EUR/GBP: Attacking the .8600 Sweet Spot – Trade Closed

Trade Closed: 2013-04-23 03:57

Looks like I closed this bad boy at the right time!

EUR/GBP 1-hour Chart

I never really had plans to hold on to this trade into the weekend because that would expose me to unnecessary risk, and that’s just not my style. So when the pair began stalling at around .8530 and formed a pinbar, I took this as my cue to close up shop for the week. And boy was it the right decision!

Soon after I closed my trade, EUR/GBP staged a strong rally and ended up right in the area of my entry. If I had decided to keep my trade open, I would’ve ended up being stopped out at break even. Luckily, I was able to react to the signs the market was giving me and instead ended with a small profit.

Closed trade manually at .8523: +57 pips / +0.356%

I know it ain’t exactly the biggest win, but it’s better than nothing, right? Besides, I’m happy just to string together two wins in a row for the first time this year. Hopefully, the streak will continue!

Thanks for following, guys! Here’s to catching more winners together!

Trade Idea: 2013-04-17 02:17

As far as technical analysis goes, all signs point to sell on this bad boy! Check it out yo!

EUR/GBP 1-hour Chart

We’ve got a major confluence zone at the .8600 handle:

  1. It’s a major psychological level.
  2. It’s a proven area of interest (former support and resistance).
  3. It lines up perfectly with my favorite Fib level – the 50% Fib.
  4. It’s just a few pips below the top WATR.

Best of all, we already have a bearish divergence in the works!

Fundamentally, it’s hard to pinpoint exactly why the euro has been so resilient as of late, which makes me think that it’s rise may be overdone. Recent reports haven’t exactly inspired confidence in the region, so I don’t see why the euro should stage an extended rally.

As for the U.K., we have claimant count data and MPC meeting minutes set to come out later in the London session. Between the two, methinks the minutes could hold more weight since the markets would like to know whether or not the BOE is moving closer to increasing its stimulus program. The BOE doesn’t seem like it’s in a hurry to increase rates, especially since inflation was unchanged last month, so there’s a chance the minutes could turn out to be bullish for the pound.

In any case, here’s how I set up my trade:

Sold EUR/GBP at market (.8580), stop loss at .8660, profit target at .8420.

I placed my stop above the 61.8% Fib and my profit target at the previous low for a solid 2:1 return on risk. With the 0.50% that I’m putting on the line, this should give me 1.00% if everything turns out as planned.

So what do y’all think of my trade idea? I’d love to hear what’s on your mind. Share your thoughts below, homies!

Risk Disclosure
Weekly Watch: April 8 to 12, 2013
Q1 2013 Trading Performance
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  • George Mavreas

    placed a sell limit at 0.8648 (61.8 Fibonacci) my favorite. stop loss 0.8740.

  • az za

    you trde is counter trend dude, but it ok TP just area 0.8530 if below than that is very2 risk

    • cyclopip

      I notice that the long-term trend is still bullish, which is why I don’t plan to hold this trade for very long (definitely not past Friday). I may consider exiting around .8530 if the market gives me signs to exit. Thanks for sharing your thoughts, bud!

    • Amit Desai

      I would agree with az za that if at all, go in the direction of the tide or sit on the shore.

  • Erik

    I’m bullish on this pair. My target is .8850 on the weekly chart and I am only going long on my H4.

    • cyclopip

      Good luck, mate! Where did you enter your long position?

  • jan roguszka

    I put a sell stop order at 0.8530 after the NY close last night. It just makes a lot of sense technically to sell this pair. First, there is a pin bar rejection on the daily at 0.86 which has been a solid S/R line going back to 2008. Second, there was a double top at 0.8790 which has since broken down through 0.86; I see this set up as a confirmation of the breakdown. Finally, there is a descending trendline on the weekly chart going back to 2008 which has capped the recent rally.