EUR/USD: Waiting to Pull the Trigger

Trade Idea: 2011-01-13 02-13

EUR/USD Chart

Boy is it good to be back! But just because I miss the thrill of being in on the action on the charts doesn’t mean I’ll go head over heels for the first setup I see. If there’s anything I’ve learned in my three-week break on a tropical island other than efficiently applying sun block on my back, it is that good things come to those who wait. Let’s see if the same principle will apply on EUR/USD!

When I looked at the 4-hour chart of EUR/USD, I noticed that price has retraced a large portion of its down move last week. The first thing that came into my mind was SELL THAT RALLY! The overall trend is downwards and the Stochastic show that the pair severely overbought. But I didn’t just spend my holidays getting a tan. I did some reflecting and realized how impulsive I get sometimes.

The old me would’ve probably clicked SELL immediately, but it’s a new year and I made a promise to myself that I’m going to wait for candlestick confirmation as much as I can before taking a trade. In this case, I’m looking to short the pair around the 1.3200 region IF I see reversal patterns like dojis, bearish engulfing candles, shooting stars, etc.

I’m also keeping my pinky promise to be more careful with my fundamental analysis so I’ll take my time in getting a better feel of market sentiment first.

The event risk is high with the U.S.’s trade balance report for November, initial jobless claims for the previous week, and the PPI for December on tap. If risk appetite continues to dictate price action today, better-than-expected economic reports could send the pair higher.

However, if we see the market return to old school fundamentals, positive figures may just convince traders to root for the dollar. Not to mention that there’s also the ECB interest rate announcement and the Spanish bond auction that I have to keep tabs on.

For now, I’m going to be patient and see how price moves on data and, assuming it gets there, how it reacts to the 61.8% Fibonacci retracement level… Stay tuned!

  • Pipster4lyphe

    It’s a good idea to watch price action around the area of interest…but I think the next big resistance for now stands at 1.3435, it broke thru the 3074 support and I think 1.3435 would be a better play…but let’s wait and see what happens at the close of today…sometimes technicals/charts don’t lie…I’ve come to see that fundamentals aren’t always the driver of the market…as I got burnt pretty bad last year playing on mostly rick aversion trades based on fundamentals when clearly the charts were screaming risk appetite based on technical analysis!

    But GL & Happy Trading for 2011…I hope you feel refreshed from your tropical island trip, and hope you got a nice tan!!

  • Arushmen69

    Hi, Happy new year for you.
    I am waiting to shoot too. but I have two question.
    1: What time frame will you use to look the reversal shape?
    2:What will be you action if the price brake above the 1.3200 area?
    Thanks in advance
    ajcfelipe@yahoo.es

  • Pipster4lyphe

    It’s a good idea to watch price action around the area of interest…but I think the next big resistance for now stands at 1.3435, it broke thru the 3074 support and I think 1.3435 would be a better play…but let’s wait and see what happens at the close of today…sometimes technicals/charts don’t lie…I’ve come to see that fundamentals aren’t always the driver of the market…as I got burnt pretty bad last year playing on mostly rick aversion trades based on fundamentals when clearly the charts were screaming risk appetite based on technical analysis!

    But GL & Happy Trading for 2011…I hope you feel refreshed from your tropical island trip, and hope you got a nice tan!!

  • Arushmen69

    Hi, Happy new year for you.
    I am waiting to shoot too. but I have two question.
    1: What time frame will you use to look the reversal shape?
    2:What will be you action if the price brake above the 1.3200 area?
    Thanks in advance
    ajcfelipe@yahoo.es

  • sunglow

    Hi Huck

    I to am waiting to pull the trigger on this one. Looking back over the one day charts back to mid November, 13400 seems to have been a ceiling and we are getting somehwere near that point now. However, let us see how the market develops. The EUR/USD has had a bit of an eerie feel to it over the past few days and I cannot help but feel that this market has been upset by ECB and/or far Eastern intervention. My gut instinct says that a short on this pair might be profitable, but if I do go for it, I think that I will keep banking my profit on the way down until I see that normal market conditions have resumed.

  • sunglow

    Hi Huck

    I to am waiting to pull the trigger on this one. Looking back over the one day charts back to mid November, 13400 seems to have been a ceiling and we are getting somehwere near that point now. However, let us see how the market develops. The EUR/USD has had a bit of an eerie feel to it over the past few days and I cannot help but feel that this market has been upset by ECB and/or far Eastern intervention. My gut instinct says that a short on this pair might be profitable, but if I do go for it, I think that I will keep banking my profit on the way down until I see that normal market conditions have resumed.

  • liverpool

    Hi Huck
    happy new year.

    i am new and 1st time here , i think i am lucky to find your (HLHP) mechanical system. I am waiting these
    EMA`s crosses ,i wondar if its the first thing you watch it , why its not in the above chart.

  • liverpool

    Hi Huck
    happy new year.

    i am new and 1st time here , i think i am lucky to find your (HLHP) mechanical system. I am waiting these
    EMA`s crosses ,i wondar if its the first thing you watch it , why its not in the above chart.

  • liverpool

    hye Huck ,, seemes missed the rally , very bullish chart seems going to 1.35 .

    i think the final rally trget 1.3890

    have a great day

  • liverpool

    hye Huck ,, seemes missed the rally , very bullish chart seems going to 1.35 .

    i think the final rally trget 1.3890

    have a great day

  • 6505341124

    You should thank lucky star that you decided not to short at 1.32 area. Eur had not only recouped losses since begining 2011, it is now heading towards 1.35. Euro woes is taking a back seat now..

  • 6505341124

    You should thank lucky star that you decided not to short at 1.32 area. Eur had not only recouped losses since begining 2011, it is now heading towards 1.35. Euro woes is taking a back seat now..