Daily FOREX Analysis - Brasil: EUR/JPY: Fan Line To Hold Further Up Moves?

Sunday, August 12, 2007

EUR/JPY: Fan Line To Hold Further Up Moves?

DAILY CHART

04-HOUR CHART

(CLICK ON THE CHART TO ENLARGE IT.)
04-Hour Chart: Fan lines (purple lines) from last bearish move (168.90 to 160.40) worked very well as resistance at 162.70, which is also the 50% fibo correction of minor bearish move (165.45 to 159.90 marked with the yellow lines). 161.70 historical white line worked well as support on Sunday Aug 12th opening. OK, we do have a series of fibo corrections but we cannot forget that the major trend is bullish on the daily so, moving on:
Daily: Last Friday´s low was at 159.96 which is exactly the 50% fibo (blue lines). It closed above the bottom of the bullish channel (purple line). But no indicator favour the long yet: MACD below its signal line; RSI below 50 reference line and below its MA; Momentum also below its signal line and: ADX not kicking. So my entry points are:
SHORT break 161.70 with target 161.25 (watch it! bottom of bullish channel). Add lots at break of 161.20/161.10 with target 160.50.
LONG a failure 161.70 with 1st target 161.20

TRADING STYLE

Even though we are considered Day-Traders, our trading sometimes requires different styles, according to the patterns and/or how the market moves during our trading sessions. All strategies presented in all posts below are for Positioning but, depending on how markets behave, our style can change so that we can capture good trading opportunities......

Our Trading Styles are discriminated as below:

1) Scalping: Short-term trades, usually betwen 2 to 15 minutes, with stops lower than 8 pips, targeting 15 pips. Generally our Scalping trades apply very low stops (5 pips) aiming quick surges in prices of around 10 pips, in a matter of a very few minutes.................................................................................................
2) Day-Trading: this is our main Trading Style where we dedicate most of our time. Their lenght is usually betwen 10 to 60 minutes, sometimes for more than 2 hours, with stops between 10 and 20 pips and targets between 20 and 60 pips...
3) Positioning: Long-Term trades based on Daily and 4-Hour charts, with stops between 20 and 40 pips, targeting minimum 60 pips. Most of these trades have Open Limits......................................................

Money Management

This is a crucial aspect of our trading, considering the different styles we apply to our trading Sessions. As the Positioning Style requires larger stops (usually the double of our Day-Trading Style), their lot size is lower than usual, generally 50% of our standard lot size. As the Scalping style requires lower stops (usually half of our Day-Trading style), their lot size is usually 150% of our standard lot size. For instance: let´s suppose that our current standard lot size is 200K. For Scalping trades the lot size will be 300K and for Positioning it will be 100K...................................