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
Trade Idea: 2009-04-29 15:25
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:
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!