EURUSD: Retest of Broken Resistance – Closed Open Order

Closed Open Orders: 2010-01-13 21:30

PoD Chart

Argh! It’s too bad my long EURUSD order didn’t get triggered because I could’ve netted a hundred pips on that trade. The price didn’t dip as low as my entry order at 1.4450 but it did surge all the way up to my first profit target at 1.4550. I’m tempted to hold on to this trade because the pair is a bit range-bound and it could still reach my entry point. However, with the ECB rate decision coming up, I think it’s best I close my open order in order to avoid event risk. After all, the EURUSD did lose some ground yesterday as concerns about Greece’s debt resurfaced, hinting that ECB President Trichet could give some cautious comments in his rate statement.

Trade Idea: 2010-01-11 21:55

PoD Chart

Seeing as how my recent EURUSD trades have been profitable, I’ll be trading this pair again today! After all, euro zone isn’t set to release any high-impact reports for the next couple of days so the EURUSD could continue to benefit from US dollar weakness. Later on, US will release its trade balance data, which could show that the deficit widened from $32.9 billion to $34.9 billion in November. This could cause investors to lose their appetite for the greenback, which has already been weakening after last Friday’s dismal NFP report. Well, it seems like America is having a tough time lately… and with the infamous Simon Cowell set to leave American Idol soon, the future ain’t looking too bright!

On the technical side, I saw that the price is making higher highs while stochastics is making lower lows. This is called a hidden bullish divergence, which indicates that the pair could possibly swing higher. Additionally, by using the Fibonacci tool, I noticed that the 38.2% Fibonacci retracement level lines up with the previously broken resistance area. I suspect that buyers waiting around this area to buy the pair cheap.

I will have two targets: one at the previous day high and another at a previously broken support level. My stop loss, on the other hand, will be placed just a couple of pips below the 61.8% Fibonacci retracement level.

I will risk 1% of my account on this trade. Here’s what I’m going to do –

Long EURUSD 1.4450, pt1 at 1.4550, pt2 at 1.4650, stop at 1.4350

  • PabloFrancesca

    I had the same idea because the top of the latest channel had been broken, but latest price action seems to be offering some stiff resistance around 1.4550.
    I’ve decided to go the other way. Hopefully the news releases later this week confirm your dollar bearishness.

  • PabloFrancesca

    I had the same idea because the top of the latest channel had been broken, but latest price action seems to be offering some stiff resistance around 1.4550.
    I’ve decided to go the other way. Hopefully the news releases later this week confirm your dollar bearishness.

  • rokasvivas

    Hello dear huck. why didn´t you just enter the trade anyway manually on time. At least in my feeds the rate was as close as 1 pip, I mean, 1.4451 the day and the time you posted your idea. What difference would have been 6 or as much ten pips if you would have entered the trade? or maybe my suggestion is agaisnt your rules, isn’t it? Good luck!

  • Huck

    @rokasvivas That’s a good point rokasvivas… I guess I just wanted to get the best price! Also, as much as possible, I try to use orders because it gives me time to think about my trade after I’ve set it up… Something to protect me from impulse trading decisions! :)

  • rokasvivas

    Hello dear huck. why didn´t you just enter the trade anyway manually on time. At least in my feeds the rate was as close as 1 pip, I mean, 1.4451 the day and the time you posted your idea. What difference would have been 6 or as much ten pips if you would have entered the trade? or maybe my suggestion is agaisnt your rules, isn’t it? Good luck!

  • Huck

    @rokasvivas That’s a good point rokasvivas… I guess I just wanted to get the best price! Also, as much as possible, I try to use orders because it gives me time to think about my trade after I’ve set it up… Something to protect me from impulse trading decisions! :)