Fib Holding on EURUSD? – Trade Closed

Trade Closed: 2010-07-25 22:34

PoD Chart

When things were finally going my way and when I was up about 70 pips, I decided to move my stop to breakeven + 1 and eliminate any risk. The EU stress tests results were coming out, and I just didn’t want to leave my trade chance.

Turns out it was a good decision! After testing the 1.2800 handle, the pair stalled before rising back up! I opened my charts this week to find that the pair is now around 1.2940.

So, I didn’t have to endure the stress of having a losing position over the weekend. Imagine all the pimples that would have caused! I even made a pip to boost! Yippee! Hey, don’t judge me – a pip’s a pip! Tee-hee!

Total: +1 pip / I don’t even wanna bother calculating how much % I made!

Trade Idea: 2010-07-22 22:55

PoD Chart

When I looked at EURUSD’s 1-hour chart, I noticed that the price has been consolidating right below this week’s open price. This is nearly in line with the 61.8% Fibonacci retracement level and, with the stochastics pointing downwards, the price could head lower as well. I decided to enter at market while the price is still waiting in that area. Since there might be some extra volatility around the time of the release of the EU stress test results, I set a wide 150-pip stop (roughly equal to the pair’s average true range) on this trade.

You might be asking, “Huck, why are you going to short EURUSD when it’s clearly in an uptrend?” Glad you asked dear reader!

Well, I believe the euro zoneis still not out of the woods yet. The upcoming results of the stress tests could show this and give rise to risk aversion once again. Let’s also not forget the German Ifo business climate survey is scheduled to come out later. If that prints worse-than-expected results, we could see the euro give up its gains.

Although it might be true that the US economy isn’t doing very well either as confirmed by Ben Bernanke in his most recent speech, the Greenback has this unfair advantage of being the world’s safe haven currency. During times of uncertainty and risk aversion, it is the Greenback that benefits the most.

Here’s what I did:

Short EURUSD at market (1.2890), stop loss at 1.3040, profit target at 1.2750.

I hope this works out for me! If only I could plant this short EURUSD idea into one the minds of one of those bankers at Goldman Sachs! Mr. Cobbs – are you for hire? I’ll treat you better than Mal ever did! (Just kidding Mal, don’t haunt me in my dreams!)

Like what you've read?
Join over 40,000 other traders who get our newsletter. Tutorials, EAs, chart setups, free forex trading systems, and more!

8 comments

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>