Trade Idea: 2011-12-8 00:00
After days of chart-watching, I have finally decided on a trade and I have Big Pippin to thank for it!
The trade is a simple one as it just uses a combination of a falling trend line resistance and Stochastic. As you can see, the pair is starting to inch closer and closer to my desired entry point. Stochastic is also approaching the overbought territory, hinting that the bulls are running of out of steam.
On the fundamental side of things, I will have to keep tabs on the ECB interest rate decision later. Just like most forex junkies, I expect the central bank to keep interest rates on hold. There are those who say that we could see the central bank cut borrowing costs for a second month in a row, but I’ll keep my expectations low.
And besides, I think that dovish remarks from ECB President Mario Draghi will be enough to send the euro down the charts. I mean, we’ve been hearing a lot of bad news from the euro zone, from credit rating downgrade warnings to funding difficulties to talks of an impending recession. It’s not that hard to imagine hearing some pessimistic remarks from the central bank head honcho, right?
Anyway, with price making “lower highs,” I think this is a pretty decent trade. I’m hoping to jump in at 1.3430, once the Stochastic hits overbought. My stop will be placed somewhere above the previous swing high (1.3470) and my profit target is set at the former low (1.3350).
Wish me luck!