Trade Closed: EUR/JPY Resistance at Fibs?

Trade Closed: EUR/JPY Resistance at Fibs?

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EUR/JPY managed to pop up to my short orders at the Fibs before dropping ahead of the ECB meeting. Decided to adjust my trade after the event, which was quickly closed at my new stop on today’s high volatility. Here’s a quick review.

EUR/JPY Resistance at Fibs?

EUR/JPY 1-Hour Forex Chart
EUR/JPY 1-Hour Forex Chart

Earlier this week, I decided to go short EUR/JPY on expectations that the European Central Bank will engage in new stimulus measures to help combat the negative economic effects from the coronavirus pandemic. I looked to scale into a short position at the Fibonacci retracement area, and fortunately, the market granted my wish of a little bounce (positive risk sentiment on coordinated central bank stimulus hopes) to trigger my short orders at 117.95 & 118.95. This put me into a short position with an average price of 118.57, and lucky for me, the 61% Fibonacci area held nicely before sellers took back control on rising coronavirus fears to take EUR/JPY  back down to the previous swing low area around 116.50.

Today, the ECB has come and gone with an announcement of economic support in the form of cheap loans, capital relief for banks, and an increase in asset purchases. But traders were looking for a rate cut like the other major central banks, and when we didn’t get one, euro bulls were ready to take control back.

After hearing of the ECB holding off on rate cuts, I decided to adjust my trade by closing 55% of the position (odd number of lots) manually at 116.93 and roll down my stop on the remain position to 117.70 (one daily ATR from session bottom) to give the trade room to breathe. Unfortunately for me, that wasn’t the case as the market quickly popped higher on the session as volatility was really high today, taking me out of my remaining position at the adjusted stop.

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Total: +130 pips average / +0.73% gain on 1.00% max risk

So, while I could have done much better if I just closed the whole trade down instead of a partial position, I think that was the right call given the broad risk-off environment and outlook that the euro zone could go into recession meant that there was more downside to come and I wanted to leave something on in case of that scenario. Unfortunately that didn’t play out, but I did get a very nice return-on-risk for only a four day trade….not bad!

What do you guys think of this trade adjustment? Should I have just closed the whole trade down after the ECB didn’t cut? Let me know in the comments section below!

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