Day Trade Long Setup on EUR/USD? – No Trade

No Trade: 2011-10-12 13:05 ET

It’s a “no go” on my day trade as the market dip wasn’t enough to trigger my orders at Tuesday’s lows. It’s a shame because euro bulls jumped back in with force! Check it 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.

PCDPOD20111011.review.png

It seems that traders are still taking the coordinated proposals and rhetoric towards recapitalizing banks as a positive, not only for the euro, but for general risk taking. Also, China reacted to the US Senate passing a bill last night that would impose tariffs on “currency manipulators.” China responded by fixing the Yuan lower, possibly adding to today’s broad USD weakness.

So, it’s definitely not a good day for the Dollar, nor for myself as I missed out on a sweet trade on a simple setup. Given that the pair has already rallied around 200 pips, I have decided to close my open orders to go long. No trade.

We have the FOMC meeting minutes coming up, so I’ll wait for that event to pass before reassessing the markets and looking for new opportunities. AS always, stay tuned for new ideas by following me on Twitter and Facebook. Good luck and good trading!

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Trade Idea: 2011-10-11 18:05 ET

Good evening forex friends! After the Merkel and Sarkozy announcement of a “plan to have a plan” for bank recapitalization, it’s been all about euro strength this week. If we see a pull back, is that another opportunity to jump in the trend?

PCDPOD20111011.png

Today, Slovakia was the one of the last to vote for an EFSF expansion and it looks like they decided it was a no go. It was a single party, the Freedom and Solidarity party, that decided that the poorest members shouldn’t have to pay the huge debt of the “richer” states like Italy and Greece.

This was pretty much expected by traders and price action reflected it as we saw no strong reactions. This lack of a hard sell off with this event, and strong bounce back from the Fitch downgrades of Italy and Spain, tells me that traders are expecting a “yes” vote eventually and that the euro strength is here to stay this week.

So for a day trade, I’d like to go long if I see the market reach a more desirable price. On the chart above, I used a Fibonacci tool and highlighted the 38% to 61% area as potential support. Also, the stochastic indicator shows the pair’s rally may be temporarily out of steam and pull back.

I look to pull the trigger at Tuesday’s low of 1.3565 and my stop will be half of the daily ATR to give the pair some wiggle room. Here’s what I will do:

Long EUR/USD at 1.3565, stop at 1.3480, pt at 1.3740

Remember to never risk more than 1% of a trading account on any single trade. Adjust position sizes accordingly.

Since this is a day trade, my actual risk will only be 0.50%, but my target gives me a 2:1 potential reward-on-risk. I may scale another position into this trade if I get triggered and the market goes my way.

With such a small amount of risk, there’s actually a lot of ways to adjust this trade if triggered, so be sure to follow me on Twitter and Facebook for fast adjustments and updates. Thanks for checking out my blog, good luck and good trading!

9 comments

  1. Marshall Clarke

    I am not going long until a move over 1.37 followed by a downward retracement on the 1hr. This will confirm a trend change on the Daily chart by establishing a Higher High.

    For the mean time, I’m with Raghee on this one:

    link to babypips.com

    I am keeping an eye out for shorts on the 1hr after a trend line break down followed by an upward retracement.

    -MC

    Reply
      • Marshall Clarke

        Hey Pipcrawler!

        I did not get in yet… I have been eyeing it CLOSELY waiting for the retracement to 1.37 I was talking about.

        I think that time has come! We have seen a NICE retracement to the 1.37 which, using the 1hr, is also an upward trend line & fib!!

        I am waiting FOR A WEE BIT more price action up before going long but this entry is NEARLY formed! I’m waiting for 1 more nice clean bull candle on the hourly. Stop will be 2x the 1hr ATR (13). I am prowled and ready to go Bull riding!

        Reply
        • Marshall Clarke

          Entry Confirmed!!!!! Hopefully I’ll be Crawlin in Pips!

          Long @ 1.3766
          Stop @ 1.3691 (75pips)

          Puts the Stop Loss sittin’ pretty a few pips behind that 1.37 support.

          Reply
          • Marshall Clarke

            Trade has been going good. Was +120 pips at one point!

            At +1 Stoploss (+75 pips) I moved the stop to Break Even. I will continue to trail my stop to lock in gains.  

          • Marshall Clarke

            Moved Stoploss to 1.3815…

            This is 10 pips under the Support @ 1.3825

            This is also below the 1hr Trend Line.

            This is also below the 61.8% Fib from the 15min chart.

            This is also right about at the 1hr PSAR .01

            I like multi-factor trailing stops :)

          • Marshall Clarke

            Trade exited @ 1.3840

            So +70 pips!! Thanks for the insight Pipcrawler ;)

            Reason for exit: Short trade triggered @ 1.3840 so I reversed my position and went short. The Daily encountered Fib resistance combined with the 1.4000 resistance level. Price broke down through the 1hr Trend Line which helped initiate this new short trade.

            -MC

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