Trade Idea: 2013-6-6 2:07
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.