Support-Turned-Resistance on EUR/USD? – Stopped Out

Trade Closed: 2012-1-23 00:40

EUR/USD 4-Hour Chart

As you can see, I got the reversal candlesticks that I had been waiting for. When I saw that a bearish candle formed after the doji, I sold the pair at market and got in at 1.2845. The trade worked well for a bit, but price soon reversed and rallied strongly due to optimism towards Greece’s debt deal. I then got stopped out at 1.2900.

To be honest, I’m not too bummed on this trade. After all, even though my analysis was incorrect, I did follow my trade plan strictly! Ah well, better luck next time!

Sell EUR/USD at 1.2845, stopped out at 1.2900: -55 pips/-1.00%

Trade Idea: 2012-1-19 00:15

EUR/USD 4-Hour Chart

Alright folks, today, I have a “sorta” counter-trend trade idea on EUR/USD. I say “sorta” simply because while it has been trending upwards the past few days, but in the longer time frame, the pair is on a downtrend.

As you can see, the pair is currently testing a broken-support-turned-resistance level. With Stochastic in overbought territory again, this usually means that going short is a good idea. However, I’ll be a little bit more cautious.

I still haven’t won a trade this year, so I’ll play it safe. There’s a pretty big event risk coming up and I don’t want to get whipsawed. As you’ve probably heard by now, Greece is due to conclude its talks with private sector creditors about another debt deal.

Personally, I don’t really have my hopes up for the meeting and I’m pretty bearish on the euro. Why? It’s because whether or not Greek officials get a go signal for more aid, the truth is that the sovereign crisis will still be far from over. However, like Pip Diddy, I understand that I also have to give the shared currency props for its resilience on the charts. And who knows, a positive outcome from the meeting may actually give the euro a big boost. Err, I wouldn’t want to have a short euro position open if that happens.

So my plan is to wait for another confirmation in the form of a candlestick pattern. It could be any type of bearish candlestick: a shooting star, a doji, a bearish marubozu – the important thing is that it should point to a reversal.

That’s it, folks! But before I end this post, let me just repeat that I HAVE NOT ENTERED YET. I WILL BE EXTREMELY CAUTIOUS GIVEN THE UPCOMING GREEK DEBT DEAL. I will wait for confirmation before jumping in. Wish me luck!



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  • Jānis Pusplatais

    Now’s the time to enter I guess? 🙂

  • Shindhu Manob

    Though we have got a DOJI at the peak (61.8% Fibo Level). We should wait and see how market reacts in this hour. Then we may confirm about DOJI candle.
    N.B: Spanish and French Bond Auctions results has come better than expected.

  • DanteA31

    You need a better trading plan. This was a breakout from a mile away. Please seek a better plan. Posting kindergarten analysis like this is shameful.

    • SwordOFManagement

      That is very harsh DanteA31, she does not claim to be an expert trader…or even a good one.

  • Ahmad Qassab Bashi

    Guys do you think it will reach 1.2920 again or not ?

  • SwordOFManagement

     Three years ago a trader asked to define how I trade, to which I replied ‘body in the direction of profit, wick in the direction of loss’.
     Indeed, if price is closing higher then it must be closing over “something” & that something is no longer resistance! 
     Yes, resistance is always behind you so why would you draw for yourself a new obstacle after overcoming the last; would not a trader on the other side draw for himself an obstacle, the same one that is supporting your trade?
     Wick in the direction of loss simply means that moves against you are temporary UNTIL price can PROVE that it is going DOWN by closing LOWER!
     A simple answer is made complex by the mind’s unwillingness to accept it.….

    • huck

      Excellent analysis SwordOFManagement. This helped me greatly. I will consider this in my next trades. I’m off to a terrible start… Three straight losses. 🙁

      • RazorX

        Some pretty hard comments here folks. I agree with Huck – great analysis by SwordOfManagement. .. and Huck I’m up to 5 straight losses this year and no wins so…. yeah.

    • Cillian Murphy

      I am intrigued!

  • ras

    what’s matter is <<the probabilities=””>> to have at list a pull back from this possible resistance, if not, a higher close will confirm the bull force ;)</the>

  • Craig N.

    Hmm.. Might have been a good idea to have waited for the stoch to drop out of the overbought territory to confirm that it wasn’t just minor resistance, before make the short trade.

  • Deec

    hi huckle that price action is called the breakout pull back conttinuation pattern i am sorry you didnt see it coming but take a note of that lol

  • Shabananader

    It’s ok guys she is doing fine, her system is not so powerful enough to grab pips, so she has to switch to another trading system. try the cowabunga system it’s great. ok i will give you a hint when you see a setup just be sure that the candle you want to be the setup candle to close below 50% of the (HH3-LL3) including the setup candle.

  • SwordOFManagement

     You may or may not be into it, but 10 x 2 P&F charts are pretty close to hourly charts:….

     One major advantage though is clear S/R levels:

     You can see the same thing on a time chart but it doesn’t jump out and slap you in the face like it does in P&F.