Pick of the Day: EURUSD – Close Trade

Close Trade: 2009-12-04 9:30

PoD Chart

Happy Jobs Friday to all! Well, I’ve been sitting on this EURUSD range for a whole week and it looks like it took the US jobs data to get it out of its funk! Surprisingly, positive headline numbers and revisions has given my EURUSD position a nice boost!

And I say “surprisingly” because the initial reaction was a rally in equities futures AND the US Dollar! An odd little break from the “normal” correlations of the past year, but it’s a wacky day to start as NFP headline numbers surprise economists with a reading of only 11k jobs lost versus the expectations of 125k lost. Also, the unemployment rate ticked down to 10.0%.

This caused EURUSD to drop and find a low around 1.4910, and with the end of the week approaching I decided to close my trade to avoid weekend risk.

Closed at 1.4932

Total: +98 pips/ +0.65% gain

It looks like conditions are getting better and this brings on the question of if the Fed will cut QE measures and hike rates sooner than expected. While, this may be a positive sign for the greenback, I’m going to hold off jumping for joy as a Dollar bull as I’d like to see what the non seasonality adjusted numbers are and if this trend continues.

I’m thinking the trend may continue because companies can do “more with less” for only so long. Working people to death is unsustainable and hiring must resume, even if it’s a few at a time. We’ll see…

For now, I’m going to enjoy this small win for the week, kick back and start my weekend early, and be refreshed for next week’s battles. Have a great weekend and I’ll see ya next week!

Trade Idea: 2009-11-30 10:27

PoD Chart

Good morning Forex friends! I have spotted a candlestick pattern on EURUSD, potentially signaling a reversal back to the downside. Will we see EURUSD weakness at the beginning of the trading week?

On the four hour chart above, I have highlighted the evening doji star pattern. This is a bearish reversal signal as we see a bit of indecision at the end of a strong rally (doji candle) and then a strong bearish candle showing sellers are back in control. Stochastics seem to be topping out near overbought levels, also signaling a potential swing lower.

Over the US holiday weekend, we saw a return of risk aversion as Dubai requested a six-month moratorium on some $80-90 billion in debt. It has been a see-saw ride for the risk aversion move as the UAE central bank issued a statement that they “stand behind” their lenders, while today they also said that the Dubai world debt will not be guaranteed. I think this situation has brought back to light that the recovery will not be swift as credit and financing issues remain across the globe.

One other little tidbit supporting my risk aversion bias was the results of Black Friday weekend. While more shoppers came out for the bargains, it was noted that they were spending less. I think weaker sales will continue amidst the continued weakening employment situation in the US. When people are losing jobs, how can they afford to buy non-essential items?

So, based on the candlestick setup and my risk aversion bias, I am taking a short trade on EURUSD. It looks like the pair has rallied a bit since I started writing, so I will short here (1.5030) with my stop 150 pips away (daily average true range). I will target the previously tested support area marked on the chart. Here’s what I am going to do:

Short EURUSD at market (1.5030), stop at 1.5180, pt1 at 1.4880, pt2 at 1.4730

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

This week is packed full of economic data on the Forex calendar, most notably the ECB interest rate decision and US employment data. It should be an action-packed ride, so I will have to be flexible and adjust quickly. Stay tuned!

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  • Babysteps

    Hello pip
    I like this trade ,I will try to join in nearest point.
    pip, Don’t u think it could be reversal point to down?
    For me i think so.
    GL all

  • Babysteps

    I sell 1.50 my TP 1.38 “Long term trade”
    What do you think pip?
    Thanks

  • Babysteps

    Hello pip
    I like this trade ,I will try to join in nearest point.
    pip, Don’t u think it could be reversal point to down?
    For me i think so.
    GL all

  • Babysteps

    I sell 1.50 my TP 1.38 “Long term trade”
    What do you think pip?
    Thanks

  • BollingerBands

    To start the month a little bit technical, broker ACM Fx also highlighted this currency par, said the fibo 61.8 at 1.4929 is a significant support. Very good chart saw there http://files.ac-markets.com/Newsletter/2009-12-01/AlertChart01Dec09_0903.png
    Thanks for sharing this analysis

  • Babysteps

    I add sell 1.5090

  • BollingerBands

    To start the month a little bit technical, broker ACM Fx also highlighted this currency par, said the fibo 61.8 at 1.4929 is a significant support. Very good chart saw there http://files.ac-markets.com/Newsletter/2009-12-01/AlertChart01Dec09_0903.png
    Thanks for sharing this analysis

  • Babysteps

    I add sell 1.5090

  • Pipcrawler

    thanks for the comments and opinions everyone! Babysteps – if you have well thought out analysis and plans, then go for that 1.38 – just manage your risk! For me, I have no outlook or opinion on that price level, but I think it is possible for USD to rally if we see the Fed raise interest rates, pull in QE measures, or another crisis that would bring about a return to safe haven trades. Who knows when or if that will happen… All I can say is be flexible and on your toes!

  • Pipcrawler

    thanks for the comments and opinions everyone! Babysteps – if you have well thought out analysis and plans, then go for that 1.38 – just manage your risk! For me, I have no outlook or opinion on that price level, but I think it is possible for USD to rally if we see the Fed raise interest rates, pull in QE measures, or another crisis that would bring about a return to safe haven trades. Who knows when or if that will happen… All I can say is be flexible and on your toes!

  • nbernal

    Wonderful trade. Great! Tks. Now what about it going back up? The MACD and Stoch are setting up.

  • nbernal

    Wonderful trade. Great! Tks. Now what about it going back up? The MACD and Stoch are setting up.