, and more demo trading until I re-gain a sense of direction.

What was the problem causing me to lose that sense of direction? I do not believe it was the charts or the markets, but my own pyschology preventing me from seeing potential trades. It happens.

Troy

[mntrdr4x]

I do have trade plans for tonight. I appologize as they are a little late and one already executed. However that one has stopped out and there may be another opportunity for an entry. The EUR/JPY has failed above 130.00 thus far while the EUR/USD has struggled to remain above 1.3000 psychological area and the USD/JPY struggles above 97.78.

Break out channel 124.37-137.40 midpoint 130.89 (LT CTR)
Wide channel 124.37-130.05 midpoint 127.21
Compressed channel 129.00-130.05 midpoint 129.53 (Open)

Entry: buy @ 130.08 Stop: 129.75
TP1: 130.55 TP2: 130.89
R/R: 2.5/1 Stop is 33 pips B.E.+1: 130.09

Entry: sell @ 128.82 Stop: 129.09
TP1: 128.54 TP2: 128.06
R/R: 3/1 Stop is 27 pips B.E.+1: 128.81

The buy plan is just above the high of the last 24 hour session and the new wide channel top at the key number of 130.08. An entry here allows for a stop at the 129.75 key which is below the 130.00 key number and the previous day’s high. TP1 is a bias number which has been significant at times in the oscillations of the break out channel. TP2 is the LT CTR and the break out channel mid-point and could be an area of reversal as midpoints can often be an area of battle. Also, this allows for TP2 before the 131.00 significant area. The sell plan is a key number just below the compressed channel bottom allowing for the stop to be above the 129.00 psychological barrier. TP1 is a bias number and TP2 is at M2. Reward to risk is a little on the small side however we are in the middle of a large channel which can be volatile.

My expectation is for this pair to possibly go a little above the high of the last 24 hour session and then retrace after a large move. These expectations of are little significance which is why we trade with the numbers! Keep in mind that there is a BoJ rate announcement tonight which could provide for some volatility. If the EUR/JPY goes above 130.00 and fails at or before 130.55, I will be looking to sell at the 129.75 area. My rules of engagement regarding this situation will be to monitor the EUR/USD at 1.3268 and the USD/JPY at 97.78. Another area of interest to prove that numbers come back around in the FOREX. The buy plan is almost the exact same plan I had back on April 17 which has not executed. It has executed tonight.

[sarath]

Nice move, good analysis

sarath

E,P. Canadian

[Fx-Rich]

Troy,

You've really taken Joe's info and ran with it. Very impressive. Keep up the good work.

I'm also stocking EURJPY with other JPY pairs. I have certain indicators that I look at to give me trade setups and I'm integrating Joe's channel analysis into my calculations.

I'm also comparing EURUSD and GBPUSD to decide if I want to trade EURJPY or GBPJPY to see which pair has most strength.

I want flexiblity with the JPY because it's so sentitive to wants going on with the ecomonies of each country it crosses with.

All the JPY pairs are very tricky because they are so volatile, but could be very rewarding

Richard Butnik EURUSD, JPY pairs