Correction In The Middle Of A Clear Trend

Hello, my friend!

Glad to see you again here. Today we are getting back to probably one of the most interesting currency trading instruments. So, this article will emphasize the EUR/JPY instrument, which we have already reviewed before. The main feature of this asset is its own evaluation of various world's events. The originality of this asset is that it works as a thread connecting East with Europe. Now one of the critical thing for us is that it is affected by ongoing instability of the Eurozone, which indicates that the instrument has some potential for speculations. The interesting fact for us is that nowadays there are negative interest rates in Japan and zero rates in the Eurozone. It creates a directed cash flow ratio.

Picture 1. A chart of the EUR/JPY for 26.01.2019 - 26.02.2019.

As we can see in picture 1, there is a current upward trend, which implies the strengthening of the EUR. However, apart from this upward trend, there are some other arguments — for example, the growth of the positions of big traders and deflationary expectations in Japan. However, if we look at this more globally, then we can see that the EUR/JPY now is at the equilibrium level, which may symbolize moderate fluctuations near the level of 126 Yen per Euro, which is almost the same as at the beginning of the year.

Picture 2. A chart of the EUR/JPY and the index of "big traders" for 26.01.2019 - 26.02.2019.

As we can see, despite the globally growing trend, traders have decided to hedge against a significant price level and reconsider their positions in case of price correction. These actions have already reflected on the chart.

In the short term, we believe that there will be a price correction for this asset, so it is better to increase the number of "Lower" positions for it.