Trade Closed: 2011-4-19 3:09
What goes up, must come down. I think Alicia Keys wasn’t just singin’ about cheating ex-boyfriends in her song Karma. Looking at yesterday’s sharp euro sell-off, it seems to me that traders are tryin’ and desirin’ to go back to the dollar!
Fundamentally, it seems that traders have finally turned their risk aversion switch back on again. Last Friday, the euro fell on news that Greece would most likely need to restructure its debt. This has been a long-time fear of the market, and now that it has hit the limelight, traders finding ways to cover their long euro positions!
Then, yesterday, the euro fell again when Standard & Poor, a credit rating agency decided to downgrade the U.S. debt outlook to negative from stable.
Ouchies. That’s like getting two “It’s not you, it’s me” from boys in just one weekend!
On the technical side of things, it looks like EUR/USD still has room to move up with Stochastic still showing upward momentum. And so, my plan is to wait for a retracement and short the pair when it’s already overbought and signs of exhaustion start showing. I’m gonna be on my tippy toes for reversal candlestick patterns between the 61.8% and 38.2% Fibonacci retracement levels.
So there. Based on my fundamental and technical view of the pair, I am looking for ways to go short. I don’t exactly know when, but I will pull the trigger once if price shows resistance between the 38.2% and 61.8% Fibonacci retracement levels. Hopefully, price manages to get up to my desired entry point and give me a chance to bag some oh-so-lovely pips!
And as always, if you’ve got any questions or comments, you can hit me up here or in Facebook or Twitter!