Trade Closed: 2011-9-28 23:18
And that’s two in a row! Yep, that’s right. I took profit on my EUR/USD trade yesterday.
As you can see, the 38.2% Fibonacci retracement level held like a charm. After price had stalled around the support area for a couple of hours, the pair traded higher. Initially, I had my hopes up that the euro would rally higher up the charts.
However, upon hearing news about some European officials commenting that there hasn’t been any real progress on Greece, I decided to place my profit target at 1.3660 to get at least a 1:1 reward-to-risk ratio on my trade and cancel my buy order at 1.3510.
Closed EUR/USD at 1.3660: +100 pips / +0.5%
Whew! Boy am I happy for doing so! EUR/USD didn’t even tap the 1.3700 handle before trading lower again.
Trade Idea: 2011-9-28 02:34
As I’ve mentioned time and time again, one of the most cliché sayings in trading is “the trend is your friend.” I hope to take advantage of this by going long on EUR/USD.
As you can see, the pair seems to have already broken out of its horizontal range. To me, this is a sign that the pair is starting a new uptrend, which means that going long should be a good idea. Since the pair is already testing the broken resistance and Stochastic shows that conditions are oversold, I decided to buy at market (1.3560).
One thing that I should tell you is that I only risked half my usual position size. I’m saving the other half just in case price dips a little further and tests the 50.0% Fibonacci retracement level.
As for my stop, I placed it just below the 61.8% Fib at 1.3460. I don’t have a set profit target yet though because I believe we’ll see new highs. Why? Well, I think we’re already seeing a shift in market sentiment.
If I remember correctly, investors had been pretty worried about euro zone‘s debt crisis last week. Bad news coming out of the region, as well as the FOMC meeting, kept the euro under intense selling pressure for the most part of last week’s trading. But I think that market participants have gotten tired of playing it safe that now they get giddy buying up higher-yielding currencies with every positive report we get from Europe!
I know policymakers haven’t decided on a concrete plan to solve the debt crisis yet. But I think that renewed optimism over the region’s fiscal situation will be enough for the euro to rally… for now.
To recap, here’s my game plan:
Buy EUR/USD at market (1.3560) and at 1.3510, risk 0.5% on each position, stop for both trades is at 1.3460, and profit targets have yet to be determined.
That’s my trade for this week. What do you think about it? Hit me up with your comments please. Thanks a bunch guys!