Pick of the Day: EUR/USD – Close Trade

Close Trade: 2009-05-08 14:55

Good afternoon! After waiting a few days of waiting, my short position was triggered as EUR/USD rallied after today’s US employment data. Unfortunately, 1.35 did not hold for very long as the US Dollar continued higher to above 1.36. As the trading week closes, I have decided to close out this trade and take the small hit going into the weekend.

Close trade at market (1.3624).

Total: -124 pips/ -0.62% loss

For a bit, my trade was looking good as there was a brief sell off after 1.35 was hit. I should have taken profit then given the weak jobs data, but I thought I could squeeze out a bit more pips. Unfortunately, given the fact that it was a better number than last month, risk tolerance grew fast as money flowed out of the safety of the US Dollar and into higher yielding currencies.

So, that’s it for the week. It looks like risk tolerance is here to stay as the worst seems to be behind us….at least for now. I’ll look to jump in the trend next week, until then – have a great weekend!

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Trade Idea: 2009-05-04 16:41

PoD Chart

Greetings everyone and welcome back to another wonderful week of Forex trading! As I stated in my last post, I am going to revisit my short bias on EUR/USD this week, especially as we are see a bit of divergence on the charts.

I have the four hour chart up, and I have highlighted where the pair is showing regular bearish divergence as price action creates higher “highs”, while stochastics is giving us lower “highs”. Divergence tends to be a very early indicator, and with stochastics not quite back into overbought territory, I’ll wait to see if the pair hit 1.35 before jumping in. I like that level as it seems it has been an area of interest in the recent past. In the most recent visit to that area, sellers won out the battle and the pair dropped back to 1.30 and lower.

Fundamentally, there’s a lot going on this week in the economic calendar. Most notable includes the ECB interest rate decision, US stress bank test results, and US employment data. Swine flu concerns are also still on the table of potential market movers.

Again, I am still in the camp that we haven’t seen the worst parts of the economic recession, but apparently the markets are moving on “things are getting less worse” type data. This may or not continue to be the case as we continue to get new data this week. Also, my friend Jack Crooks gives some startling data and thoughts on the Eurozone over at Currency Currents which supports my bearish euro stance. Check it out!

So, I look to short EUR/USD on divergence and potential resistance at the psychological area around 1.35. My stop will be 200 pips, just a bit more than the average daily range of around 170 pips. My targets will be 1.33, 1.31, and beyond. Here’s what I am going to do:

Short EUR/USD at 1.3500, stop at 1.3700, pt1 at 1.3300, pt2 at 1.3000

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

Stay tuned!

  • camelman

    Pipcrawler, appreciate your picks. One question regarding this trade and the last one. The only reason you got out of the last EUR/USD was the end of the week was coming and you wanted to close out your positions. Why didn’t you continue with the same trade on Sunday/Monday since nothing changed as far as the technical and it was a matter of not being exposed to over the weekend news? I see you have the same beleive in the EUR/USD just you raised your stop significantly higher. Thanks

  • pipsprof.

    Hello,great one,just want to let u know I will wait for confirmation of price movement before jumping in this trade, 1.3550 area is a crucial battle zone,the downtrend starting july 2008 on d daily chart is still intact,but the stock futures are in uptrend now,so also oil is bullish,gold is on the verge of breaking out of its longtime downtrend,all these factors does not support a bearish EurUsd in the shortime,So master,here is what i have decided to do, if 1.3550 longtime downtrend resistance holds, short EurUsd 1.3540, Stop 1.3740, Tp1,1.3340 and Tp2 1.3000 and beyond, My stop 1.3740 will be slightly above the feb swing high.However if price closes above 1.35800,breaking the downtrend successfully,Here is what I will do, Long EurUsd 1.3600, Stop 1.3400,tp1 1.3800,and tp2 1.4100. Just my 2cent analysis,hope am proven right sir.Thanks for all your work,been following your trades a while now.

  • camelman

    Pipcrawler, appreciate your picks. One question regarding this trade and the last one. The only reason you got out of the last EUR/USD was the end of the week was coming and you wanted to close out your positions. Why didn’t you continue with the same trade on Sunday/Monday since nothing changed as far as the technical and it was a matter of not being exposed to over the weekend news? I see you have the same beleive in the EUR/USD just you raised your stop significantly higher. Thanks

  • pipsprof.

    Hello,great one,just want to let u know I will wait for confirmation of price movement before jumping in this trade, 1.3550 area is a crucial battle zone,the downtrend starting july 2008 on d daily chart is still intact,but the stock futures are in uptrend now,so also oil is bullish,gold is on the verge of breaking out of its longtime downtrend,all these factors does not support a bearish EurUsd in the shortime,So master,here is what i have decided to do, if 1.3550 longtime downtrend resistance holds, short EurUsd 1.3540, Stop 1.3740, Tp1,1.3340 and Tp2 1.3000 and beyond, My stop 1.3740 will be slightly above the feb swing high.However if price closes above 1.35800,breaking the downtrend successfully,Here is what I will do, Long EurUsd 1.3600, Stop 1.3400,tp1 1.3800,and tp2 1.4100. Just my 2cent analysis,hope am proven right sir.Thanks for all your work,been following your trades a while now.

  • Babysteps

    Hello pip
    I have diffrent view,I’m Long since 1.3250.
    Good luck all

  • Babysteps

    Hello pip
    I have diffrent view,I’m Long since 1.3250.
    Good luck all

  • garry.heah

    Today EURUSD goes near to 1.35 area.. Let’s see what gonna happen next..

    Fundamentally, ECB cuts rates from 1.25% to 1.00%, but the EUR sell off never happened, US employment data came slightly better than forecast this morning, US stress bank test results(ermm ..not very sure about the outcome.. haha.. =D)

    So for this trade i will do, Long EurUsd 1.3600, Stop 1.3400,tp1 1.3800,and tp2 1.4100.
    Just my 2cent analysis.. =)

  • garry.heah

    Today EURUSD goes near to 1.35 area.. Let’s see what gonna happen next..

    Fundamentally, ECB cuts rates from 1.25% to 1.00%, but the EUR sell off never happened, US employment data came slightly better than forecast this morning, US stress bank test results(ermm ..not very sure about the outcome.. haha.. =D)

    So for this trade i will do, Long EurUsd 1.3600, Stop 1.3400,tp1 1.3800,and tp2 1.4100.
    Just my 2cent analysis.. =)

  • Babysteps

    Hello pip
    This was nice week for me :-) closed 1.3620 , Prefer lock my profit and next week have clear mind.BUT might visit 1.37 befor weekend.
    Happy weekend all

    PS:I have asked u something in previous post hope u could check it.

  • pipsprof.

    Hello guys,EurUsd successfully breaks 1.3550 longtime resistance zone,and is going to close above the 200 daily EMA which is at 1.3436,note that price is heading for 1.3735,and some hesitation might occur there,in the short time,stocks are doing well,commodities also good,the banks that correlate greatly with the Euro are not in serious trouble,so the euro is set to explode upwards.However,we should be cautious of overcorrection from the Euro as it often does,so I will be a bit flexible in this trade and Take profit at 1.3730, and wait to jump right back at 1.3770 after its correction.A bird in hand is worth a thousand in the Jungle!!!! Ha Ha Ha!My original tadeplan is still on,Long 1.3600,sl 1.3400 and tp 1.3800 and beyond. I also think this trade may be slow bcos of profit taking and the wkend generally,people taking off thier positions for risk avoidance.Lets see what this great market has in store for us all,and I hope we all win,I hav a charity I want to donate 10% of my wins for.Happy wkend all,

  • vanyxster

    Great fishing for me today :D ……. have closed 50% of my longs before closing……..I am gona be disapointed when it hits 1.3800.
    Have a nice weekend all

  • Babysteps

    Hello pip
    This was nice week for me :-) closed 1.3620 , Prefer lock my profit and next week have clear mind.BUT might visit 1.37 befor weekend.
    Happy weekend all

    PS:I have asked u something in previous post hope u could check it.

  • pipsprof.

    Hello guys,EurUsd successfully breaks 1.3550 longtime resistance zone,and is going to close above the 200 daily EMA which is at 1.3436,note that price is heading for 1.3735,and some hesitation might occur there,in the short time,stocks are doing well,commodities also good,the banks that correlate greatly with the Euro are not in serious trouble,so the euro is set to explode upwards.However,we should be cautious of overcorrection from the Euro as it often does,so I will be a bit flexible in this trade and Take profit at 1.3730, and wait to jump right back at 1.3770 after its correction.A bird in hand is worth a thousand in the Jungle!!!! Ha Ha Ha!My original tadeplan is still on,Long 1.3600,sl 1.3400 and tp 1.3800 and beyond. I also think this trade may be slow bcos of profit taking and the wkend generally,people taking off thier positions for risk avoidance.Lets see what this great market has in store for us all,and I hope we all win,I hav a charity I want to donate 10% of my wins for.Happy wkend all,

  • wizrus

    Hi everyone, im new to this community. i had a terrible day, im a new trader and i got wiped out! i was short on the eur/usd and aus/usd. got i went in the wrong lane at the wrong time. i got desperate and started to disregard the basic rules of margin limits and stop orders, etc. i have an issue with closing out a trade that went the wrong way because i cant take a loss. what to do?

  • vanyxster

    Great fishing for me today :D ……. have closed 50% of my longs before closing……..I am gona be disapointed when it hits 1.3800.
    Have a nice weekend all

  • wizrus

    Hi everyone, im new to this community. i had a terrible day, im a new trader and i got wiped out! i was short on the eur/usd and aus/usd. got i went in the wrong lane at the wrong time. i got desperate and started to disregard the basic rules of margin limits and stop orders, etc. i have an issue with closing out a trade that went the wrong way because i cant take a loss. what to do?