EUR/JPY: Ready for a Top?
April 23, 2008
One of the strategies in my High Probability Trading eBook is called the Extension Fade. The strategy looks to fade a move after a currency pair has rallied or fallen for a certain number of consecutive days.
According to the eSignal chart below, EUR/JPY is now on its EIGHTH consecutive day of strength. In the past 10 years, there has only been 6 times that EUR/JPY has rallied for 8 days in a row! This move has statistical significance and for that reason, there is a strong chance that the currency pair will top out very soon.
Fundamentally, there are also reason to believe that Euro selling will also continue. This morning we had weak German PMI numbers and tomorrow we are expecting the German IFO survey. A little watched index called the Belgium Business Confidence Index tends to have a strong correlation with the German IFO index as indicated by the chart below. In the month of April, the index fell to a 2.5 year low. This suggests that German business confidence could drop as well, which would be the fundamental catalyst needed for a more meaningful turn in the Euro.
Posted in euro record high, euro
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April 23rd, 2008 at 6:33 pm
[…] As for the Eurozone, we expect German business confidence to deteriorate materially. […]
April 24th, 2008 at 8:47 am
You should use G to plot 4-in-1 graph!
April 28th, 2008 at 1:28 pm
[…] April 23, I even said that EUR/JPY was ready for a top after rallying for 7 consecutive trading days. Since then, the currency pair has fallen over 150 […]