Pick of the Day: EUR/USD

About Pick of the Day

At the end of each trading day, I will find what I believe is the best looking short term trade setup for the upcoming trading day. If you're a forex newbie, it can be tricky in the beginning trying to figure out how to look at charts and draw lines. My goal is help you understand the psychology of price movements so you can learn to analyze your own charts and trade on your very own. Trades will be posted by 1 am ET, Monday through Thursday evening.

Read First: Trade Rules!!

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Posted 23:39 10 January 2008 by Pipcrawler

Good evening! It's the end of the week and I think we have a chance to jump into the EUR/USD rally at a better price.

After Big Ben's speech, we saw risk return to markets and the Greenback sell off as traders price in a 50 basis point cut. It appears the Fed is focusing more on the economy rather than inflation.

So, we saw EUR/USD rally pretty fast, and now the pair is caught in a tight range. I think we may see profit taking during the European trading session and if that happens, if may be short lived as traders begin to price in rate cuts in the US as well as a rate hold by the ECB today.

So we will go long at the 38% Fibonacci area which also lines up with potential minor support at 1.4650. Let's go!

Long EUR/USD at 1.4710, stop at 1.4670, pt1 at 1.4750, pt2 at 1.4800

Remember to never risk more than 1% of your account on any single trade.

Good luck my friends!