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CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Please ensure you fully understand the risks involved. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Please ensure you fully understand the risks involved.

Trade of the week: short EUR/JPY

EUR/JPY seems to be struggling along its downtrend line and may in the short-term slide towards previous support.

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We would therefore like to sell EUR/JPY with a stop loss above the January high at ¥161.90 and a take profit level at ¥158.50.

(AI Video Summary)

Recent trading outcomes

The video starts off with Axel Rudolph summarising his recent trades. He first talks about his successful long position on the S&P 500, which reached his target just below 5000. He suggests using a trailing stop loss or take profit order to continue making gains as the market moves up. Alternatively, he mentions that cashing in profits would have resulted in a 200 point profit already.

Next, he discusses his trade on the volatility index (VIX). Although the trade initially made profits, it has since retraced back to the entry levels. He advises keeping the trade going and using a stop loss below the January lows. Despite being slightly in the red for now, he believes the trade has potential to regain momentum.

Rudolph then talks about his unsuccessful trade on the Nikkei 225. He expected the index to go down, but it kept reaching new highs instead. He mentions using a 2% stop loss and admits that using a stop and reverse order would have been a better choice in hindsight. He estimates that he hypothetically lost 2% of his capital on this trade.

This week's trading opportunity

Moving on, he introduces their trade idea for the current week, which is to go short on the euro against the Japanese yen (EUR/JPY). He bases this decision on an ABC Elliott Wave correction pattern, suggesting the possibility of the euro going back down towards the December to February uptrend line. He also mentions resistance at a downtrend line from November of the previous year. He sees a good risk-reward setup, with a tight stop loss above the January high, and a downside target around the 158.50 zone.

This information has been prepared by IG, a trading name of IG Australia Pty Ltd. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

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