How Low Will the Euro Go?!? – Close Open Orders

Trade Closed: 2010-05-06 22:56

Lesson learned. When risk aversion’s too strong, don’t bet on the EURUSD to retrace as far as the 61.8% Fibonacci retracement level. I completely missed the boat on this one, as the pair hastily fell when the European trading session opened up.

In hindsight, I think the better decision was to play the break of the previous day low. The pair was strongly trending at the time and there weren’t really any signs of it retracing. Better luck next time, Huck!

Trade Idea: 2010-05-05 23:23

PoD Chart

Here goes another edition of “How Low Will Euro Go?!?” And tonight’s main performer is… Hucklekiwi Pip! Give her a round of applause ladies and gentlemen! *Clapping*

I’ve always wanted to be a hotshot trader analyst but I guess those dreams will have to wait now. I mean, I’ve got you guys, right? Hah!

Moving on to more serious things, have you heard about all the riots all over Greece? Apparently, the rallies all over Greece have turned pretty violent and things are looking pretty bleak over there.

Once again, the news triggered widespread risk aversion, causing the EURUSD to drop to the 1.2800 handle! I suspect we’ll be seeing more of this in the coming days so I’m looking for ways to short the pair.

Since the start of the week the EURUSD has been taking ridiculously sharp dives and while I’m very tempted to just dive in and ride the strong downtrend, it might be better to wait for a pullback. After all, sellers gotta pause to catch their breath sometime, right?

I popped open the 4-hour chart and noticed that the previous week low lines up between the 50% and 61.8 Fibonacci retracement levels. It also coincides closely with the psychological 1.3100 handle, so I set my short entry there. Since price recently consolidated around the 1.2800 area, I placed my first profit target there. I had to check a longer-term time frame for the next support level in sight, and saw that there’s nothing in sight until 2009’s low just above 1.2500! I’m going for the big prize on this trade!

Here’s what I’m gonna do:

Short EURUSD at 1.3100, pt1 at 1.2800, pt2 at 1.2500, stop at 1.3250.

Actually, the EURUSD actually reminds me of the Limbo – just how low can it go?!

I’m crossing my fingers that this works out just as well as my recent EURUSD short trade. Wait, you haven’t seen it yet? It was my best trade yet! Hopefully luck is still on my side and I catch another break on this trade. Check it out at MeetPips.com!

  • Vark

    Hi!
    I was always wondering how to go about those TP1 and TP2? I mean if you set your TP in trade, the trade will be closed. So by saying initial TP1 and next TP2 you will be watching the PA around TP1 and if it starts to retrace yiou will close your trade? And if it makes a clean break through that TP1 level, you will let it ride to TP2?
    Thanks

  • Huck

    Hi Vark!

    What I do is that I split my position into two, setting different take profit points while keeping the same stop loss for both. Now, if I happen to hit my first take profit point, I normally move the stop of my 2nd position to my entry price, therefore creating a risk free trade.

    While there have been some instances where moving my stop to breakeven has caused me to stop out on the second position, I noticed that there are times where letting the it run can become quite rewarding.

    I’m still relatively new to all this – I do have problems setting my TP2 at times. What happens is that either I am too ambitious or not ambitious enough. Hopefully in time, I’ll be much better at picking out take profit targets.

  • Vark

    thanks, that clears it a lot. So you open a position with say, a standart lot with SL and TP. Then you modify the TP for half the lot, leaving the SL in place. Cool, gotta try that.

  • Vark

    Hi!
    I was always wondering how to go about those TP1 and TP2? I mean if you set your TP in trade, the trade will be closed. So by saying initial TP1 and next TP2 you will be watching the PA around TP1 and if it starts to retrace yiou will close your trade? And if it makes a clean break through that TP1 level, you will let it ride to TP2?
    Thanks

  • Huck

    Hi Vark!

    What I do is that I split my position into two, setting different take profit points while keeping the same stop loss for both. Now, if I happen to hit my first take profit point, I normally move the stop of my 2nd position to my entry price, therefore creating a risk free trade.

    While there have been some instances where moving my stop to breakeven has caused me to stop out on the second position, I noticed that there are times where letting the it run can become quite rewarding.

    I’m still relatively new to all this – I do have problems setting my TP2 at times. What happens is that either I am too ambitious or not ambitious enough. Hopefully in time, I’ll be much better at picking out take profit targets.

  • Vark

    thanks, that clears it a lot. So you open a position with say, a standart lot with SL and TP. Then you modify the TP for half the lot, leaving the SL in place. Cool, gotta try that.