Trade Closed: 2010-02-12 09:30 EST
Good morning friends! And what a wonderful morning it is to open up the charts and see that my second profit target was hit! Euro weakness persisted throughout the morning European trading session and the EURUSD hit 1.3550 to close me out.
1st Half: +125 pips
2nd Half: +250 pips
Total: +1.5% gain
This week’s trade was a classic example of how simple trading can be. A fibonacci trend trade setup paired with eurozone difficulties and bam – a nice profit for the week!
This setup may be good for another week or so since solid plans to help Greece have yet to surface. Honestly, in my opinion, I think the delay of a real plan is due to the fact there are no painless solutions to the debt burdens. Don’t help Greece, the country defaults and won’t be able to borrow money to run itself at a sustainable rate. Budget cuts will have to happen and probably push Greece into a prolong recession or depression. Bail out Greece, and you’re just transferring fiscal irresponsibility and massive debt to somewhere else…who would want to take that on when everyone else has their own debt issues???
I dunno friends, it’s not looking good for the euro or risk taking as this whole situation is affecting credit markets around the globe. I’ll continue to be short biased on EURUSD until a bailout plan comes to light. Even then, it’s probably not going to be a long term fix for what ails the Eurozone. We’ll just have to wait and see…
Until then, it’s been a great week of trading and hopefully, you’ve grabbed some pips as well! Thanks for checking out my blog and have a great weekend!
Trade Adjustment: 2010-02-11 13:11 EST
Whooooweee! What a ride this week has been with all this talk of bailouts and no bailouts for Greece. It’s brought enough volatility to trigger my short position at 1.38, and after some roller coaster action, the pair has hit my first profit target at 1.3675 and then some.
At my first profit target, half of my position was closed, and instead of moving my stop to break even, I have moved it to 1.3750. That is above the 61% Fibonacci retracement level of today’s strong downward move from 1.3800 to 1.3600. I figure I would lock in more profits as we close out this week.
So, some nice profits locked in, and I look to continue to hold this pair short as all we hear is jaw boning on how Greece’s debt issue will be resolved and no definitive plans. I expect more volatility and hopefully a retest of 1.3600 before the end of the week.
Stay tuned for updates and adjustments!
Trade Idea: 2010-02-08 13:44 EST
Good afternoon forex friends! Oh man oh man…missed out on that nice risk aversion move last week, but I may get a chance to jump in again. It looks like EURUSD bottomed out after hitting 1.3600 and it may be retracement time. Another short opportunity?!
It’s a simple technical setup that is almost identical to my last trade idea. Keep it simple right? The pair is in a downtrend on the four hour chart and because it looks like it is retracing, I have used the Fibonacci tool to find potential resistance points. It looks like the area between 1.3750 to 1.3850 may be a great area to watch, and depending on price action, I will place short orders in there. It looks like buyers may push up the market to that area as stochastics show the pair is just coming out of an oversold environment.
Fundamentally, I have the same economic outlook for both the Euro and the US as in my last post. Well, there has been one notable change, and that’s the US jobs data report released this past Friday. Unemployment ticked down to 9.7%, but there were 20k jobs lost in January… confusing much? Also, December’s number was revised fro 85k jobs lost to 150k. Yikes!
That 9.7% unemployment rate may be attributed to those who were looking for jobs have stopped looking, thus decreasing the labor pool.
The jobs picture looks confusing at the moment, but potentially worse after the previous month revisions. If it doesn’t start picking up I think risk aversion behavior may continue to pick up, and that may pose well for the US Dollar.
So, this week I will look to short EURUSD if the market reaches the potential resistance area marked on the chart. This week’s forex calendar may provide the volatility needed to get there, especially the European Central Bank Monthly Report, US Retail Sales, and Eurozone GDP. My stop will be the daily average true range of EURUSD, which should be well above the resistance area, and I will target previous swing lows and hopefully beyond. Here’s what I am going to do:
Short EURUSD at 1.3800, stop at 1.3925, pt1 at 1.3675, pt2 at 1.3550
Remember to never risk more than 1% of a trading account on any single trade. Adjust position sizes accordingly.
Stay tuned and good luck!