EUR/USD: Anticipating An Upside Break

Trade Idea: 2013-6-6 2:07

EUR/USD 1-hour Chart

As you can see, EUR/USD is clearly in consolidation mode as it has been trading within a very tight 50-pip range. The pair has found support at 1.3050 and pretty good resistance at 1.3100. Normally, I would implement a strategy that can go either long or short depending on the breakout, but given the pair’s recent uptrend and the fundamentals, I’ve decided to take an upside bias.

My plan is simple: if price makes a new high, I’m going to go long. I’ll aim for the next key resistance level at 1.3200, with my stop nearly placed below today’s low.

I’m anticipating an upside break to happen before or during the ECB rate statement. Why? Well, I think that the central bank won’t announce that it will resort to negative rates in order to boost the economy.

I remember that during the bank’s last rate decision, the euro sold off heavily when the idea was brought up. But if we take a look at the economic data that have been released since then, they haven’t been so bad as everyone thought they would be. Well, at least in my opinion, they’re not that awful to warrant such a dire measure from the ECB.

As for the dollar, perhaps yesterday’s negative ADP figure will inspire a bit of sell-off. After all, the report is considered as a leading indicator of the much-anticipated NFP.

I’ll closely watch my trade. Heck, I felt so bad for my account after my last trade on EUR/USD went wrong. Good thing I watched the latest episode of the Game of Thrones which made me realize that I could be suffering a fate much worse than this!

Anyway, to recap, this is my plan:

Buy stop at 1.3125. Profit target at 1.3200. Stop loss at 1.3060. As usual, I’ll risk only 1% of my account. Risk disclosure.

XOXO,

Huck

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  • funtim78

    Very nice one! I’m sure you did not even expect the 1.33 by the end of the day 😉

  • PipMeHappy

    I like your trade idea, although I still think that the fundamentals point to a USD rise and a bearish Euro… Today’s 230+ pips bullish Euro candle (Day chart) was pretty impressive, though and it is a convincing technical move… However, a tapering of QE3 by September could lead to further potential upside for the Greenback… Yes, patience, patience! I continue to hold short the Euro. Good luck to us both!

    • PipMeHappy

      NFP out… 175k jobs created…better result than forecast… The unemployment rate, however, is up 0.1%…

      Reactions from the market: USD bullish.

      EUR/USD down from 1.3275 to 1.3191, and falling;

      USD/JPY up from just above 95.00 to 97.00, and rising…

      Good news for the Greenback…

      Happy trading.