EUR/JPY: A Technical Analysis

EUR/JPY: A Technical Analysis

20:38 24/05/2010
As Casey has his favourite pair (EUR/USD) so I have mine. As a scalper I see the EUR/JPY, with it’s constant volatility, as a veritable cash machine. I look at five time frames altogether with this pair. They are the hourly, 30 minute, 15 minute, 5 minute and 1 minute. Using the different time frames like this is similar to looking at the pair under an ever increasingly powerful microscope. Each shorter time frame is a closer look into the price action as you can appreciate. In order to make a viable trade entry all 5 (or 4 if you don’t use the 30 minute time frame) have to show the same signal. This is where timing comes into play. If one of the 4 or five signals is against the others and you don’t feel comfortable with the entry point, sit back and wait. Timing is everything.
Looking at the Ichimoku analytical set up, we see the Chikou Span giving us a classical downward trend pattern. As I mentioned, the Chikou Span (GREEN) acts as a momentum tool. At, or above the current price as it is here in the daily chart, it’s indicative of the down trend shown. The Kijun-Sen is the base line (RED). In the chart we see the Kijun-Sen and the Tenkan-Sen are widely separated with the Tenkan-Sen (BLUE) crossing from below at first then abruptly reversing and crossing from above. Although this is indicative of a down trend, we should look to the MACD which is converging, hopefully at the beginning of a crossover from above as well. Kumo cloud thickness is indicating volatility to come and some resistance.

 

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POSITION            SHORT
PRICE                    112.50 (at the time of this article)
TARGET               109.50
STOP                     113.30

EUR/JPY (All times, unless otherwise stated, are in EST)
The most active days are Weds (20% TM) and Thurs (21% TM)
68% of trends occur between 01:00 and 13:00.
51% TM begins between 05:00 and 13:00

A profitable strategy is useless without discipline.
Many traders end up losing money because they fail to make trades that meet their own criteria.
“Plan the trade and trade the plan” …. Success is impossible without discipline.

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  • YankeeClipper1

    Thanks for your comment AJ… a TM simply (in this case) means Trend Movement

  • AJ

    interesting analysis. what is TM?

  • YankeeClipper1

    FYI I just pulled +38 pips off this pair in the time it took me to write the above article

    Mike (aka YankeeClipper)