Continuation of downtrend for EURJPY

This is my trade on Friday, November 20th.

EUR was on the slide against the USD and JPY since midday US session Nov 18(Wednesday). The slide was arrested by midday European session on Nov 19^th. The subsequent correction carried it into a 61.8% fibo retracement by early Asian session.

From the swing low of 131.72 to swing high of 132.92, EURJPY make a retracement of 61.8% with a engulfing candle on a 30 MTF chart, indicating the minor downtrend is reversing. An engulfing candle at 61.8% retracement of swing high 132.92 to swing low of 132.20 point to a possibility of the continuation of the downtrend.`(refer to the 30 MTF chart below)

As my trade started at about midday Tokyo session, at 8:00 (6:00 GMT) on the 5 MTF chart a wedge is formed. My bias at this time is on the short side as the prices are moving below the Pivot Point.

On my scalp trade which I used the 1 MTF, I entered a short at 8:16 when EURJPY fall below the blue channel with all indicators pointing a downward moves. Exit at 78.6% retracement of swing low of 132.20 to swing high at 132.73.

The next entry is long when prices break the down sloping line at 9:00(7:00 GMT-European session started).

With the two entry I have made my daily profit target of 50 pips.

Trading EURJPY at midday Asian session

EURJPY was on the slide since European opening. The EURUSD was trading at narrow range with the Yen crosses slipping as Japan recorded an improved 3^rd Qtr GDP. EURJPY slipped from 134.30 to 133.14. EURJPY recovered to the 38.2% fibo retracement at early Asian session to 133.55. It made a swing low at 133.05 and the prices went sideway within a range of 20 pips. Upon penetrating the downtrend line (the red line) I made an entry for buy. My target is to the area of 61.8% retracement of swing high 133.55 to swing low of 133.05. Upon reaching the fibo 61.8%, prices formed a dark cloud cover candle and the Asian open price provides the resistance. Enter for short with target of 20-25 pips.

The unemployment effect lingers

EURJPY settled into range after absorbing the unemployment data storm yesterday. With the exception during the European/London session which saw EURJPY moving with a high volatility, the EURJPY trade in orderly fashion not going nowhere fast with no strong incentive to add a loaded risk position nor to liquidate existing one.

The low at midday US session to the opening high of Australian/Asian session set a fibo swing retracement level. Prices went sideway at below the 61.8% retracement but did not touch the 78.6% retracement. Given that the last price reaction only retrace 38.2% of yesterday swing high to low, I foresee that EURJPY is moving downward therefore my scalping trade will be a downward bias.

The EURJPY recovered what was lost

The Euros strengthened against the USD and JPY with EURJPY managed to recover during the Asian session what was lost the previous Friday . EURJPY was ranging between 50 pips during the European and New York sessions.

The short term is bearish with lower highs and lows since the close of New York session. With a quieter European and American session, the early session today will be more or less in the continuation of the previous mood. The 60 and 200 EMA in the 5 MTF are converging substantiating a side way move.

Recovery on the bad data of unemployment rate

The main economic news for last week was the NFP release and the unemployment rate on Friday. The news surprised the market for the downside moved that we saw the return of risk aversion which favour the JPY.

From the high of last to the low of last Friday, a 38.2% retracement acted as resistance to early Asian session. The Daily Pivot Point also pinpoint the early resistance level. Than EURJPY retreat to the 78.6% retracement at Tokyo open (00:00 GMT). This support level supported by the monthly pivot point and the daily midpoint between the pivot point and the S1, set for EURJPY on the upside move that started at low of 133.32 moved past the pivot point and approaching the R1 at 134.63.

The recovery of EURJPY in morning Asian session indicated the market had digested last week unfavourable economic news in US.

US unemployment rate at the highest in 26 years

Yen strengthened against the USD and EUR during the US session last Friday on risk aversion worst than expected non-farm payroll report from US. Job market contracted slightly more than expected by -190k in October, worse than consensus of -165K. unemployment rate which soared to 26 year high of 10.2% versus consensus of 9.9%.

After the painful employment figures in the US, the market will have more time to digest the news this week.

EUR/JPY recovered strongly during the middle of the week but retracement to 50% in the last two days showed that t the upside was limited below 135.97 resistance and thus retain the near term bearish outlook that fall from 138.47 is still in progress. Friday's fall and touching of 133.15 breaking minor support of 133.36, indicated a bias downward retesting 132.50 first. Break will bring fall resumption towards 131.72 next. However, note that a break of 135.72 resistance will argue that fall from 138.47 has completed and will turn outlook bullish for retesting this resistance first.