Countertrend Trade on EUR/USD

Trade Idea: 2012-6-7 1:26

I’m hoping to extend my winning streak by going long on EUR/USD. Are you with me? Here’s my trade idea:

EUR/USD 1-Hour Chart

On the technical side of things, the pair has been making higher highs and higher lows on the hourly timeframe. I think that this trend could carry on for at least a couple of days, so I’m going to buy the pair when it pulls back.

Using the Fibonacci retracement tool, I spotted that the 1.2500 coincides nicely with the 61.8% Fib level. I plan to enter at that level when reversal candlesticks materialize and confirm my bullish bias.

Meanwhile, on the fundamental side of things, I think the market is starting to price in the possibility of QE3 due to the weakening macroeconomic situation of the U.S.

If you recall, the non-farm payrolls last Friday came in severely weak. It showed that the unemployment rate surged higher to 8.2%. The number of new jobs was also only at 69,000, and not 151,000 like initially expected. It also helped that euro zone fears have somewhat tempered, thanks to the emergency conference call of the G-7 nations two days ago.

There are a couple of important events on the docket today. There’s the bond auction of Spain, as well as a scheduled speech by Federal Reserve Chairman Ben Bernanke. I don’t know how those events will turn out, but I hope they end up helping my trade!

If I do decide to enter, I’ll place my stop loss just below the most recent swing low at 1.2430. Once price hits the level, my trade idea will already be invalidated. I’ll put in two positions, risking 0.5% of my account on each one. I will take profit at 1.2600 on my first position then I’ll let the other half ride the trend.

To recap, my plan is:

Buy EUR/USD at 1.2500, stop loss at 1.2430, first profit target at 1.2600, second profit target yet to be determined, 1% risk. Risk disclosure.

XOXO,

Huck

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23 comments

  1. Waynon

    nice setup on H1, took a long @1.24600 SL 1.24400 TP to be determined, depends if 1.26200 will hold or not! 

    Reply
  2. robertok

    Am waiting for the exact same set up as well, NY open. my stop loss however is smaller, only 35 pips. My profit targets are 1.2585, 1.2610 and final at 1.2640.

    Reply
  3. Crouzilles

     Looks like a good trade idea, but where is the 1.2530 swing low you talk about?
    Personally I can see a 1.2540 swing low which is the 1.000% Fib level, did you make a typo?

    Personally, I think it is too deep a stop loss if buying at 1.2500. I’d rather put my stop loss at 1.2450 which is 25 pips below the 0.764% Fib level.

    With a Limit at 1.2600 you get yourself a nice rounded 2:1 risk ratio.

    What do I know, I’m a noob ;)

    Good trading

    Reply
  4. Azrijaafar

    Hi Huck..
    Already long since yesterday. Agreed with yous SL and PT. But I just dont think EU will retrace until your entry point. But who knows, right??

    Reply
    • Ajay M Surve

      Hi Joshi Sir ! Where from you ? I like to talk with you …I am new in this trade so I will like to…share you experience in this fild…we cam meet at my Gmail id ajay.m.surve ..i am waiting for your reply…Sir 

      Reply
  5. robertok

    This set up is gonna get tricky in a min. It looks like a sell day set up so I wont hold it past london open highs. Will be shorting the it later when it makes a high during london open

    Reply
    • robertok

      You got a point there but am playing on the US jobless claims data when it comes out later. It might just provide the catalyst to drop the pair to that 1.2500 level thats why I said NY open. It’s also why I wouldn’t take the 38% entry just yet. If there was no US data coming out then I would have agreed with you. Let’s wait and see.

      Reply
      • Hucklekiwi Piphuck Post author

        Sadly, I missed the initial move up as my trade did not trigger last night. I’m thinking whether I should keep my limit order at 1.2500, or make some adjustments.

        Reply
        • robertok

          I made minor adjustments for a 1.2485 entry and a final 1.2575 exit if it re tests the asian session high.

          Reply
          • Hucklekiwi Piphuck Post author

            Kept my orders and got triggered last Friday. Price started week with a huge gap up! Nice!

          • Robertok

            Haha, I saw that..woke up with a smile on my face. Am out of the trade now…150pip haul. After adjusting my entry  and stop loss on friday. My original final exit of 1.2640 got hit so thats it for me. The gap is probably gonna close in london session so thats why am out.

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