Trading the Largest Mover for Past 2 Weeks
The EUR/JPY has trended 350 pips in the past two weeks,yet it hasn’t broken its March 21, 2012, high. This makes the recent increase a possible counter trend move leaving EUR/JPY vulnerable to a sell off, says Jeremy Wagner of Daily FX.com.
One of the most popular forex trading strategies is trend following. This is because identifying trends is quick and relatively easy. As a result, trend trading is one of the first strategies taught when learning to trade forex.
Using technical analysis, we can identify the stronger trending moves by reviewing forex charts. However, one time frame may not be enough to accurately assess the direction of the trend. Therefore, we need to incorporate multi-time frame analysis so we can see the bigger picture trends.
350-Pip Trend on EUR/JPY
For example, for the past two weeks, the EUR/JPY has moved the farthest by increasing nearly 350 pips. Does that mean the trend is up or is this just a correction of the previous down move?
78.6% Fibonacci Retracement Level
As you can see above, prices have been working higher since July, but have yet to clear the highest price point in 2012 near 111.40.!--start-->