Trade Closed: 2011-09-06 22:15 ET
Well that was fast! As expected, traders took the spike higher as another opportunity to sell off some euros during today’s trade. Check out how it all played out!
Before you move on, for those who are not familiar with my framework, signals, setups, or acronyms, please visit my discretionary trading framework blog.
As I mentioned above, huge moves in the currency market today as the SNB currency intervention announcement pushed the euro up, giving traders a chance to push it back down on the problems in Europe.
In the review chart above, we can see I was only able to get in my half position at 1.4200 as the market turned on a dime and dropped like a rock. With 1.4000 showing a ton of support and the move lower looking a bit overdone on the high time frames (stochastics showing oversold on the daily), I decided to close my open orders at 1.43 and close my half position at 1.4045.
Total: +155 pips/ +0.60% gain
It’s not a big win, but I’ll take it after a couple losses and a few missed trades in August–a winning streak always starts with one win, right?
From this point on, I’ll be watching that 1.4000 area, and if it breaks it could possibly go down to 1.3000 given the right conditions (e.g., ECB rate cut, sovereign debt default, bank failures, etc.) Stay tuned on my Twitter and Facebook pages for updates and new trade ideas!
Trade Idea: 2011-09-06 06:05 ET
Another round of Swiss National Bank currency intervention news sparked massive moves in the currency markets today, including EUR/USD. Is this another opportunity to short the euro on its sovereign debt and banking issues?
Early in the European trading session, the Swiss National Bank said it would set a minimum exchange rate target of 1.20 francs to the euro. This would be done through foreign currency purchases with no limit. Nuts! Of course, this caused a massive sell off in Swiss francs against the euro, with the side effect of the euro rallying against the Greenback. Now, I think this event will have a short term affect on the EUR/USD market, so I look to short EUR/USD on its current sovereign debt and banking issues.
On the one hour chart above, we can see the pair spiked higher and using the Fibonacci retracement tool, we can see the area it is stalling is currently between the 38% and 61% Fib levels. These levels also happen to line up with major the psychological levels of 1.42 and 1.43 respectively.
My plan is to scale into a short position at 1.42 and 1.43 for a swing/longer term position. My stop will be above the Fibonacci retracement levels at 1.4380.
Short half at 1.4200, stop at 1.4380
Short half at 1.4300, stop at 1.4380
Remember to never risk more than 1% of a trading account on any single trade. Adjust position sizes accordingly.
As you may have noticed, I didn’t set a profit target; I wanted to be flexible with whatever the market conditions may give me. If the banking and sovereign debt issues continue to get worse in Europe, then I could potentially ride this down to 1.4000 and beyond.
As always, I’ll stay flexible to what the market gives and I will be sure to update my adjustments on my Twitter and Facebook pages! Good luck, good trading and stay tuned!