Pick of the Day: EUR/USD – Trade Closed

Trade Closed: 2008-12-29 11:09

My trade was closed today as the Euro rallied against the Greenback, reaching highs around 1.4350 and hitting my adjusted stop at break even along the way.

1st Half: +250 pips
2nd Half: +00 pips
Total: +0.50% gain

We’re still in a thin trading environment and will probably continue into the new year. This means more choppiness with price action dictated by focus on weak US economic data and comments from the ECB. Will the ECB continue to cut or signal that they feel the actions already taken by central banks and governments have been enough? We’ll have to wait and see. For the remainder of the year, I am going to look for short term swing setups, so stay tuned!

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Trade Update: 2008-12-24 10:44

Happy Holidays! As expected, this week has been a snoozer as volatility drops on holiday trading. EUR/USD has maintained a range bound behavior between 1.39 and 1.41 this week, and probably looks to stay that way as we close out the holiday week.

Bad news in US employment data as we saw the rise in unemployment claims reach 586K last week. That pushed the Greenback slightly weaker than most of its counterparts. This type of behavior has me questioning on whether market reaction to data is shifting from risk tolerance behavior back to fundamental valuation. I don’t think we will know until we get past holiday trading.

So, I’ve still got a risk free trade open for now with my stop at my breakeven point. No adjustments for now and we’ll see how the markets trade throughout next week. Until then, good luck and have a Happy and Safe Holidays!

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Trade Adjustment: 2008-12-19 11:39

EUR/USD dropped as traders take back some of the move the Euro has made against the US Dollar in the past week. My short orders at 1.4180 were triggered and the first profit target was easily hit this morning.

Half trade closed at 1.3930. Adjusting stop on remaining position to break even at 1.4180 to create a risk free trade. Will continue to target 1.25 and trail stop by 250 pips.

So, things are going well for now and we’ll see how far EUR/USD goes. I don’t know if we will see 1.25 again, which is why I am going to trail my stop and let it ride to maximize my trade. I may even add to my position if it continues to go my way. Stay tuned adjustments and updates and have a great weekend!

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Trade Idea: 2008-12-19 00:58

PoD Chart

Well, I must be a glutton for punishment because here I am looking to short EUR/USD one more time! I’m sticking to my guns on my EUR/USD analysis as I think I was just a bit too early on my previous two trades. Will the third time be a charm?

Here’s what I said in my last post:

“Eurozone is definitely not immune to what’s going on in the credit markets and it won’t be too long until the ECB starts slashing rates more aggressively as well. My other thought is that the world needs a safe haven, and that is the US Dollar. Even though this all started in the US, the US is still the world reserve currency, and probably still the best bet on some stability. So, a huge chunk of my trade idea is sentiment based in that I think the Euro will fall to the Greenback as the ECB will probably continue to cut rates and as the world needs some stability.”

With the quick appreciation of the Euro this last week, I am more convinced we may see a rate cut from the ECB if the Euro stays at these levels or above. Euro strength hurts the ability to purchase imports at a more reasonable price, thus hurting the consumers ability to purchase goods at a more reasonable price – especially important during a recessionary period. I don’t think the ECB will want to allow anything to continue to hurt the Eurozone economy, and that means weakening its currency if it has to with more rate cuts.

I have the Daily chart up once again and this time it looks like we have a bearish candlestick pattern as yesterday’s bar forms a shooting star pattern. Are there more sellers than buyers now? Stochastics are in overbought territory, but turning lower…have the Euro bulls run out of steam? We’ll see….

So, I look to short below yesterday’s lows, and with a very wide stop I look to hopefully capture a move back down to 1.3000 or beyond. Here’s what I’m going to do:

Short EUR/USD at 1.4180, stop at 1.4430, pt1 at 1.3930, pt2 at 1.2500

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

So, let’s see if this low-liquidity volatility will whip me out one more time. There’s no major EU or US news coming up, so technicals and risk sentiment will probably play out for the rest of the week. Stay tuned!

  • padlmi

    Last time I thought you were a little early; now it seems the timing is right. Good luck!

  • camelman

    Pip, when you posted your pick, it was 1.4250/1.4270. Why did you pick lower price for a short instead of a higher price? Thanks

  • qtarch

    I’ll sell this pair once it breaks 1.41-1.42 support. It’s a little risky to sell it now.

  • MonsterTrader

    I’m no trading until january, but I’ll demo this one with you….lets see what goes down!

  • padlmi

    Last time I thought you were a little early; now it seems the timing is right. Good luck!

  • camelman

    Pip, when you posted your pick, it was 1.4250/1.4270. Why did you pick lower price for a short instead of a higher price? Thanks

  • qtarch

    I’ll sell this pair once it breaks 1.41-1.42 support. It’s a little risky to sell it now.

  • cadarkitek

    I like this short seen that the market test the backside of the up trendline that it previously breaks on the weekly and now its pulling back.

  • MonsterTrader

    Great Trade!

    I wish i would have traded it live!

    Think its too late to jump in for 2nd tgt?

  • MonsterTrader

    I’m no trading until january, but I’ll demo this one with you….lets see what goes down!

  • Pipcrawler

    Thanks for the comments everyone! Camelman – I wanted price confirmation that we would see a move lower, and that’s why I waited until price action broke below previous days lows.

    MonsterTrader – it’s not too late depending on where you think it’s going. For me, I think it still has a ways to go. I’m gonna ride it and probably add more a tiny bit at a time!

  • cadarkitek

    I like this short seen that the market test the backside of the up trendline that it previously breaks on the weekly and now its pulling back.

  • MonsterTrader

    Great Trade!

    I wish i would have traded it live!

    Think its too late to jump in for 2nd tgt?

  • Pipcrawler

    Thanks for the comments everyone! Camelman – I wanted price confirmation that we would see a move lower, and that’s why I waited until price action broke below previous days lows.

    MonsterTrader – it’s not too late depending on where you think it’s going. For me, I think it still has a ways to go. I’m gonna ride it and probably add more a tiny bit at a time!

  • swordofrue

    Nice trade. However, I am not ready to short EUR/USD.

  • swordofrue

    Nice trade. However, I am not ready to short EUR/USD.

  • traderkenny

    yar..this is the time!

  • traderkenny

    yar..this is the time!

  • bookmoon1

    it ‘ll Not touch 1.2500 pRo

  • bookmoon1

    it ‘ll Not touch 1.2500 pRo