Trade Closed: 2013-4-18 00:40
The market is so dang volatile this week! After rising on Tuesday, EUR/USD dropped like a rock in yesterday’s trading. Pip Diddy said that the almost-200-pip decline was caused by remarks from an ECB official saying that the central bank could cut rates. Ugh!
But I should have known better. Instead of setting a limit order, I should have just entered my trade manually. Heck, I should’ve closed as soon as the pair closed below 1.3100 and maybe I would still have some pocket money left for my supposed trip to Cabo.
Stopped out at 1.3050: -1.00% / -65 pips
I’m really bummed out about this trade! I may need to talk to Dr. Pipslow for some trading advice.
I hope you guys fared so much better than I. Did anyone catch the drop?
Trade Idea: 2013-4-17 3:04 EST
After moving within a horizontal channel for five trading sessions, it looks like EUR/USD is about to start a new uptrend. Yesterday, the pair broke through its range and made a new swing high. With price stalling and Stochastic showing that conditions are overbought, I think we could see a slight pull back.
I don’t want to get left behind when the pair rallies, so I’m going to place a buy limit order at the 50% Fibonacci retracement level. I think it’s a good level to jump in as it coincides nicely with the 100 SMA and a broken resistance level.
I’m ultimately targeting new highs but I’m going to take some profit off the table at the 1.3200 major psychological level. Now, in case the trade doesn’t go my way, I’ve set my stop loss below the 61.8% Fibonacci retracement level.
To be honest, I really don’t know what could fundamentally sustain the dollar’s sell-off. For the most part, I’m taking my cue from the U.S. dollar index. If you look at USDX on the weekly chart, you will notice that it recently got rejected around its previous high at 84.000.
Perhaps the market is trying to tell us something? Maybe we’ll see more negative data from the U.S., enough to convince the Fed to keep its monetary policy loose for an extended period of time. Or maybe policymakers would be able to come up with a consensus in this weekend’s G20 meetings on to address the recent weakness in global growth and cause risk appetite to pick up.
Regardless, I’ll be closely monitoring the pair. Once I hear any news that could invalidate my trade fundamentally, I won’t hesitate to close or cancel it. I promise!
To recap, here’s my game plan:
Long EUR/USD at 1.3115. SL at 1.3050. PT1 at 1.3200. PT2 to be determined. 1% risk. Risk disclosure.