EUR/USD: A Simple Falling Trend Line Setup – Trade Update

Trade update: 2012-10-31 01:13 am EST

EUR/USD Hourly Chart

1.58% gain, baby!

As I said in my HLHB Weekly Update, I closed half of my position at 1.2920. I initially wanted to hold on to my trade as I hoped that price would continue trading lower. However, since it didn’t make a new low, I simply took profit on the remainder of my position at 1.2914.

Woohoo! I hope this trade marks the beginning of a winning streak. Fingers crossed!

Trade idea: 2012-10-25 2:03 am EST

EUR/USD Hourly Chart

It looks like there’s a bearish confluence on EUR/USD around a previous support area. So this week, I’ll try to score a win by shorting the pair. Wish me luck, pretty please!

Connecting the pair’s most recent highs, we actually see that a falling trend line has materialized. I used the Fibonacci tool and realized that the trend line actually coincides nicely with the 61.8% level and last week’s low around 1.3020. Very tempting, eh?

Fundamentally, I think that there are also a lot of downside risks, especially when you take into account all the things that are going on in the euro zone at the moment.

For one, there has been no request for a bailout by Spain, and there’s nothing to suggest that it’s coming soon. This is very disappointing for market participants, which has led to a lot of “risk off” trades in the last few days.

Also note that yesterday’s PMI readings mostly came in worse-than-expected. PMIs are used to see where the economy is headed, so when they are falling, it also means that the economy is contracting.

Given the technical setup and the current fundamental landscape I have decided to place a sell order on EUR/USD at 1.3020. Here are the complete details of my trade idea:

Sell EUR/USD at 1.3020, SL at 1.3085 (above this week’s high), PT1 at 1.2920 (yesterday’s low), PT2 to be determined. 1% risk. Risk disclosure.

Wish me luck!

XOXO,

Huck

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  • disqus_B4cL9iLxfs

    Nice! I did catch sell signal too, but on 4 hour chart, connecting lower highs and the 19th resistance level, i got the same idea to sell at 1.32. I only not sure to wait for the cross of the two lines or jump in when price hit 1.32???

  • Shriram Iyer

    Best of luck. Nice setup. Hopefully your trade will be triggered.

  • adrian

    you made it; first TP

  • Tsvetomir Traykov

    I did almost the same analysis. There is also the 100SMA acting as a resistance.

  • Jack Reijven

    I believe that with a bullish pin bar supported by a strong area @ 1.2956, you may be better off to go long on this trade. I missede the boat, as I had entered a limit order @ the 50% retracement of the pinbar (1.2958) and the trade took off without me. I had a profit target set @ 1.3059 (1:2 Risk Reward). Never mind. Better luck next time. Don’t forget that no trade is also a valid position and you can’t lose on that one, so it is a good position/trade. There will always be another trade.
    Hope for you that it reverses and your trade will be a good one.
    Cheers,
    Jack.

  • real pips

    HI Huck,
    When are gonna release Q3 for the trend catcher?
    its overdue.

  • Sheriff Hm

    nice catch. hope you win today.

  • bluefley

    This is gonna be interesting, I have the opposite trade running! Trading the daily chart, low test candle reversal and bounce of the 20 ema. You could also add a hidden bullish divergence in there. Also considering it’s been in an uptrend for almost 3 months… We’ll see :)

  • Fozzi

    forgive my newbie question…

    PT1 at 1.2920

    PT2 to be arranged.

    did u place 2 sell orders????

    • huck

      Yes, I placed 2 sell orders. If I’m planning to short with 1 lot, for instance, I will set two 50,000-unit sell orders. Hope that helps!