EURJPY – Remarkably choppy price action in the Japanese Yen has made for a difficult week of sentiment-based trading, and the next JPY moves may prove pivotal amidst strong market swings.
Trade Implications – EURJPY: Our purely sentiment-based Momentum2 system flipped direction on the EURJPY and sold from ¥128.15 then ¥127.26 as retail traders bought aggressively into the most recent sell-off. Yet there is distinct risk of getting chopped out of the recent short position as we’ve seen little follow-through on the recent JPY rally.
Elevated Japanese Yen volatility expectations emphasize that prices will remain volatile in the days ahead. And though we won’t give up on the EURJPY-short positions just yet, we think it prudent to keep risk tight as overall forex market conditions remain quite choppy.
Written by David Rodriguez, Quantitative Strategist for DailyFX.com
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