Closed Open Order: 2010-02-16 21:29
Whee! A breakout on the EURUSD! But, unfortunately, the pair broke out to the topside, opposite of what I was expecting. Germany’s and the euro zone’s Zew economic sentiment indexes indeed dipped further below 50.0. Germany’s index fell to 45.1 from 47.2 while the entire euro zone’s account also slid to 40.2 from 46.4.
Still, risk appetite came back in stride yesterday as strong economic figures from the US and a 3.9% spike in crude oil prices spurred investors to pursue higher-yielding currencies. As a result, the EURUSD flew all the way up to a high of 1.3780, which is more than a hundred pips away from my entry order. I guess I’ll have to close my open order then. Good thing I set my short order far below the minor support on the 1-hour chart. Phew!
Trade idea: 2010-02-15 21:57
I’ve been doing some reading and it seems that traders are still bearish on the euro as there is so much uncertainty regarding Greece. If European leaders fail to release a concrete plan to help Greece, sentiment could disintegrate further than it already has. After all, the euro dropped last Friday largely because of the poor GDP figures indicating that growth was almost non existent in the euro zone last quarter.
Looking at the economic calender, it looks like the ZEW economic sentiment reports will be released today. Both the German and the euro zone wide versions are expected to dip further away from the 50.0 mark. If the index falls further, it could cause traders to sell the euro, which would play right into my break out idea.
Technically, I noticed that the pair has been consolidating for quite a while. It has been stuck in a range, with support around 1.3580 and resistance at 1.3635. Could it be revving up for a strong move downwards? I’m hoping to catch a breakout to the downside so I will be shorting 10 pips below the pair’s previous day low of 1.3580. Since I’m going for a quick day trade, I will take profits at the 1.3530 level, which is the previous week low. I also placed another profit target at the psychological 1.3500 handle. I’ll set my stop 5 pips above the minor resistance around 1.3635.
Here’s what I will do:
Short at 1.3570, pt1 at 1.3530, pt2 at 1.3500, stop at 1.3640.