Long-term trading strategy for currency pair EURJPY

Long-term trading strategy for currency pair EURJPY

During the development of long-term trading strategy for work with cross-course EURJPY it will be useful to look through the history of this currency pair for last years.
So, if you look at the weekly chart of EURJPY you will notice continuing growth from October 2000 till July 2007. About seven years of uninterruptible increase from the level 88.87 to 168.93. Ladder to the sky at a height of eight thousand points! There have been composed some legends about gold era carry-trade on Forex. One would think there is nothing difficult: buy on pullback and hold the position until the patience allows you.

Then gather the gold harvest. But everything in this world (good and bad) comes to an end some day or another. On the 20th of July 2007 cross began its catastrophic falling from the level 168.93, which ended in a month on August 17, 2007 at the level 149.26. Just for a month cross fell off by almost 2 thousand pips. Just frames of that giant surge determined the behavior of this instrument until the present moment. It can be said, that after the giant trend we observe the giant flat.

In fact, if you move from the weekly chart to the daily one, you can distinguish several rather good trends within the bounds of huge sideways trend. The most stable trend is upcoming one which started on March 20, 2008 from the level 151.71 and finished on June 14, 2008 at the level 169.96. The price twice tested this new historical level, then turned down and went almost a half of giant price band. This situation can hardly give a hope for any sharp trend movements. Of course, trends exist here, but from the point of medium and short-term perspectives. At the global level the price continues fluctuating within the band of 2000 pips until the global reverse is outlined or the upturn movement goes on.

So opening long-term positions for this instrument it is worth using outlined relevant price levels. The relevant price levels are accumulation of price levels 169.96, 168.93 and 167.67 at resistance level. Also price levels 152.11 can be considered as relevant. It was tested three times by the price: 22nd of January, 14th and 20th March 2008. Support level 149.26 can also be mentioned as relevant, though it has never been reached after August 17, 2007. It is also important to take into account the price band from 158.27 to 159.34 because there is the great number of reverse points during the medium-term fluctuations. Furthermore, this diapason located approximately in the middle of global price channel.

Strategy is very simple. Waiting for achievement of relevant price level by the instrument, observe the price behavior and according to the results of observation make trading decision. Finally, the author insists on the review character of this article. Make your own decision for position opening. At the best case you make a fortune yourself, at the worst case there will be no one to blame.


More FOREX-news on pages InstaForex.Com