One More Push Higher for the Euro? – Trade Closed

Trade Closed: 2012-01-19 15:45 ET

Good afternoon forex friends! It looks like potential support area was tested and held during the European trading session, but with the weekend quickly approaching I’ve decided to close up shop for the week.

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

PCDPOD20120119.review.png

Traders went back into risk-off mode during the morning European trading session on concerns of the outcome of the Greek debt discussions this weekend. This prompted a move in EUR/USD back down to the potential support area I highlighted yesterday. It looks like there were buyers ready to go in the 1.2900 area, bringing on a bounce as high as about 1.2950 during the US session.

Unfortunately for my day trade, that’s about all I got as the pair retraced back down soon after the European trading close. With the weekend quickly approaching, and the outcome of the Greek debt talks unknown, I have decided to manually close my trade down and go flat into the weekend.

Closed at 1.2919. +4 pips/ +0.016% gain

Basically, another breakeven trade for the week. At least it wasn’t a loss, right? Looking back, probably to only thing I would have done differently was to close at the end of the European/US overlap. That’s where it would make most sense to close down long positions for the weekend by European traders. Besides that, it was a straightforward setup and the market just didn’t have enough juice push higher.

Well, that’s it folks. Another week of surviving in the markets and I’m glad to chose to check out my blog in the process. Thanks and be sure to check back next week for new ideas and updates. Have a great weekend!

Trade Idea: 2012-01-19 18:40 ET

Good evening! Got a technical trade setup to play the positive sentiment shift for the euro this week. Will we see a pull back and bounce higher to close out the week?

PCDPOD20120119.png

Sentiment was highly influenced this week by positive data from various parts of the globe, including strong European bond auctions that boosted the euro higher. We saw strong demand for Spanish and French bonds,and short-term Portuguese bonds sold off better than expected as well. It seems like it didn’t take long for the markets to get used to a lower credit rating environment. Also, my main man Forexgump made a great argument that we may see an agreement this weekend that Greek bondholders may take a haircut on what they’re owed. So, with this apparent new, and probably short-lived, sentiment shift, I’ve decided to go with the flow and see if I can catch some of this action before the week ends.

On the 15m chart above, I’ve highlighted potential areas of minor support if retested. If there are no changes to sentiment in Friday’s session, this area could be supported by buyers for one last push higher this week. I look to go at the top of that highlight range for a day trade. My stop will below that area and I will go for the Major Psychological level (MaPs) as my profit target. Here’s what I am going to do:

Long EUR/USD at 1.2915, stop at 1.2855, pt at 1.3000

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

This trade structure gives me a potential near 1.4:1 return-on-risk, and because it is a day trade, I am reducing my risk to 0.25% of my account.

As always, if the market environment shifts on a new catalyst, I’ll be sure to adjust my open orders or open position quickly. Be sure to follow me on Twitter and Facebook for updates. Thanks for checking out my blog…good luck and good trading!

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