A Dovish Draghi Knocks EUR/JPY from Resistance

October 21, 2016

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

Keeping some their options open come December, it’s an interesting little double alignment with the Fed expected to make their move in the opposite direction that same month.

Did someone say opportunity?!

Focussing back ont the present In fine Super Mario Draghi style, the major issues were pretty much tiptoed around.

“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:
161018_eurjpy_daily
Click on chart to see a larger view.

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:
161021_eurjpy_hourly
Click on chart to see a larger view.

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.

———

On the Calendar Friday
JPY BOJ Gov Kuroda Speaks

CAD Core CPI m/m
CAD Core Retail Sales m/m

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Dane Williams – @VantageFX

Risk Disclosure: In addition to the website disclaimer below, the material on this page prepared by Forex broker Vantage FX Pty Ltd does not contain a record of our prices or solicitation to trade. All opinions, forex news, research, tools, prices or other information is provided as general market commentary and marketing communication – not as investment advice. Consequently, any person acting on it does so entirely at their own risk. The expert writers express their personal opinions and will not assume any responsibility whatsoever for the Forex account of the reader. We always aim for maximum accuracy and timeliness, and FX broker Vantage FX shall not be liable for any loss or damage, consequential or otherwise, which may arise from the use or reliance on this service and its content, inaccurate information or typos. No representation is being made that any results discussed within the report will be achieved, and past performance is not indicative of future performance.

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