Short on EUR/JPY: Analysis and Trading Strategy

2 Jan

Dear readers, my name is Andrea Russo, and today I want to share my upcoming short setup on EUR/JPY, based on a combination of technical indicators and market signals. The trade is not yet active, but it will follow the direction indicated by the arrow on the chart. The goal is to take advantage of a potential bearish reversal while maintaining an optimal risk/reward ratio.


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Technical Analysis

Wave Trend Breakout (1H):
I identified a clear bearish breakout on the Wave Trend in the 1-hour chart. This signal highlights a loss of bullish momentum, suggesting a possible downward move.

Overbought on the 4H timeframe:
On the 4-hour chart, the price is in an overbought zone. This makes me think that a reversal is imminent, as the market could correct to more sustainable levels.

Alligator in a bearish phase (1H and 4H):
The Alligator confirms this thesis: on both timeframes, the lines show bearish crossovers and open downward, a typical signal of a developing downward trend.



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Trading Strategy

My plan is to enter after a slight pullback following the initial expected drop. This will allow me to enter at the best possible price, optimizing the position.

Entry Point: 162.839, after a brief technical rally.

Stop Loss: 163.249, placed 50 pips above the entry level to limit risk.

Take Profit: 159.047, targeting a key support level with a realistic and well-defined profit target.



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Risk Management

For this trade, I’ve set a risk/reward ratio of 1:3:

Risk: 0.5% of capital.

Potential Return: 1.5% of capital.


This setup allows me to keep risk limited while maximizing potential gains.


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Conclusion

I’m confident this analysis has identified an interesting opportunity on EUR/JPY. As always, the market may surprise us, but a strict risk management approach and attention to confirmation signals will be crucial for the trade's success.

Thank you for reading! Let me know your thoughts in the comments!

Andrea Russo

2 Jan

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