Trade Closed: 2013-09-08 17:30 ET
It looks like the trend wasn’t my friend this time thanks to comments from the ECB!
My main man Forex Gump wrote all about it in a recent blog post, that the euro got slammed big time when Draghi admitted that policymakers actually discussed lowering interest rates during their monetary policy meeting! This lead to a downside break in all euro pairs, including my long position in EUR/CAD. I held on on the possibility of it being a short-time reaction and that CAD weakness would prevail, but no luck there as it was all down hill for the euro. I was stopped out at 1.3715.
Total: -105 pips/ -0.50% loss
The trade was looking sweet as the rising trendline and 61% Fibs held, but as expected with FX trading, something will eventually come in to change the story. Thank goodness for my stop, but I probably should have closed the trade right after Draghi made the comments on lowering rates. That’s a pretty big sentiment changer and I could have limited my losses even more. Something to remember for next ECB event!
So, I gave back some of my AUD/CAD profit, but it’s a new week and time to look for new opportunities. Good luck trading this week, my forex friends! This is Cyclopip signing off!
Trade Idea: 2013-09-03 5:20 ET
Check out another hot trend setup, this time on EUR/CAD!
Since bottoming out around 1.2130 last year, this pair has been on an uptrend. And with European data starting towards positive, while Canada has been weak as of late, this trade may have the legs to continue.
Now with this pull back to the rising trendline on the 4 hour chart, this might be the perfect opportunity to play this trend. The trendline lines up nicely with a major psychological level that has attracted a lot of orders in the past 1.3800, as well as the 61% Fibonacci retracement area. This kind of confluence may attract more orders than other areas, so I like the probability of a return to the uptrend here. Here’s how I’m setting up my trade:
Long EUR/CAD at 1.3820, stop at 1.3715, profit target at 1.4100
I’m setting my stop just below that confluence of lines, which would clearly invalidate my trade idea and I’m being extra careful with my entry because of all the big events on the forex calendar this week. My initial max target is the previous swing high, but I may let this trade run if the European and Canadian stories continue to support this rally higher. But for now, I’m only risking 0.50% of my account with an initial potential reward-to-risk ratio of 2.66:1.
What do you guys think? Will this trend stay intact?