Pick of the Day: EUR/USD – Close Trade

Close Trade: 2009-05-01 15:12

Good afternoon! It’s the end of the trading week, so it’s time to close up shop to avoid any weekend risk. EUR/USD failed to move anywhere after I entered short a couple of days ago as buyers and sellers continue to battle it out around 1.3300. Also, today is “May Day” and most trading desks in Europe were closed today.

So, as the end of the day approaches I have decided to close my short position:

Closed at market (1.3260)

Total: +30 pips/ 0.125% gain

I do plan on re-entering short in EUR/USD next week as long as the pair stays below the falling trendline and 1.3300. Until then, have a great weekend!

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Trade Idea: 2009-04-29 15:25

PoD Chart

Good afternoon kiddies! With US GDP data and the FOMC meeting passing us by, I have decided to jump back into the markets on a nice little technical setup of EUR/USD. The pair seems to find some resistance at a falling trendline at the moment – will sellers win out and push the pair lower?

It’s a simple technical play as I short at the falling trendline drawn on the four hour chart. It also coincides with the 1.3300 level, which in the recent past was an area of interest and battle between buyers and sellers. Stochastics are indicating overbought conditions, so there is a possibility we have run out of buyers in the short term.

Fundamentally, we saw US GDP print much weaker than expected at -6.1% an annualized decline of -4.6%. We also got an interest rate decision from the FOMC today as there was no change in monetary policy. They did notate that the “pace of contraction appears to be somewhat slower” and that “inflation will remain subdued”. The “Greenback ” rallied after the report, I think mostly for the fact that no new quantitative easing measures was introduced. I think this will be bullish for the US Dollar in the short term against most of the majors.

So, I like a short play with the trend and on the fact no new quantitative easing measures are being taken. I shorted at the market, my stop will be above the recent “swing high” around 1.3400 from a couple of weeks ago, and I will target previous lows around 1.2900 and beyond. Here’s what I am going to do:

Short EUR/USD at market (1.3290), stop at at 1.3430, pt1 at 1.3150, pt2 at 1.3010

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

There is plenty of data for the rest of the week to spark further volatility including: US jobless claims, Eurozone unemployment rates, and US ISM manufacturing being the most notable.

The major risk to my trade is if “risk appetite” continues to grow as investors think that the worst is over, then the euro may continue it’s ascent against the US Dollar. We’ll just have to wait and see how traders play this 1.33 – 1.34 area.

Stay tuned and good luck!

  • ibrahimonur

    Are you using (5,3,3) stochastics here or what?

    I will prey for greenbuck to be back!

  • ssnake

    i made about 80 pips on short a couple of hours ago

  • Babysteps

    Hello pip,
    I will wait and watch but i have question,Is it bad or good for usa to have weaker $$ than other currency like euro?
    I think the fighting now about weaker currency to be able export and and get more investment to the market
    I say that for many reason i see about us index and dowj…
    I think eur will back like befor 7-2008,What do you think?
    Thanks

  • vanyxster

    I agree on my COG chart setup this is 99% short …. i have entered today at 1.3300 now I can only w8 & hope :)

  • ibrahimonur

    Are you using (5,3,3) stochastics here or what?

    I will prey for greenbuck to be back!

  • ssnake

    i made about 80 pips on short a couple of hours ago

  • Babysteps

    Hello pip,
    I will wait and watch but i have question,Is it bad or good for usa to have weaker $$ than other currency like euro?
    I think the fighting now about weaker currency to be able export and and get more investment to the market
    I say that for many reason i see about us index and dowj…
    I think eur will back like befor 7-2008,What do you think?
    Thanks

  • vanyxster

    I agree on my COG chart setup this is 99% short …. i have entered today at 1.3300 now I can only w8 & hope :)

  • sukiyaki

    Hmmm I think it’s a bit too early to enter now.
    The price has not clearly rejected the downtrend resistance line.

    Better be late than sorry

  • ssnake

    woke up and noticed new movements against our plans, the daily chart is longing up towards the bollinger band. technically speaking, it looks like the price will bounce, but unless something big happens, no serious movements won’t occur, maybe an upwards trading channel is forming as usual.

  • Babysteps

    Now i’m in :-)
    good luck all

  • sukiyaki

    Hmmm I think it’s a bit too early to enter now.
    The price has not clearly rejected the downtrend resistance line.

    Better be late than sorry

  • ssnake

    woke up and noticed new movements against our plans, the daily chart is longing up towards the bollinger band. technically speaking, it looks like the price will bounce, but unless something big happens, no serious movements won’t occur, maybe an upwards trading channel is forming as usual.

  • Babysteps

    Now i’m in :-)
    good luck all

  • Babysteps

    Closed at 1.32
    For me no more short,Hope pip answer my question i meantion above.
    Thanks

  • br02ccl

    Thanks Pipscrawler for showing the way. Good call on this trade. Got in a little earlier at 1.3371 with a stop at 1.3401. Neg div on the CCI vs price (4 hr), very near/at S/R, top of bollinger, Stoc & CCI at overbought coming down and overall trend is down. Out at 1.3235. (follow SMA 8 period) Gain of 136 pips.

  • top_shot

    Cheers for that got 75 pips out of it :)

  • Babysteps

    Closed at 1.32
    For me no more short,Hope pip answer my question i meantion above.
    Thanks

  • br02ccl

    Thanks Pipscrawler for showing the way. Good call on this trade. Got in a little earlier at 1.3371 with a stop at 1.3401. Neg div on the CCI vs price (4 hr), very near/at S/R, top of bollinger, Stoc & CCI at overbought coming down and overall trend is down. Out at 1.3235. (follow SMA 8 period) Gain of 136 pips.

  • top_shot

    Cheers for that got 75 pips out of it :)

  • Pipcrawler

    Thanks for the comments everyone! Glad to see everyone is making some pips out there, keep it up!

    Babysteps, is it good for the US to have a weaker currency? This is a tough question. From an export point of view, then yes because it makes US goods and services more attractive from a cost standpoint. Plus, foreigners can invest in US assets at a much cheaper price.

    For the average joe in the US, it’s not good to have a weaker US Dollar. It makes imports are much more expensive, like raw materials and energy, putting pressure on the average US consumer.

    If there is a recovery in the global recession, there will be an outflow out of the US Dollar as it has been the safe haven currency since the financial meltdown. This will certainly weaken the US Dollar, probably cause a nasty case of inflation, and if there is a slow recovery we could see possible stagflation…that’s bad the US for sure. Let’s hope it doesn’t go down that road…

  • Pipcrawler

    Thanks for the comments everyone! Glad to see everyone is making some pips out there, keep it up!

    Babysteps, is it good for the US to have a weaker currency? This is a tough question. From an export point of view, then yes because it makes US goods and services more attractive from a cost standpoint. Plus, foreigners can invest in US assets at a much cheaper price.

    For the average joe in the US, it’s not good to have a weaker US Dollar. It makes imports are much more expensive, like raw materials and energy, putting pressure on the average US consumer.

    If there is a recovery in the global recession, there will be an outflow out of the US Dollar as it has been the safe haven currency since the financial meltdown. This will certainly weaken the US Dollar, probably cause a nasty case of inflation, and if there is a slow recovery we could see possible stagflation…that’s bad the US for sure. Let’s hope it doesn’t go down that road…

  • Babysteps

    Thanks so much pip for answering my question.
    Is there a way to send you my long time analysis and view to know your opinion?
    Happy weekend :-)

  • Babysteps

    Thanks so much pip for answering my question.
    Is there a way to send you my long time analysis and view to know your opinion?
    Happy weekend :-)

  • garry.heah

    Yo Pipcrawler, 1st of all i would like to say thanks a lot for keep posting and sharing here, it’s just like a precious lesson & reminder to us.. why am i saying this? Please allow me to describe..

    EURUSD went up to 1.3346 in the Asian session Monday, i was lucky as i’d lower my previous S/L from 1.3345 to 1.3290 after i read your post here yesterday, it reminded me to aware of the weekend risk..

    And few hours later, in the Asian session, i was stopped out at 1.3290 but not 1.3345.. i am lucky as i am out with a tiny profit.. ha..

    Thanks Pipcrawler for your gentle reminder..Appreciate it..

    And please do keep sharing and updating your post here..
    i look forward to learn more from you to be a consistent forex trader.. thanks and all the best… =)

  • garry.heah

    Yo Pipcrawler, 1st of all i would like to say thanks a lot for keep posting and sharing here, it’s just like a precious lesson & reminder to us.. why am i saying this? Please allow me to describe..

    EURUSD went up to 1.3346 in the Asian session Monday, i was lucky as i’d lower my previous S/L from 1.3345 to 1.3290 after i read your post here yesterday, it reminded me to aware of the weekend risk..

    And few hours later, in the Asian session, i was stopped out at 1.3290 but not 1.3345.. i am lucky as i am out with a tiny profit.. ha..

    Thanks Pipcrawler for your gentle reminder..Appreciate it..

    And please do keep sharing and updating your post here..
    i look forward to learn more from you to be a consistent forex trader.. thanks and all the best… =)