Capitalizing on Euro Weakness

Hello Traders,

Welcome to today’s article!

The Euro weakness has been quite drastic this week. Not only the EURUSD took a good hit, the Euro crosses also weakened substantially. In this article I would like to focus on two of those crosses: the EURJPY and the EURCAD. So with no longer a due, lets get the currency trading advice started.

EURJPY end of the trend?

When looking at the day chart we are able to conclude that the massive uptrend on the EURJPY has halted and a came to an end, at least temporarily.

The following factors are key and essential in my opinion:

1)      The uptrend channel line has been broken;

2)      The attempt to break the top has failed;

3)      Subsequently the EURJPY is now making lower lows and lower highs on the day chart.

MAR 28 2013 EURJPY DAY

Triangle

The current situation is as such that the EURJPY is in currently at the bottom of a triangle type of formation and price action is almost hanging out of it. Simply put, the EURJPY is at a talking point: either it will break or the currency will bounce and continue in the wedge.

As usual, there are always three potential scenarios: a break of the triangle to the downside, a break of the triangle to the upside, and a continuation of the consolidation within the triangle.

Trade Setups

Based on the current FX structure, I see the following Forex trading opportunities:

a)      A break of the triangle & the nearest 4 hour support to the downside and a hook back to the broken support level;

b)      A break of the day support and hook back to the -0.272 trade, and the same for the -0.618;

c)       A break of the triangle & top to the upside and a hook back to the broken resistance level;

d)      A move back to the top of the triangle, which is a very risky trade.

I am biased to the downside at the moment. Quite simply due the fact that the currency broke the uptrend line and is making lower lows and lower highs. This is starting to show all the potential signals of a down trend, but lets wait for the confirmation first. Once we have that, it could be a great Forex setup for further downside.

MAR 28 2013 EURJPY 4 HR

Day chart key support

Some extra FX help: we should however be aware of the Fibs on the day chart as these levels will act as support areas once price does get that low.

The 382, 500 and 618 Fibonacci retrace all correspond to significant bottoms as well. Especially the 618 Fib is equal to a major level: a huge week top.

EURCAD

The uptrend seems to be toast.

MAR 28 2013 EURCAD DAY

From our Forex training we should all know that on the EURCAD week chart we are able to see a clear break of the uptrend support line, which has so far given an angle to the Euro rise in value versus the CAD. That uptrend line has been clearly broken by this week’s candle stick. I

f the candle indeed closes at the end of this week in a similar shape and avoids becoming a huge wick from the bottom (small chance of happening), then we can conclude that we have a clean break of the uptrend on the EURCAD.

MAR 28 2013 EURCAD WEEK 2

The day chart shows us that the targets of a major and a smaller swing high and swing low have been taken out. The currency retraced to the 500 and 618 Fib and neatly took out the -0.618 targets.

Ever since the currency has done this:

a)      Respected the week trend line

b)      Made double top on day chart at the week line;

c)       Making consecutive lower highs and lower lows;

d)      Broke the day chart up trend line;

e)      Made an impulsive downside.

Therefore when looking at the current structure of the market, I am looking for a hook back to the broken support level and then a continuation to bigger support levels at lower levels. Please see the chart for those significant bottoms which will be my take profit targets.

MAR 28 2013 EURCAD DAY 2

MAR 28 2013 EURCAD WEEK


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