Forex Trade: Shallow Retracement on EUR/USD

Shorted EUR/USD at market early this week. Let me know what you think of this forex setup!

As I mentioned in my tweet early this week, I shorted EUR/USD at market (1.2479) when I thought that the pair is on its way to making new intraweek lows.

On a fundamental basis, I’m still bullish on the dollar on the grounds of possible rate hikes next year. It also doesn’t hurt that the U.S. has generally been printing better-than-expected economic reports recently. I can’t say the same about the euro zone though, as the region is still printing disappointing figures in its PMI and inflation reports.

On the technical side, I saw an entry opportunity when EUR/USD made a shallow retracement around the 38.2 Fib area on the 1-hour chart. Since the pair only went that far in its last “retracement,” I thought it was safe to enter at market and place my stop loss just above the Fib levels 100 pips above my entry.

EUR/USD 1-Hour Forex Chart

EUR/USD 1-Hour Forex Chart

Trade Update:
Thank goodness for wide stops! EUR/USD unexpectedly spiked on Tuesday when a news report hinted that ECB leaders are questioning Draghi’s leadership. The possibility of Super Mario getting replaced by someone less open to QE turned out to be bullish for the euro, and pushed EUR/USD to just 1 PIP below my stop loss. Phew!

EUR/USD 1-Hour Forex Chart

EUR/USD 1-Hour Forex Chart

Right now the pair is still hanging around its previous lows. Do you think the bears are done at the level, or are we just seeing a pause in the euro’s selloff?

Your two cents are welcome!

XOXO,

Huck

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  • ForExchange

    Hi Huck,

    well, now we know the answer: you made the right choice! The question is if it would have been less risk to enter this trade on a breakout to the downside. Then you would not hade to sweat because of your SL.

    Good luck to you,
    FE

    • Nah, in this case an entry near a good retracement level would have been a better choice. Next time though!

  • Leonard Chang

    Missed by 1 pip? dont be denial, your position is closed , the SL is hit, so dont lie , u think people cant compare the box position(SL position)? , heres a hint, price that u said missed by 1 pip to ur SL is go down after it hit a clearly obvious Supply level.

    • Nah, it really did miss by a pip. Unfortunately, I kept the remaining position for too long and price eventually did stop out half of what I risked here. Probably should have taken profits when I had the chance :))

  • Kent Onomatopoeia Cook

    I think you’re on the correct side of this trade. We’re seeing some monetary policy divergence between the Fed & the ECB (The former becoming more hawkish, the latter more dovish), and the major support level of 1.2450 just got broken.

    • Fundamentally I think the trade is still valid. Got stopped out by last week’s spike though. I might look for more ways to enter in the near future. 🙂

  • Hi! Are your short positions still open? That rally last week was a killer! 🙂

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