Forex trade ideas

EUR/USD shorts are staring to work nicely.

Source: Bloomberg

I looked at short EUR/USD yesterday at $1.0971 and after a move above $1.10 the pair has printed a bearish outside day reversal and could be back to the $1.04 area.

My suggested stop loss remains at $1.1070 for now. As detailed yesterday I am keen to add to the position on a break of the 23 March lows.

GBP/JPY chart

Source: IG charts
Source: Bloomberg

GBP/JPY- Entering the key support zone

I also think GBP/JPY looks quite interesting from the short side, although the pair is highly correlated to US equity markets and the S&P 500 seems to be holding the October uptrend. Interestingly, GBP/JPY has not fared so well and has broken below its own uptrend drawn from the October lows at ¥177.75 (as shown on the daily chart). Better buying has been seen in the pair, however if we look at the daily candle, but my key target zone (as measured by the blue coloured area) is widely in play no. How the pair reacts around here could be key, as a break would be outright bearish and signal a deeper correction, perhaps even to the ¥170 area. 

Looking at small positions in USD/JPY

The JPY in general is finding good short-covering of late, but one talking point today has been whether the lows have been seen in USD/JPY. If we look at the daily chart the series of lows in mid-February around ¥118.24 have held and as you can see from yesterday’s candle good buying have come into the pair. This has coincided with a nice move higher in US bond yields, which ultimately is helping the USD valuation.

There is no glaring buy signal from trend or momentum indicators, but I am enthused by the price action and the bullish candle. With this in mind traders could look to buy a small position in USD/JPY at market (¥119.24 at the time of writing), with a view to exit the trade if we see a move through support at ¥118.24.

The 23 December and 23 March high (as shown on the chart) intersects at ¥120.16 and I feel adding to the trade on a closing break above here makes a lot of sense. Subsequently a closing break above the December high of ¥121.85 would be outright bullish and again I feel adding to longs on this development would be wise.

Again, keep position sizing low until trend and momentum conditions are working and then adding to the trade is something I feel could help increased profitability in trading. 

This information has been prepared by IG, a trading name of IG Markets Limited. 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. See full non-independent research disclaimer and quarterly summary.

CFD’s zijn complexe instrumenten en brengen vanwege het hefboomeffect een hoog risico mee van snel oplopende verliezen. 79% van de retailbeleggers lijdt verlies op de handel in CFD’s met deze aanbieder.
Het is belangrijk dat u goed begrijpt hoe CFD's werken en dat u nagaat of u zich het hoge risico op verlies kunt permitteren.
CFD’s zijn complexe instrumenten en brengen vanwege het hefboomeffect een hoog risico mee van snel oplopende verliezen.