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.
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.
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