EUR/USD: Start of a New Trend? – Profit Taken

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.

EUR/USD 1-Hour Chart

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

EUR/USD 1-Hour Chart

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!

XOXO,

Huck

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  • BoyRobot

    i’m already on this trade. +70 pips

    • BoyRobot

      Made 80+ pips, and am out :)

      • Schorse

        Me too! Thanks, Huck.

  • Digitalgypsy5720

    Be Careful!! ;-)  Good luck :-)

  • Melodic_bieng

    I like your trading strategy and also feel a big up move is due, but I am going to wait and see if the market tests last week low of 1.3383

  • Billyhill1974

    Hi Huckelkiwi Pip,
    I’m brand new to this (but have traded equities before) and am currently going through the school of pipsology but have also got much from your two threads additionally – really nicely described trading plans for us beginners.  Good luck on this one.

  • Guest

    I hope you’re wrong Huck!  Im on the opposite side of this as that looks like an evening star at the top of the up move which coincides with a decending diagonal trend line. 

    • huck

      DISLIKE!!!

      :((

      • Guestlist

        at least u get 100pips compare too that that person..probably he/she lost 100pips..lol xD

  • crazysac99

    Huck, would you ever consider adding to this position with the other 0.5% you saved in case the .500 fib was tested?? What would you use as your indicator to add if you did?? Thanks!

    • huck

      Probably not because the pair marked a new new high before dropping. That would mean the Fibs that I drew weren’t correct anymore!

    • Billyhill1974

      I did a paper trade Buy at the .500 fib which seemed to provide support and it has worked so far but not sure it was entirely a valid trade based on the fib invalidity point you make above? Beginners error? Is there a new resistance line emerging at 36800 or so. Have sold my paper trade for a possibly rather lucky gain of 80 pips.

    • Igh

      85pips.. =)