Potential EUR/JPY and Santos trades

EUR/JPY has approached key support and Santos has fallen over 17% in the last 25 trading sessions - I suggest potential trading ideas for both.

Source: Bloomberg

EUR/JPY has approached key support, as you can see from the daily chart. A break from the August low of ¥135.72 could see the pair target the ¥132.00 area. Given the shaded area has been a floor in the price this year, this area of support will be closely watched in the market. With the various oscillators highlighting the weakness, my preference is clearly to be short this pair right now, although I would look to sell a closing break through the floor.

Santos has fallen over 17% in the last 25 trading sessions, but is looking very oversold. On the daily chart, the price has closed two standard deviations from its 20-day moving average. However, if we increase the probability of mean reversion, we can see the 14-day RSI is at 16.7, while stochastic is at an extreme low.

Naturally, we will need to see stabilisation in energy prices, but this seems to be materialising, with Brent prices 2% higher from Friday’s cash close. Personally, I would be using any weakness on the open today as a buying opportunity for a short-term move closer to the 20-day moving average at $13.79. I would look to exit the trade by placing a stop loss at $11.89.

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