Diary of a Financier

FX Cross: Long EUR against JPY

In Trading Desk on Thu 19 May 2011 at 07:50
  • Going long EURJPY FX Cross.
  • To fulfill the tactical trade, I’m pairing long FXE against preexisting short FXY.

On May 5, I posted an entry about shorting the Yen (JPY). It was a spot on call, which I played by outright shorting the Yen Trust ETF (FXY) on May 6. Keeping with that short Yen position, I’ve now paired it with a long Euro (FXE), which is my synthetic construction of a long EURJPY FX cross.

First, note the strong hold at support in EURJPY, which has now bounced back into its bull trend:

EURJPY daily

EURJPY daily extended

Examining the Euro index in isolation, I find a chart pattern indicative of a mere pullback from breakneck trajectory. FXE corrected to its support, rounded out a firm bottom, then bouncing back into retracement with indicators resting on support/trendlines:

FXE daily extended

In contrast, FXY continues to slide after failing a triple top. Now the pattern is skewed toward the downside, with bearish indicators propelling it:

FXY daily extended

–Romeo

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