Pick of the Day: EURUSD – Trade Closed

Trade Closed: 2009-11-25 11:00

PoD Chart

Good morning! It looks like the resistance that has been working for the past couple of weeks couldn’t hold in today’s session on negative US Dollar comments from the FOMC Meeting Minutes.

The Federal Open Market Committee called the dollar’s depreciation “orderly” in minutes from its most recent meeting, and forex traders took it as a signal to sell USD across the board. As we can see in the chart above, EURUSD found temporary resistance at 1.5000 during the Asia session before popping higher at the open of the European trading session. Needless to say my trade was triggered then stopped out for a loss.

Trade closed at 1.5075.

Total: -75 pips/ -1.0% loss

Not a great way to start off the holidays, but losing is part of the game and it does happen. This was a great setup and it just didn’t work out this time. Good thing I managed my risk, so this one loss is no biggie.

That will probably be the only trade for the rest of the week from me as I go off to celebrate Turkey day and give thanks for both the good and the bad trades of the past year – hopefully I’ve learned from both. For those who are not on holiday, trade safe as the US trading sessions have less and less liquidity, and for those who are on holiday please be safe and have fun!

Trade Idea: 2009-11-23 11:48

PoD Chart

Good morning fellow Forex fiends! EURUSD has been in a ranging pattern for the past few weeks, and with the US markets in holiday mode this week, I thought this pattern may hold.

I have the one hour chart up and we can see a really basic trade setup. The 1.5000 – 1.5050 has been an area of resistance for the past few weeks. The rally in risk that opened up this week has brought the pair back up to that level and it looks like sellers are fending off the buyers pretty well. Stochastics are indicating the market is overbought in the short term and that buyers may have temporarily lost some juice.

Will this area hold? You can never know for sure, but it looks like a good probability that it will continue to hold, and the risk-to-reward ratio looks good if I target the bottom of the range.

As I said earlier, the US is in holiday mode this week with everyone’s minds on Turkey, football, and holiday shopping. While this doesn’t mean the markets are closed, it does mean lower liquidity, probably some rangebound action, but with a higher probability of spikes in volatility as it takes less volume to move the markets.

There’s plenty of data on the forex calendar this week, so we’ll probably see a bit more movement, but within the range. If currencies do break out one way or another, again the moves may be more pronounced that in normal market conditions. Trade safe always!

So, I’m gonna take a short trade on EURUSD based on a simple resistance setup and range bound conditions. My stop will be above the previous week’s high and I will target the bottom of the range. Here is what I am going to do:

Short EURUSD at 1.5000, stop at 1.5075, pt1 at 1.4925, pt2 at 1.4850

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

Thanks for checking out my blog! Stay tuned!

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  • sergeyrar

    Im with you on this one !

  • sergeyrar

    Im with you on this one !

  • MonsterTrader

    can you post the links you use to read up on the Minutes meetings or beige books?

    Thanks :)

  • Pipcrawler

    MonsterTrader – Check this out: link to bloomberg.com

  • MonsterTrader

    can you post the links you use to read up on the Minutes meetings or beige books?

    Thanks :)

  • Pipcrawler

    MonsterTrader – Check this out: link to bloomberg.com

  • visulube

    Hi, Great Blog.

    This would have worked if you went short 2 pips earlier, hindsight eh !

  • visulube

    Hi, Great Blog.

    This would have worked if you went short 2 pips earlier, hindsight eh !

  • lowy

    Pipcrawler Thanks for your ideas .
    May i ask you if you really trade this ideas live ?

  • lowy

    Pipcrawler Thanks for your ideas .
    May i ask you if you really trade this ideas live ?