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The EURJPY has been an exciting trending pair to trade over the course of the last month. From its March 21st high of 111.42 the pair has declined 599 pips to its April low at 105.43. During this swing down we have been fortunate to enter trades thus far utilizing breakout entries toward new lows. Taking a note from April 6ths Chart Of The Day , we can continue to look for new ways to enter the EURJPY pair on the continuation of the trend.
The MACD Oscillator can be an excellent way of pinpointing new entries during an established trend. MACD is comprised of a MACD line, signal line and histogram. Since price is moving downward we will look to add to our short positions when the MACD line closes below the signal line. This signals that momentum is returning to our trend and can then re-enter the trend.
Price targets from our previous two positions can be used for this trade as well . As long as the trend is heading lower, lower lows should be targeted. As our current monthly low resides at 105.43 , limits should be placed under this point of short term support.Looking down the graph, long standing support for the pair can be found near 104.05 and then 102.05. Both targets can be utilized depending on your risk tollerance and time horizion on your trading positions.
My preference is place a fresh sell order on the EURJPY on a MACD cross near 1.0616 or better. Limits should look for a minimum of 200 pips of profit at 1.0416. Stops for all positions should be moved to 1.0716 locking in 128 pips of profit on existing positions, while creating a clear 1:1 Risk/Reward ratio for our new position.
Alternative scenarios include price breaking back above the previous high
---Written by Walker England, Trading Instructor
To contact Walker, email WEngland@FXCM.com . Follow me on Twitter at @WEnglandFX.
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