EUR/USD: Shorting at the Shoulder

Trade Idea: 2012-12-12 3:21

EUR/USD 4-hour Chart

Since my past two losses were from GBP/USD, I’m going to go with EUR/USD this time. As you can see, the pair has just broken a major rising trend line, and with price testing the area between the 50.0% and 61.8% Fibonacci retracement levels, I think price could start moving down again.

Normally, I wait for candlestick patterns for confirmation but given how price has stalled at the 1.3000 major psychological level and the oversold Stochastic, I decided to jump in already. What’s more is that the pair seems to be in the process of forming the right shoulder of a big head and shoulders pattern.

On the fundamental side of things, I think that the upcoming FOMC Statement could turn out to be bullish for the dollar. From what I’ve read, most market participants are anticipating the Fed to announce another stimulus program to replace Operation Twist which is due to expire at the end of the month.

The consensus seems to be for a liquidity plan amounting to 45 billion USD. However, I think that there’s a good chance for Ben Bernanke to announce a package of a smaller scale given the recent improvements in the economy.

So, there ya go! That’s my take on the market. To recap, my plan is to:

Sell at market (1.3005). Stop loss at 1.3080, PT1 at 1.2900, PT2 yet to be determine. I will bet 1% of my account. Risk disclosure.

Keep your fingers crossed for me, will ya?

XOXO,

Huck

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  • Fitz

    I’m following you on this. Good luck to us! :D

  • Shriram Iyer

    Woaahhhh Huck!!! As much as i would like to wish you luck I would recommend you to hear out the FOMC decision. Very risky trade today. But i keep fingers crossed. I myself will wait for the decision.

    • huck

      Unfortunately, the FOMC statement really did turn out to be negative for my trade. Oh well…

  • SenatorJohnMcCain

    It’s very funny to see people on babypips failing over and over. Have you ever kept track of how many times these “patterns” work and how many times they don’t? If it’s working for you, then perhaps there is some truth to it, but if you are adhering to it in spite of the fact of it not working for you over and over, then maybe you’re trying to hard to force some flawed mindset on the market and you’re feeling the pain as a result. FOMC is not risky if you know how to trade it (hedging works as does reducing your exposure). Ultimately a course of microeconomics would help a lot of traders.

    • Hebert

      I totally agree with you!!! They are totally very much the same with the same rigid thinking that the only way the euro will go is down due to the 4 year old euro crisis. I have been following their trades on this pair for quite some time and noticed their persistent bias of shorting the pair ignoring many times the ongoing market sentiment. I think they developed this bias because at the begining of the euro crisis they managed to reaped some good profit from shorting the pair and from then on all their trades are almost the same ie: short the pair again and again despite losing a good number of times. I hope newbie do be careful if you choose to follow their trade idea on this pair! Her current trade has just been close out so convincingly even before the FOMC press conference!!!

      • huck

        Thanks for your input. It seems that I really need to take a reexamine my bearish bias. I appreciate your feedback!

  • seqburn

    many time i speak to all nebiew trader include me the FX market can“t be predited 100% is becoz you not a BANK or BIG Player huh! but for advise don`t ever follow if you do not know what u see :)

  • Peter Matthewmatty

    Peter Matthew: I will explain to you the EurUsd Chart Fundamentals at this point so you are able to get a better understanding of the market sociology at this moment and as for future trading-pips. The EurUsd Pair is currently in an Uptrend Position from 1.2030 starting on 24/7/12 it will remain in a bullish trend for another One Year and 6 months, upto expected date July 2014 not actual but somewhere close to this date.

    The Euro`s Current Price is 1.3154, Resistance Level 1.3305 triggered this move back to intermediate low of 1.3154 at present time. A Strong Support Level is advised at this point, as will be seen throughout Monday 24th December 12 and the week to follow Next Resistance Level to be tested will be seen at 1.3681 so Strong Buys are Recommended. For More News & Market Discussions follow @Scoobe01 at Twitter.com