We looked at the B Pound recently and gave you areas to sell if you did you made a huge profit with low risk and we have done separate report on the BP – here we want to look at the Yen and Euro and low risk /high reward trading scenario.
Lets look at these currencies and what the week ahead holds.
Japanese Yen
The trend against the dollar is down and has been for years – the recent rally is simply un-winding of carry trades.
This means the JY should resume its down trend and the recent volatility is presenting a low risk high reward opportunity. Take a look at a good free chart service such as futuresource.com and you will see for yourself.
Prices have spiked and are outside the top Bollinger band and resistance lies at 0.85.50 and 86.00. The key to looking at the short side is a change in price momentum.
Pull up the Relative Strength Index which has peaked at just above 70.00 and is losing momentum and also check the Stochastic which is set to cross with bearish divergence.
Look for a reversal day and momentum to turn bearish target on both indicators – target is the mid Bollinger band.
Euro
The euro is in a long term uptrend against the dollar and the recent correction (like the one we looked at in the British Pound) is simply the huge speculative long position being washed out and this looks to be almost done.
The key near term support is 1.36 (bottom of Bollinger band and July Lows)
Again you need to look at the RSI and stochastic and watch for a change in price momentum.
At present there is NO signal to buy RSI continues to fall and the stochastics are deeply oversold.
In Both Currencies
Do not try and predict WAIT for the confirmation on the charts backed up by price momentum.
Trade the reality of price – NOT your opinion (or the opinions of others) stay focused on the charts and stay disciplined.
There are of course conflicting news stories about what happens next – by focusing on the charts and trading the reality of a shift in price momentum, you will be trading the odds and that’s what any currency trader needs to do.
The long term trend is down in the Yen and up in the euro and while we could see a major trend change, this looks like a correction in both currencies and the longer term trends up in Euro and down in Yen will re assert themselves.