EUR/USD: New Yearly Highs in the Making? – Trade Closed

Trade Closed: 2011-5-9 2:49

EUR/USD Hourly Chart

Just like my home girl Lady Gaga’s single, Judas, EUR/USD dropped on the charts (by more than 500 pips!) when ECB President Trichet left out the words “strong vigilance” in his statement and stopped me out at 1.4770. I guess I was too late in befriending the trend.

I bought the pair at market (1.4845) ahead of the ECB interest rate decision. Yep! I guess you could say that it was very impulsive of me for doing so. I hadn’t anticipated much changes from the ECB’s rhetoric so I thought that there was more room for the pair to move up than down. But boy was I wrong!

Oh well! What’s done is done. I don’t want to be such a cry baby anymore. But rest assured that the lesson is learned: be patient. Heck! How can I not be careful with that 1.0% loss on my account?

Stopped out at 1.4770 / 1.0% loss

I think playing the break out would have been a better and safer idea. What do you think? Anyone of you guys made dough on EUR/USD? Tell us how by writing on the comment box below or hit me up on Facebook or Twitter!

Trade Idea: 2011-5-5 1:11

EUR/USD Hourly Chart

As you can see, the pair broke above the range yesterday and made a new high. With the appearance of the bullish divergence and with the pair having found support at the week open, I’m anticipating a repeat of yesterday’s price action.

My crystal ball* seems to show that EUR/USD has the potential to break out of its trading range and trade past yesterday’s high.

*Made in China

In order to catch the move, I decided to open two positions. The first position aims to take profit just a few pips below yesterday’s high at 1.4930. For the second position, I’ll just let it ride and close it manually at the end of the week. Of course, as always, I’ll be using a stop loss. I placed my stop below yesterday’s low at 1.4770. If price reaches this level, I believe that my trade is invalidated.

I’m all about having fun, but I don’t want to be in the market when the NFP report sparks fireworks on the charts. I may even close it early when prior the NFP!

I’m also wary about the upcoming European Central Bank interest rate decision at 7:45 am EST. It won’t be as big as the NFP, but it has the potential to cause some strong breakouts if the ECB does not keep rates unchanged at 1.25% as the market expects it to do. Still, I personally think that the bias is to the upside due to the rising food and commodity prices.

So, based on my technical and fundamental view on EUR/USD, I’m going to buy it. Here’s my plan:

Buy two positions at market (1.4845), first pt 1.4930, second pt yet to be determined, stop loss at 1.4770.

I feel good about this trade. How about you? Follow me Twitter, like my page on Facebook, or leave your sweet nothings in the comment box below.

  • Packygee

    good thing we didnt go short yesterday!

    • huck

      You said it. Whew!

    • John McKee

      I did took a 20 pip loss…could have been worse

  • Goras99

    I think it’s well founded trade, from both sides of technical and fundamental sides. What we have seen this week (news related dollar), it’s high probability that pair gonna move up again, back to highs.

    Hope, your trade will be fine ! =]

    • Joshua Pearce Gibson


  • Joshua Pearce Gibson

    When everyone is shouting “buy”, that’s about the time you start quietly looking for a good place to go short.

    • huck

      So you’re going to use me as a contrarian indicator? Hahaha!!

      • Joshua Pearce Gibson

        Absolutely not. That would be rude.

        • huck

          Hey, it’s a perfectly legitimate strategy 😉

          • Joshua Pearce Gibson


          • Joshua Pearce Gibson

            All honesty though… pending limit sell @ 1.5 for me.

          • Joshua Pearce Gibson

            OR I sell when price closes below 1.45. those are my terms.

          • piphawk

            hey hucklekiwi
            i agree its a good strategy but i had a quick look and wouldnt it do better in a trending market? not channels? i trade something very similar but i only apply it in a trending market because channels bounce every where. also correct me if im wrong but wasnt yesterday a fake out? so that doesnt count as a real brake out or does it? im actually asking here as i am unfamiliar with channels? but wouldnt that mean that the resistance level is still there?

          • piphawk

            also i thought you needed three touches on a line for a valid resistance line? thats what i use entry on the third otherwise you can just join two tops up anywhere

    • Guest

      You are currently very right! Huck was late, unlucky her, maybe next time.

    • Guest

      but, you also missed the short opportunity like me? If so, unlucky us..

  • Sedeete

    I like the idea, took more or less the same (bit tighter stop loss, and took it a bit later than you did).

    I’m hoping and aiming for the 1.5000 psychological resistance to probably close my trade

  • Adrian Stoica

    Have you opened these positions?

    • huck

      Yes sir 🙂

      • Adrian Stoica

        Thank you.

  • Mnajib_1986

    Nice idea HuckleKiwi Pip… I`m also doing same with you but I have bought at 1.48150… Have a nice trade;-)

    • huck

      Nice! Better entry!

  • anne

    Can anybody help me to about the EUR /JPY TODAY?

  • Rolands

    I think it’s good.
    I’m counting waves and I think that was end of second wave where you bought, so now I’m expecting powerfull third wave to target ~1.5018 🙂

  • Rolands

    + How do you choose you pt level?

    • John McKee

      I look for a 2 to 1 reward to risk ratio then adjust according to resistance this one was quite easy as yesterdays high is above that reward level

      • huck

        Whew! I’m glad that some of my readers won. Congratulations!

  • Jez

    I’m in the Queen Cleopiptra school of trading on this one which means sell at 1.4938 (previous high) if Stochastics (21,3,1) are overbought.

  • John McKee

    Bought at 14823 structured the trade using two trades limiting total exposure to 5% both stop losses the same but one profit limit set to 100 pips second set to 200pips when first pl hit will move stop on second trade to break even and then trail it

  • huck

    EUR/USD dropped like a rock just now!!! What happened? I think my emotions are on a rollercoaster right now… 🙁

    • Jez

      Trichet sends the Euro nosediving – FXstreetNews

    • kjpip

      Trichet just got that best of you. He was probably short himself.

    • Name to comment

      Sorry to hear that. I lost a bunch of money. I bought 5 minis at 1.4835 10:30GMT (6:30 EDT) and then added another 5 minis at 1.4731 11:30GMT (7:30EDT). Serious loss. For the sake of analysis can you tell me your trade position details.

  • Andy H

    What software do you use to take pictures and annotate charts?!

    • huck

      Xtick has a function to capture charts while I use Adobe Fireworks to make annotations.

  • Richie

    Hi Huck,

    I don’t wanna sound like some smart-ass, but I think that you should definitely avoid trading the Euro just one day ahead a ECB meeting. There is never a guarantee for something in the markets and we don’t know the reaction to such events.

    • huck

      I will keep that in mind for my next trades!

    • Jim P

      What he said. Trade after big reports, not before.

  • Darkforce82

    Trichet’s previous attempt to sink the Euro all failed, because Big Ben is just a little bit more powerful than him. Interesting to see whether the reputation he has gained recently will give him more ground in winning the battle.

  • snpfx

    hey huck if you take a look at the daily tf, the price hasnt been able to close above the 1.4890-1.4900 for 6 days in a row!!!, plus stoch in overbought conditions too. i hope it help for your future trades:)

    • huck

      Yeah! There are like 5 doji candles in succession. Ugh!!

  • Buckscoder

    Lol. I bought way cheaper than you. I bought after the drop. Lol. I waited for exactly this drop. Lol. And this has nothing to do with Trichet. Lol. The apple was overdue. Plus what has the drop of commodities to do with Trichet? 😉

    The eurusd is still bullish on W/M. So, it’s likely it will go up again to test the 150. If I am not wrong, lol. Albeit this earthquake was needed and then there goes it, sell in May and go away. Today every single commodity and many shares dropped like a rock. Now it can climb to da roof! 🙂

    Just one thing, Huck: Don’t trade so much pairs if you don’t know the exact “mechanics” of one pair. Focus on just one pair and if your account is good for an “explosion” and you don’t know where to put the money because of all your profits coming in, then start with another pair. Not one second earlier!

    Focus on one pair. One system. Jumping between different pair, systems, etc and you will probably never learn one pair right.

    That’s two more cents to your mug. 😉

  • Asdfj

    Hey Huck,

    I think you mis-analyzed the trading range.
    If you look at the 4Hr time frame, you can see that it was a false breakout. If you’re going to play the range breakout, you’ll at least need to get confirmation that prices have broken the range. Also, a strategy I would suggest is to ‘straddle’ the range. Have both buy and sell orders. If prices break out but then cross back to the other side, you can recoup some of the losses.In fact that’s what I did. I had incorrectly calculated the range and got filled on my order when the false breakout came. I left the short order in place though and was stopped out on my long position and got in on the short. Now I’ve recouped the losses and am actually making money from the trade!

  • mnj_1986

    I got a big drop on my emotional…crying pips uwakkkkkk …:-(

  • Pigsinablanket

    That was some stiff resitance there Huck. Triple top and what not. We were in consolidation so I cant imagine why you would trade a break out before a breakout. Luv ya lots

  • Sid

    Did you Got hit ?