Free Profitable Forex Newsletter
Hey! This is Philip with this week's trade idea of the Free Profitable Forex Newsletter!
Markets are trading on edge despite the recovery in risky assets last week as the coronavirus pandemic is now spreading in full force across the United States. It is already well clear that this crisis, which at its core also has a medical crisis, will be bigger than the 2008-09 financial crisis.
Corona Crisis Keeps Markets Nervous
Markets are not expected to calm down before the medical situation is under control. As a result, more wild market action is likely, and traders are having their guards up high.
With that said, it is not very useful to look for trades based on fundamentals in a time when fundamentals matter little, and instead, liquidity and rapid newsflow are the main driving force of prices.
In all this, technicals and price patterns can be very valuable because they provide clear levels for our trades. Such is the example of the potential EURJPY Buy trade that we are discussing below.
Buying Opportunity: Double Harmonic Support On EURJPY 1H Chart
The Harmonic patterns are great in times of high uncertainty like now because they still give very reliable signals and, at the same time, that comes with relatively tight stops. This enables excellent risk-reward ratios more often than not. And nothing is more important for trading in volatile times than keeping your risk at a minimum.
As I am going to show in two separate charts below, the confluence of harmonic zones of these two patterns means that this 117.20 - 117.40 area is robust support for EURJPY now, making the case for a bounce highly probable. The pair is just entering this area as of the moment of writing.
The Harmonic Bat:
- As can be seen from the bullish bat pattern, shown on the chart above, its harmonic support zone is in the 117.25 - 117.40 area.
- The two targets of this pattern (those are the 38.2% and 61.8% Fib retracements) are at 118.45 and 119.20.
- That gives a potential profit of 100 - 200 pips.
The Harmonic Crab:
- The situation is similar with the crab pattern as well, shown on the chart below.
- Its harmonic support zone stands at 117.20 - 117.35 - closely overlapping the support of the bat pattern.
- The specific 38.2% and 61.8% Fib targets of the crab are at 118.67 and 119.55, close but slightly higher than the bat.
In addition to the two patterns, there is the downward channel that has its support trendline coming into the same area as the double harmonic support area.
All of this makes a case for a EURJPY rebound in this area that much more likely.
Note: the two charts above are exactly the same, they are just showing the two different patterns.
- Look to buy in the above-described confluence support area of the Bat and Crab patterns.
- The two zones overlap to form a confluence zone of 117.20 - 117.40.
- Keep in mind, as the price tests this area, it may dip slightly lower than the low, but that is fine as long as it bounces back quickly.
Stop loss:
- Look to place a tight stop just below this 117.20 - 117.40 confluence support zone.
- Some 10 - 20 pips lower is fine to allow some greater breathing room for the trade.
Targets:
- Aim for the Fib targets described/shown above.
- Since the bat pattern has the targets slightly lower, you can aim for them as a safety measure and take profits at those target levels. The price, though, may achieve the targets of both patterns.
Trade signals from the past week
TOTAL: 0 pips in the past week
TOTAL: +2825 pips profit since October 1, 2018
If you have any questions or feedback, don't hesitate to reply to this email.
Thank you!
High Risk Warning: Please note that foreign exchange and other leveraged trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved, seeking independent advice if necessary.
Any opinions, news, research, predictions, analyses, prices or other information contained in this newsletter is provided as general market commentary and does not constitute investment advice. FX Trading Revolution will not accept liability for any loss or damage including, without limitation, to any loss of profit which may arise directly or indirectly from use of or reliance on such information.
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