In today’s article, we will take a look at the JPY crosses where we see a space for a bearish extension and a strengthening of the JPY across the market with the exception in trading against the USD. Since the stock market is showing growing signs of a bearish reversal we need to think in terms of risk-off currency trading. The most sensitive risk-off currency, for a stock market turns, in the forex market is JPY.
We will use again our top-down trading analysis to get to more insights. Looking at the GBPJPY we can see that the pair is reaching the pullback reaction 148.500-149 zone. This zone could possibly provide a downside support and the risk-off in combination with USD strength and GBPUSD weakness could push it lower to 147.400 level test again. We will wait for the price action reversal signal below the 149 level.
On a Daily EURJPY chart, we have a better trading strategy situation than on a GBPJPY. The pair is reversing lower from the previously broken uptrend line pullback retest 131-131.300 zone. We have already a rejection from here for a bearish swing down into the 129.300 key level test. The risk to reward ratio on this short trade entry is better compared to GBPJPY.
From a commodity currency horizon, one long-term uptrend line break is in our focus and could lead to an extended bearish continuation if confirmed below the 75.500 level. Especially sensitive to an ongoing NZDUSD weakness this pair is our favorite for the short trade entry with the best possible risk to reward ratio.
Happy trading! (click on the chart to enlarge it)
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