The USDJPY pair dropped heavily yesterday, and as a result some pairs like AUDJPY and NZDJPY also traded lower. The pair which managed to hold on was the EURJPY, as the EURUSD traded higher yesterday. Furthermore, the EURJPY has an up-move trend line on the hourly chart. I think if the pair breaks lower, then we can look for a sell opportunity.
Looking at the 4 hour chart of EURJPY, the pair is trading in a channel, as can be seen below. Once the pair moves lower, breaks the intermediate trend line as highlighted in the hourly chart, and closes below it, then we can jump into a sell trade. Remember, we do not want to trade a false break. So, we will wait for the 4 hour close below the trend line before entering into a trade.
Initial target should be around the 140.00 level, which also represents the channel support level, and final target could be around the 139.50/60 level. Stop should be placed above the channel resistance.
Reviewing yesterday’s events and trades
Yesterday, was an interesting day, as we witnessed a big drop in the US dollar. The EURUSD traded higher towards the 1.3700 area, and the GBPUSD registered a three year high. We also saw one of the biggest drops in the yen pairs in last six months. The data which was released in the US yesterday, was more on the disappointing side, and as a result the US dollar lost some ground against the Yen, Euro and the pound. The USDJPY traded towards the 103.00 support level. The pairs like AUDUSD and NZDUSD were unable to take advantage of the US dollar weakness.
Fundamental Outlook for the day
Today, there is no market moving event scheduled for the US. We do have retail sales data for the Canada lined up, which can further ignite the rally for the USDCAD if the data disappoints again. The pair is already trading at around the multi-year highs. Today, is Friday, and I think we need to be very careful with the recent moves in the market. We could see a surge like yesterday. The profit booking ahead of the weekend may further push the pairs like EURUSD and GBPUSD to new weekly highs easily. So, trade with caution friends.
This analysis is taken from today’s Daily Market Forecast, which also includes trade opportunities on: EURUSD, EURGBP, USDJPY, EURCHF, GBPUSD, NZDUSD, AUDUSD, EURAUD and OIL.
Get it HERE: Vladimir’s Markets Forecast
Have a great weekend friends. Happy trading!
