Looking for a Pullback on EUR/USD – Closed

Trade Closed: 2013-11-25 10:00 ET

I got the pullback that I was looking for but the story quickly changed for the euro thanks to Draghi and a positive surprise on German data. With the market ticking lower a bit to start the week, I decided to get outta this trade quickly!

Before you move on, for those who are not familiar with my framework, signals, setups, or acronyms, please visit my discretionary trading framework blog.

EUR/USD forex trade review: 20131125

EUR/USD forex trade review

As mentioned in the chart review above, it was a positive surprise to the German IFO data and Draghi denying that the ECB would implement negative deposit rates that pushed the pair higher in the morning European session and during the Friday US session, the pair carried higher on positive risk sentiment.  With the pair pretty close to my stop, I decided to hold it into the weekend because my R:R at that point made it worth holding on to.

Today, we saw a broad USD rally thanks to the nuclear limits set in the deal between the US and Iran, and a bit more jawboning from the ECB member Hansson that they are ready to cut rates.  Now with US pending home sales (which has been surprising to the downside) on the way, I decided to close with a very small loss at market (1.3525). 

Total: -60 pips/ -0.30% loss

In retrospect, I wouldn’t do anything differently except for closing right after the positive surprise from German IFO data.  At the time, I thought the market would quickly refocus back on the possibility of negative deposit rates, that is until Draghi started jawboning.  But by then the market was already near my stop.  Besides that, it was a clean setup in which the market drivers quickly changed back in favor of the euro; the currency market is just quirky like that.

Well, the week is young and I am looking for a new trade.  I’m currently watching GBP/USD and USD/CHF as they are trending, but I’m gonna be cautious because this is a holiday week in the US, and data is light this week.  If I come up with anything, stay tuned by following me on Twitter and Facebook!

Trade Idea: 2013-11-21 5:05 ET

Good morning! Thanks to talks of possibly moving to negative interest rates from the ECB, the euro was slammed lower against its counter parts.  Is there a selling opportunity in EUR/USD?

EUR/USD 1 hour forex chart

EUR/USD 1 hour forex chart

For today’s session, I’m gonna get into a short EUR/USD if I see a pull back. On the one hour chart above, we can see the market broken below the rising trendline after a report came out that the ECB was considering negative deposit rates to help support the European economy. I’m not sure how that would affect the economy if implemented, but it looks like traders are betting that it won’t be good for the euro if it was. Also, we got European PMI data today and it was not pretty with only German Flash Services PMI printing a better-than-expected read.

My entry order is around the broken support area from back in Nov. 4th and 5th; a little bit aggressive, but with pops like this, retracements can be a bit shallow. My stop will be wide, about have the weekly average true range, and my target will be the previous swing low seen back in Nov. 7th. Here’s what I am doing:

Short half position EUR/USD at 1.3465, stop at 1.3565, profit target at 1.3300

Remember to never risk more than 1% of a trading account on any single trade. Adjust position sizes accordingly. Create your own ideas and don’t follow what I do.Risk Disclosure.

I’m only risking 0.50% of my account on this one, and with this trade structure, I have a potential reward-to-risk ratio of about 1.65:1. Of course, anything can happen in the forex markets, so if the story changes I’ll be sure to reassess and adjust quickly if necessary. Stay tuned by following me on Twitter and Facebook!

  • Brett Kloesel

    I literally entered in just about the same price but opposite direction.
    BUY 1.34645 may the best trade win! lol.

    • Pipcrawler

      Good luck to the both of us? haha Depending on where your exit points are, maybe we both can win :)

      • FxSniper

        Are you still in this trade?

        • SCUMMY666

          7 pips away from your stop Pipcrawler I’m curious as well.

  • Brett Kloesel

    I think there is plenty of pips for the both of us! Isn’t Forex the most amazing thing in the world!? I love my “job”!!!!!! Forex for a living, the only way to live! I rode the wave down for +130 pips and now I’m riding it upwards for another +100 pips and still running. To close or not to close before closing time…… hmmmmmmmmmm.

  • j

    Funny, I put in short orders exactly were you did. Now that eur/usd has hit the trendline, what are your thoughts? Also 50ma served as resistance. The only issue I have is price hit the trendline and 50ma, but there was no significant bounce or any bearish hammer candle, so the daily candle looks pretty bullish

    • Pipcrawler

      Looks like the bulls came back after Draghi refutes the negative deposit rate talk and the positive German IFO data. Short-term USD bullishness might help me get out of this one with a smaller loss, but even if it did pop higher….doesn’t hurt me much… well except for my pride :)

  • FxSniper

    I am still holding my long from 1.3428 and will seek to add if rates retrace to 1.3480 area, which I consider ideal for those looking to long this cunny pair. I have already adjusted my risk and riding this one free. just looking to add

    • Brett Kloesel

      1.35504 Long second position opened Friday. Still running 1.34645 Long too.

      • Pipcrawler

        Congrats on your profitable long trades! Even though I’m losing on this one, I’m glad to see we have some members grabbin’ some pips :)

        • FxSniper

          Audjpy offers a good hand at current level of 93.00. I believe pair is leveling out here for the journey ahead. My risk is 92.25

  • FxSniper

    I think you are in the right direction in terms of the overwhelming bias. I will certainly add to my long if it goes down to 1.3480 and I will still be targeting 1.3710 on this swing. I believe this pair is going for as high as 1.40 or more

    • SCUMMY666

      There has been a lot of chatter talking highly of the 1.37 level and my fingers are crossed for a 1.38! Read something over the weekend that banks are “selling” which means the 95% will try to follow them which I assume they do because you always need buyers and sellers. Say one thing do the opposite. Banks are such tricksters! lol.

  • Pipcrawler

    Thanks for the comments everyone! As of right now, I’m still in this trade. Because I’m risking so little and so close to my stop, this broad semi-bullish USD sentiment starting this week makes the remaining risk worth holding on to the trade for just a little bit longer. I look to take it off sometime today, probably ahead of the US session.

  • FxSniper

    Take a considered look at the Daily, weekly and monthly chart of this pair. Looks mighty bullish. I will consider it a grace if it retraces to 1.3480 before hitting the bullish high way again

  • ForExchange

    Hi Pipcrawler!

    You calculated pretty good where the currency was heading to! Which sources do you use the most? On which sites do you get the most infortmation which helps you?

    Thanks

    • FxSniper

      I really don’t use any special source other than my platform. I do my own analysis and my decisions are based on what I perceive the charts to be telling me. Call it Price action..

    • FxSniper

      1.3545 support offers yet another path to the upside in search of 1.3700 level, which I believe will be honored by the end of the week. So, a long at that price would, in my view be a good one.

    • Pipcrawler

      Hey ForExchange! I don’t use anything special. I just use Twitter for breaking news events and the major news outlets (e.g., Bloomberg, CNBC, Reuters, etc.) to get more details on big picture stories. I think the basics are enough to put the market into an actionable framework, but more importantly, it’ll take years of experience and practice for you to refine that framework and use it effectively to reach your goals. :)

      • SCUMMY666

        Profitability is KEY!

      • ForExchange

        Ok Pipcrawler, thanks! And whom are you following for breaking news events? Soon I hope comes the Pick of the day again :-)

  • SCUMMY666

    1.35626 SHORT opened about 20 min or so ago.

    • FxSniper

      Wishing you good luck Scummy666. It does seem to me, though that 1.3445/50 level is a good long price. I am still holding long and may add again there, still in pursuit of 1.3710

      • SCUMMY666

        I LOVE the rush of trading! I swear I will make that one final trade if I’m not already in one while laying in my death bed. lol #TRADERFORLIFE