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Why trade #EURJPY short?
In this video update, we explain why we are looking at this #forex pair and what we need to see in order to get short on the market.
Watch the video to learn more…
Hi, and welcome to this Blueberry Markets video update with me, John Kibbler, Head Currency Analyst.
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In this video, we’re going to talk about EUR/JPY. EUR/JPY was our chart of focus this week to look at with the currency heat map.
Now, the price hasn’t closed bearish on the daily yet. It’s in the very early days, but yesterday, we had this Doji candle showing indecision at this previous structure point.
What we’ve got at the moment is the price pushing to the downside. It’s pulling back; this is why I like the idea of getting short. We’ve got that bit of downtrend forming on the daily timeframe.
I’m looking for the price to extend down into this previous structure high, and even a retest of these lows here.
Now, when we’ve got that downtrend, it’s a lot to see it form on a lower timeframe as well. That’s why I like to look for things like double top patterns because then I can trade the retest, or even a head and shoulders pattern. Again, I can look to trade the retest because it’s showing me that the bearish momentum could be continuing since the lower timeframe trend is lining up with my higher timeframe trend.
So, what we’ve got is that downtrend here. Is the market going to continue down?
What I’m going to do is jump into the four-hour timeframe first. The four-hour has a nice trend to watch. At the moment, we’ve got a slight change in trend since the market formed a higher high.
So, that’s no good for us. we don’t want to trade the market when we’ve got that higher high in play. So, as you can see, the market is pushing back to the upside. That’s not what we want to see. We want to see the market creating a downtrend like in our daily timeframe, where you can see here – yes, the market pulls back, but it gives a false breakout, then the market moves to the downside. That’s what we want to see; we want to see those markets making that downtrend.
Again, for the Euro, it would be a break around this 1.2023 area. If the market breaks through that, then you could look for that trend to continue.
If you go to the hourly timeframe, you can see this in more detail. At the same time, the market has formed a double top here. It’s broken through, made its way back towards that neckline area, markets impulsed again, but now, it’s finding support at 1.2023.
If it starts to break down here and break into those new lows, we’ve got a good zone to work with for short opportunities, and because you trade it on that lower timeframe, you’ll get a good risk-reward ratio to the near lows. If it breaks and continues down, you’ve got a good risk-reward ratio down to those daily highs.
I like the opportunity on EUR/JPY this week. We’re waiting for the setup, and we’ve got to be patient. Ideally, I would have liked to see the daily close bearish, then I want to dive into those lower timeframes, and look for the opportunity, there.
But I wanted to update you on EUR/JPY because the price is forming a bit of a Doji here, which explains to me or shows me that there could be a bit of indecision, and the market could follow through.
Keep an eye on EUR/JPY. It’s the chart of the week as we explained in our Forex Market Outlook. Keep an eye on that break and retest, and I will catch you in the next video. Cheers!
The EUR/JPY has good potential for the week to come. If you’re still on the fence about buying EUR/JPY, you can give it a try with zero risks with a free demo trading account from Blueberry Markets by clicking here.
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