EUR/JPY Knocked From Resistance by Draghi

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A Dovish European Central Bank set their €1.7 trillion stimulus program on hold overnight.

Keeping some their options open until December, it’s a curious double alignment as the Fed is expected to make their move in the different direction exactly the same month.

Returning back to the present, Draghi continues to avoide the major issues.

“Sometimes it’s also important to say what we did not discuss. And we didn’t discuss tapering or the intended horizon of our asset purchase program.”

While there are still a plethora of options left on the ECB’s table heading into 2017, markets have interpreted the bank’s stance to the dovish side and the Euro has sold off accordingly.

I try to highlight the same sorts of similar trade setups across the Vantage FX blog and in all of the charts that I post. They’re simple setups where price moves into a higher time frame support/resistance zone, then we zoom into an intra-day chart to find day trading setups with the maximum risk:reward that we can squeeze out of them. Just remember that this blog isn’t here to give you live trade calls, but instead to hopefully give you the analysis tools to be able to identify the setups yourself for next time.

We’ve most recently had two ECB meetings and two fairly obvious moves out of the same daily resistance zone.

EUR/JPY daily

EUR/JPY daily

I want you to take a look at your own EUR/JPY hourly chart from this September ECB meeting blog post when we first identified the level.

Look at from where price rallied into our higher time frame resistance zone and then on the hourly, try to identify intra-day retests of previous support as resistance. Find some areas that would have given tight risk:reward and remember the setup for next time.

After price was rejected out of higher time frame resistance, I can see two clear levels to look for shorts on intra-day retests:

EUR/JPY hourly

EUR/JPY hourly

Mark your major, higher time frame levels on your charts and manage your risk around them. Using these zones to place your stops, you will always give yourself the best chance of higher risk:reward and therefore remain consistently profitable.

Trading doesn’t have to be rocket surgery. Find your edge and keep trading it.

This Friday

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This is a guest post originally appeared on Vantage FX. Reposted with permission.

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