Euro / Japanese YenShort
Daily Trend Reversion Options Play
Updated
Opened a position on EURJPY to fade the move back towards the Daily uptrend. Decided to go with an option for this with Exp on Friday Nov 10th @160.500 strike.
Price accelerated away from the uptrend after the BoJ announcement on Oct 31st, before it pulled in and supported at 159.500 for a couple days and rallied again. I feel this provides a good risk reward on the idea, supported by intra-day bearish price action today.
It looked like we had broken down yesterday, but price reversed and regained VWAP. After that though we only made a marginal new high in Asia and has since trades back below VWAP and failed to hold support at 160.850.
Price accelerated away from the uptrend after the BoJ announcement on Oct 31st, before it pulled in and supported at 159.500 for a couple days and rallied again. I feel this provides a good risk reward on the idea, supported by intra-day bearish price action today.
It looked like we had broken down yesterday, but price reversed and regained VWAP. After that though we only made a marginal new high in Asia and has since trades back below VWAP and failed to hold support at 160.850.
Note
We caught a big not long after entering the position and are now extending through the channel high. We've moved about 3/4 of the expected daily range (ExMo) so you could make an argument for adding to the position, but there's zero levels to the left up here so I don't feel confident adding more size. Strike is Friday so we still have time, but if you did want to play this move or add i'd wait for a break down of lower highs first.
Note
With just one more trading day left before expiration, I think this trade is toast. The EUR has continued to be resilient, looking likely to close bullish for the 7th consecutive day. We'll see what tomorrow brings but we'd need to see a monster move to bring the options pricing back enough to not take a loss on this idea.
Interestingly though, the higher we push, the better a short looks so there may be an opportunity to re-enter next week.
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