Trade Idea: 2013-2-28 00:12
After days of consolidating, EUR/USD is finally retracing. I’m not sure when price will encounter resistance, so I’m going to be extra careful. I don’t want to get ahead of myself because… well, being assuming (whether it be trading or in love) always leaves me hurting!
That being said, I’m going to wait for price to reach 1.3200 before pulling the trigger. There seems to be confluence around the area since the 61.8% Fibonacci retracement level, falling trend line, and 200 SMA could be found there.
I’m looking to put my stop at 1.3275 as it will give my trade more than enough room to breathe. As for my profit target, I’m going to place it at 1.3000, which is a major support area.
As I said in my most recent trade idea, I think U.S. fundamentals are more sound. For one, it does not have the same political problems that the euro zone is facing. Public polls in Italy show that Berlusconi has a chance of becoming the next Prime Minister. Generally speaking, market participants think that his re-election will be bad for Italy’s economy.
Another issue is the shift in the Federal Reserve’s stance with regards to monetary policy. As Pip Diddy keeps saying in his Daily Forex Fundamentals, the Fed could make some changes in its next monetary policy meeting.
To recap, here’s what I’m going to do:
Short at 1.3200, stop loss at 1.3275, profit target at 1.3000. Risk disclosure.