Hit by a fakeout! With the FOMC meeting minutes only a few hours away, I’ve decided to close all my EUR/USD positions. Have you ever had forex trades like this?
Original Trade Idea: EUR/USD Stop and Reverse
As I’ve mentioned in my original trade idea, I have changed my EUR/USD bias on the back of Janet Yellen’s dovish comments and mixed reports from Uncle Sam. On a technical basis, I entered long trades on the possibility that the pair had broken above a double bottom on the weekly chart.
Well, it looks like I’ve entered on a fakeout! EUR/USD reversed almost as soon as I entered my long trades and barely looked back since.
We don’t have far to look for the culprits. The dollar selloff lost steam once USD/JPY had stabilized while a couple of FOMC members gave speeches hinting that they’re still in favor of hiking rates some time this year. On the euro’s side, it didn’t help that the euro zone printed mixed GDP and CPI numbers.
I decided to manually close both my positions when I saw that the dollar was gaining ground ahead of the FOMC meeting minutes. See, many believe that the other members won’t be as dovish as Yellen had been in her recent speeches.
Here’s a summary of my positions:
Position 1: -309 pips
Position 2: -163 pips
Total: -236 pips avg/-0.37% loss on 0.50% risk
Two things I could’ve done better with this trade. First, I could’ve waited a bit more for confirmation of the “breakout” that I saw. Maybe on a retest of a broken resistance instead of jumping in? Next, I could’ve cut my losses early as soon as the dollar selloff started to lose momentum and FOMC members like Williams and Lockhart hinted that a rate cut in June or September isn’t completely off the table.
On my next trades I’ll probably focus on other dollar pairs. USD/CHF, for example, looks like it’s about to break above the .9800 area. GBP/USD is also looking good with its rising channel pattern still intact.
What do you think about this trade? Got any tips for me or does anyone want to share their current trade setups? Give a shoutout on the comment box below!