EUR/USD: Perfect Setup? – Stopped Out

Trade Closed: 2011-2-22 02:14

EUR/USD 4-hour Chart

Last week, I decided to enter at the 61.8% Fibonacci retracement level after the pair had found resistance. The pair did go my way, but the move down didn’t last long. Before I could adjust my position, the market rallied strongly, broke the falling trend line, and stopped me out. Boo!

Closed at 1.3713: -102 pips / -1.0%

To be honest, I don’t feel a wee bit disappointed. I’ve learned from reading Dr. Pipslow‘s blogs that losing is part of the game. Although it’s not something I like, I just have to deal with it! And besides, it’s my first loss for the year, and I’m still up 1.5% overall!

Trade Idea: 2011-2-17 2:02

EUR/USD 4-hour Chart

Okay, I have to admit, I got a little bit too excited when I saw this setup that I almost fell out of my chair!

My entry for this trade will *hopefully* be at the 61.8% Fibonacci retracement level. I believe this will be a very good trade since Stochastic is already overbought and my desired level coincides nicely with the falling trend line.

But to be perfectly honest, I don’t know what to make out of the lineup of high-caliber reports we have for the pair.

I mean, yesterday the dollar lost to almost all of its counterparts because of risk appetite that was triggered by a relatively upbeat tone of the FOMC minutes. So if the the CPI, unemployment claims, and Philadelphia Fed Manufacturing index reports come in better than expected, or if Big Ben Bernanke sounds optimistic in his speech later, we may see the pair trade higher.

And so, if market sentiment continues to dictate price action, I would be looking for negative figures before for my trade because these would be bearish on the pair.

I guess the best thing to do for now is wait… wait for price to find resistance at the falling trend line and form bearish reversal candlestick patterns. I’ve got the BabyPips.com candlestick cheat sheet printed right on top of my PC, so I’m sure I won’t be missing any sell signals!

Make sure you follow BabyPips.com on Twitter and Facebook so I can update you!

31 comments

  1. sunglow

    I am not so sure that the EUR/USD will climb back to your entry point. I am bearish of this pair at the moment and I wonder if you have missed your opportunity to trade.

    Reply
  2. Pipster4lyphe

    Good call Huck….but it seems as if price turned shy of your potential area of interest…I guess you are waiting until C.O.D. to determine what you want to do…never say never…in forex anything is likely…but this is definitely a good setup!

    Reply
  3. jonboy700

    Yes, 50% Fib. retrace @~1.3643, nice downward trendline, 4th leg of Elliot wave; announcements were a little slow, but not bad, it looks pretty good. I think I’m in.

    Reply
  4. abshehu

    wow you got it babe! am watching my macd set up in 4H time frame a bearish divergence signal in the making. i have a pending sell @1.3548, 1.3515 wew gud luck.

    Reply
  5. sunglow

    I am not so sure that the EUR/USD will climb back to your entry point. I am bearish of this pair at the moment and I wonder if you have missed your opportunity to trade.

    Reply
  6. Pipster4lyphe

    Good call Huck….but it seems as if price turned shy of your potential area of interest…I guess you are waiting until C.O.D. to determine what you want to do…never say never…in forex anything is likely…but this is definitely a good setup!

    Reply
  7. Hexcentric

    I think you are just about right but I think its already hitting resistance so I’m looking for a reversal pattern in the next couple of fibsticks

    Reply
  8. jonboy700

    Yes, 50% Fib. retrace @~1.3643, nice downward trendline, 4th leg of Elliot wave; announcements were a little slow, but not bad, it looks pretty good. I think I’m in.

    Reply
  9. abshehu

    wow you got it babe! am watching my macd set up in 4H time frame a bearish divergence signal in the making. i have a pending sell @1.3548, 1.3515 wew gud luck.

    Reply
  10. Pipster4lyphe

    You know what Huck…u see if u should minimize your candle sticks on your chart…you will notice that price made a sharp upward mover…starts to move in a descending channel…it would resemble a flag if you do that…so be careful with that trend line…sometimes a perfect setup tend to be….not so perfect after all…take a closer look…a break of the trend line will confirm the flag formation pattern…a way to cool down then the momentum is speed up…often times as newbie we miss the overall direction of the market due to these patterns. Let me know your thoughts too…although, you did say you were looking for candlestick confirmation…so that’s a good thing.

    Reply
  11. Hexcentric

    I think you are just about right but I think its already hitting resistance so I’m looking for a reversal pattern in the next couple of fibsticks

    Reply
  12. Pipster4lyphe

    You know what Huck…u see if u should minimize your candle sticks on your chart…you will notice that price made a sharp upward mover…starts to move in a descending channel…it would resemble a flag if you do that…so be careful with that trend line…sometimes a perfect setup tend to be….not so perfect after all…take a closer look…a break of the trend line will confirm the flag formation pattern…a way to cool down then the momentum is speed up…often times as newbie we miss the overall direction of the market due to these patterns. Let me know your thoughts too…although, you did say you were looking for candlestick confirmation…so that’s a good thing.

    Reply
  13. 10dec

    I noticed u tend to be bearish for the EUR/US pair. You have shorted the pair on a number of occassion and got burnt. You had one long trade but chose to close out early with 50+ pips afterwhich the pair went on to hit 1.38 (almost 200+pips after u closed). Why after all these u are still trading against the trend?? As I speak now,the pair has shot up almost 100pips in the euro sessions even though it had dropped about 150 pips in the asian session.The market has for the moment forgotten about the euro woes.

    Reply
  14. 10dec

    I noticed u tend to be bearish for the EUR/US pair. You have shorted the pair on a number of occassion and got burnt. You had one long trade but chose to close out early with 50+ pips afterwhich the pair went on to hit 1.38 (almost 200+pips after u closed). Why after all these u are still trading against the trend?? As I speak now,the pair has shot up almost 100pips in the euro sessions even though it had dropped about 150 pips in the asian session.The market has for the moment forgotten about the euro woes.

    Reply
  15. SagiCZ

    2cardarkitek.. Not really actually. Because that’s exactly where all the crowd’s stops will be. And you know what the pros do, right? They HUNT the crowd!

    Reply
  16. SagiCZ

    2cardarkitek.. Not really actually. Because that’s exactly where all the crowd’s stops will be. And you know what the pros do, right? They HUNT the crowd!

    Reply
  17. Hucklekiwi PipHuck

    @monstapips: It didn’t work out. Boo hoo! I guess no free coffee for me.

    @sunglow @jonboy700 @abshehu @Hexcentric: It didn’t work out as well as I thought it would. Sorry guys!

    @Pipster4lyphe: I guess I should have zoomed out on the chart before I pulled the trigger. Thanks for the tips Pipster!

    @10dec: I guess I am, huh? I’ll keep that in mind and I promise I’ll do my best to set my bias aside next time! Thanks for pointing that out 10dec!

    @cadarkitek @SagiCZ: Interesting insights guys! I’ll be sure to take them into consideration.

    Reply
  18. Hucklekiwi PipHuck

    @monstapips: It didn’t work out. Boo hoo! I guess no free coffee for me.

    @sunglow @jonboy700 @abshehu @Hexcentric: It didn’t work out as well as I thought it would. Sorry guys!

    @Pipster4lyphe: I guess I should have zoomed out on the chart before I pulled the trigger. Thanks for the tips Pipster!

    @10dec: I guess I am, huh? I’ll keep that in mind and I promise I’ll do my best to set my bias aside next time! Thanks for pointing that out 10dec!

    @cadarkitek @SagiCZ: Interesting insights guys! I’ll be sure to take them into consideration.

    Reply
  19. ddinnov

    Sorry this didn’t work out. Nice set up although I would have been either all out or some out with stop at breakeven at 1.3550 – that’s some strong support there looking at all the recent bars that have stopped there.

    I think that’s a 50% ret on the daily as well although I’m not in front of a chart right now.

    Oh well – on to the next one! :D

    Reply
  20. ddinnov

    Sorry this didn’t work out. Nice set up although I would have been either all out or some out with stop at breakeven at 1.3550 – that’s some strong support there looking at all the recent bars that have stopped there.

    I think that’s a 50% ret on the daily as well although I’m not in front of a chart right now.

    Oh well – on to the next one! :D

    Reply
  21. gondaniels

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    Reply
  22. gondaniels

    Business accounting services
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    Reply
  23. Hexcentric

    Hi Huck sorry it didn’t work out. I didn’t take the trade on this one, the daily chart I use showed a bullish candle 17th followed by bearish spinning top on 20th and a big hammer on 21st which talked me out of going short. I’m thinking this is now in 3rd impulse elliot wave so I’m planning on waiting for the end of wave 5 and see if there’s a shorting opportunity then. Expecting this to arrive around the 76.4% retrace at 13951

    Reply
  24. Hexcentric

    Hi Huck sorry it didn’t work out. I didn’t take the trade on this one, the daily chart I use showed a bullish candle 17th followed by bearish spinning top on 20th and a big hammer on 21st which talked me out of going short. I’m thinking this is now in 3rd impulse elliot wave so I’m planning on waiting for the end of wave 5 and see if there’s a shorting opportunity then. Expecting this to arrive around the 76.4% retrace at 13951

    Reply
  25. pipsinvestigator

    @Huck, Well, losing is part of the Game, making something emotional out of it can be detrimental.

    Reply
  26. pipsinvestigator

    @Huck, Well, losing is part of the Game, making something emotional out of it can be detrimental.

    Reply
  27. pipsinvestigator

    @Huck, Well, losing is part of the Game, making something emotional out of it can be detrimental.

    Reply

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