Free Profitable Forex Newsletter
Hey! This is Philip with this week's trade idea of the Free Profitable Forex Newsletter!
This week we are back with our usual rhythm of releasing one actionable trade idea per week. BTW, if you haven’t seen our yearly analysis for
2021, you can find it here: https://www.fxtradingrevolution.com/daily-fx-analysis/2021-01-09_17:50
EURphoria Getting Exhausted
The EURphoria, which drove the euro currency higher for much of H2 2020, seems to be taking a pause, or even getting tested more seriously. Namely, both the EURUSD and EURJPY pairs peaked recently, and the technical implications are turning corrective, as the uptrends are near the termination point on the charts.
Interestingly, the situation on the charts coincides with new political turmoils in Italy, where the governing coalition has again lost the majority after 15 months in power. EUR traders will be closely watching how the situation develops, particularly because a new snap election in Italy is a possibility, though unlikely.
Given that EUR positioning is stretched to the long side, it seems that the fragmentation in the ruling Italian coalition could be a catalyst to trigger a correction to the downside. We are taking a look at some key technical levels on the EURJPY pair for how that could occur on the charts.
https://www.fxtradingrevolution.com/weekly-fx-analysis/2021-01-11_15:39
EURJPY reversed in the 127.00 resistance zone after almost touching 127.50 last week. Then the pair broke the rising trendline of an uptrend channel that connects back to November 2. The price is now testing support in the 126.20 - 126.00 zone. Given the number of rejections here, a break below this trendline can lead to a nice and rather quick follow-through to the downside. Such a scenario would be a good opportunity to short the pair.
The chart provides a clear target area also. Namely, the 125.00 - 124.50 zone is a confluence support of several factors, such as the October-November highs there and the 55-day and 100-day moving averages. Additionally, the 125.00 level has been historically important in EURJPY as a psychological area and the pair often reacts there.
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The technicals are clearly turning bearish here, and both the weekly and daily charts suggest EURJPY can decline toward 125.00 - 124.50 in the following days.
Entry:
- Enter short on a bearish break of the support trendline in the 126.20 - 126.00 zone;
Stop:
- Above the 126.85 intra-day swing high;
- this level is a swing high on the 4-hour chart, and it is also well above the breakout/entry point of this short setup
Target:
- 125.00 - 124.50 area;
- Take at least partial profits as soon as 125.00 is hit
Trade signals from the past week
TOTAL P/L in the past week: 0
TOTAL: +3490 pips profit since October 1, 2018
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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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