Pick of the Day: EUR/USD – Trade Closed

Trade Closed: 2007-08-28 20:00

My short bias on EUR/USD proved to be correct as the pair drops below 1.36, but not before price action whipsaws an entry to the long side and stopping me out…doh!

Our long entry trade was triggered at 1.3670 during the early morning European trading session and then reversed throughout the day stopping us out at 1.3620.

Total: -50 pips

The pair has continued to drop as risk aversion returns to the market and the short term downtrend resumes. For those who did not close the opposite order and entered short at 1.3600, I would lock in pips and let it ride risk free. Stay tuned for the next trade idea!

Trade Idea: 2007-08-27 23:40

PoD Chart

Welcome to the final week of Forex trading in August and it looks like we’re going to start it off with the EUR/USD!

I am short bias this pair as the 240 MA’s are trending slightly lower and the Stochastics are trending lower out of overbought territory. Also, the pair is bouncing lower off of the 61% Fibonacci retracement line on the daily chart.

We do have big event risk tomorrow with the FOMC meeting minutes at 2:00 pm EDT. So, I will let price action dictate whether or not we enter this short trade idea setting orders below the 240 MA’s. Now if we have dovish tone from the Fed, we could see the Dollar selloff and Euro rally quite a bit more.

With big news ahead, I expect low volatility perfect for a straddle setup. Here it goes:

Short EUR/USD at 1.3600, stop at 1.3650, pt1 at 1.3570, pt2 at 1.3510

and in case we see a dovish Fed or signal to lower rates….

Long EUR/USD at 1.3670, stop at 1.3620, pt1 at 1.3700, pt2 at 1.3750

Please remember to never risk more than 1% of your account on any single trade. Adjust position sizes accordingly.

Also, stay tuned for trade updates and adjustments such as trailing stops and profit target adjustments and don’t forget to cancel opposite order once an order has been triggered.

Good luck and good trading!