Forex Trade Review: 2014-03-07
I patiently held my EUR/GBP short, but it just wasn’t meant to be thanks to improving European data. Here’s a quick review on my forex trade.
Original Trade Idea: Fibonacci Short on EUR/GBP
EUR/GBP just couldn’t escape the range between .8200 and .8250. For the most part, it looks like the bears kept the longer-term downtrend in tact, but it was a string of positive German economic data and mainly, a tick higher in inflation that kept buyers hanging around .8200.
Coming into yesterday’s events, I didn’t expect much action from the Bank of England. Expectations were for no changes to monetary policy and the data leading up to it didn’t suggest anything drastic should happen for this event.
For the ECB monetary policy decision, the main question was, “Will the ECB cut rates further?” But with data being good over the last few weeks, I thought it was a low probability that we’d see a cut, and with some in the market pricing in a cut, the reaction would be a big pop for the euro if we didn’t get that cut. With that in mind, I closed out my position manually at .8218 ahead of the ECB and BOE events to avoid event risk.
Total: +7 pips/+0.058% gain
It looks like closing was the right call as the ECB held and later, President Draghi cited that inflation is expected to rise gradually, taking away euro bear’s hopes of further weakness.
In hindsight, I think I played the pair well, but maybe I should have been a little more patient by waiting for a better price. Of course, that’s a tough game to play because we’ll never know when the market may move. Waiting for the perfect entry can often lead to you missing out on that 3x trade or more–and that often hurts more than taking a losing trade, trust me!
Besides my entry, I believe I had the right bias and right trade plan, but the data started favoring the euro. It happens to us fundamental traders sometimes and you just have to adapt to the shifting data and sentiment. Live to trade another day, right?
Aight, that’s it for me this week. I’m still watching AUD/NZD for a possible short, but that positive Aussie data might keep it lifted for a while. I’ll check it out on Monday and let ya know what I think. Until then, have a great weekend!