Pick of the Day: EURUSD – Trade Closed

Trade Closed: 2009-12-15 17:50

PoD Chart

Yikes! Eurozone data came out a bit weaker as expected, but what wasn’t expected was the market reaction and EURUSD dropping it’s entire average daily range on the pair!

As we can see from the attached chart above, my long entry orders were triggered at 1.4635, but the pair didn’t stop there. Eventually, my stop was hit during the morning US trading session after stronger than expected PPI numbers pushed the Greenback to 1.4505…. Grrrr!

Total: -130 pips/ -1.0% loss

So, a small hit this week, and even though my technical setup didn’t pan out this time, it was a sweet setup I’ll take almost every time. I just gotta be more careful with upcoming news… hehe! Thanks for checking out my blog everyone! Stay tuned and be safe in the markets!

Trade Idea: 2009-12-14 23:37

PoD Chart

Good evening everyone! The markets have calm down a bit after a hectic last week in November and a strong USD rally. Now, with the pair testing previous lows, is it time for EURUSD to swing back to the middle of the range?

On the four hour chart, we can see a few technical signals suggesting that a swing higher may be in the cards in the short term. First, the pair is currently testing a support area which held back in the beginning of November. At the same time, we see a bullish divergence signal as EURUSD makes lower “lows” in price, while stochastics climb out of oversold conditions with higher “lows”. Coincidentally, we saw bullish divergence the last time the pair test this level as well.

Fundamentally, no major catalysts is expected this week, but we do have plenty of data to bring temporary volatility to the markets. First, we have ZEW economic survey data coming out during the European trading session; expectations are for a slight tick down from the previous month. During the US session, we have a slew of data including PPI, Empire State Manufacturing, TIC flows, and much more. It should be a wild ride during the US session and hopefully the data will bring enough volatility to trigger my trade.

As we head further into the holiday season, I expect the markets to stay range bound as traders close up books, lock in profits, and take off for the holiday. This means liquidity will continue to lighten up and we may see more consolidation. But let’s also remember that lower liquidity does increase the probability of a a spike in volatility if we do see any sentiment shifting news events.

So, I like a long trade on the possibility previous support will hold, a bullish divergence signal, and my opinion that range bound behavior will continue into the holidays. My stop will be the daily Average True Range (around 130 pips) and I will ultimately target 1.5000. Here’s what I am going to do:

Long EURUSD at 1.4635, stop at 1.4505, pt1 at 1.4765, pt2 at 1.5000

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

Markets are kinda tricky this time year and we haven’t seen a holiday trading season after a financial crisis since the ’90s, so who knows what to expect. Trade safe always, stay focus and flexible. Good luck and good trading!

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  • gbpeurs

    Hi Pip,

    I strongly agree that market now are very tricky, got to trade very carefully. I believe everybody stop loss level is different example I have a tighter stop loss of 60 pips max.

  • engin

    macd on the weekly chart signalled short and usd index is bullish and euro is bearish and eurusd broke bullish trendline.so good luck, cause you need…

  • gbpeurs

    Hi Pip,

    I strongly agree that market now are very tricky, got to trade very carefully. I believe everybody stop loss level is different example I have a tighter stop loss of 60 pips max.

  • engin

    macd on the weekly chart signalled short and usd index is bullish and euro is bearish and eurusd broke bullish trendline.so good luck, cause you need…

  • Babysteps

    Hello pip
    for me my sell /blogs/pick-of-the-day/pick_of_the_day_eurusd_66.html
    Closed 1.4510
    I supose we going up and maybe down to 1.4440 so i’m out for while.
    GL ALL

  • Pipster4lyphe

    I share ur sentiments…but wldn’t exactly look to buy the euro as there is a shift in market sentiment…but rather to wait for a rally to abt 1.4850 for me to short the pair. I was hoping for a retracement to arnd 1.4850…Good Luck!!

  • Babysteps

    Hello pip
    for me my sell http://www.babypips.com/blogs/pick-of-the-day/pick_of_the_day_eurusd_66.html
    Closed 1.4510
    I supose we going up and maybe down to 1.4440 so i’m out for while.
    GL ALL

  • Pipster4lyphe

    I share ur sentiments…but wldn’t exactly look to buy the euro as there is a shift in market sentiment…but rather to wait for a rally to abt 1.4850 for me to short the pair. I was hoping for a retracement to arnd 1.4850…Good Luck!!

  • lowy

    Sorry Pipcrawler but the reaction was way before the ZEW . It was 1.4540 at announcement !

  • lowy

    Sorry Pipcrawler but the reaction was way before the ZEW . It was 1.4540 at announcement !

  • Pipcrawler

    Thanks for the comments everyone! @lowy The pair did start dropping before the ZEW announcement, but it didn’t intensify and break previous lows until after the announcement. Either way, it didn’t work out, but I hope every has jumped into the EURUSD drop since!

  • Pipcrawler

    Thanks for the comments everyone! @lowy The pair did start dropping before the ZEW announcement, but it didn’t intensify and break previous lows until after the announcement. Either way, it didn’t work out, but I hope every has jumped into the EURUSD drop since!

  • lowy

    What am saying is its not the reaction for the data as you mentioned( you highlighted the three candles before the announcement , actually the next bullish spinning top is the announcement candle ) that caused the drop and i don’t think it intensified it , the move was already strong and we are in a clear downward momentum . Price was away 25 pips from previous low at the announcement and it consolidated after the announcement !

  • lowy

    What am saying is its not the reaction for the data as you mentioned( you highlighted the three candles before the announcement , actually the next bullish spinning top is the announcement candle ) that caused the drop and i don’t think it intensified it , the move was already strong and we are in a clear downward momentum . Price was away 25 pips from previous low at the announcement and it consolidated after the announcement !

  • nev

    Hats off to anyone who had the balls to drop those shorts in, the strong daily uptrend and apparent euro comfortability from one of those meetings with being above 1.5 plus a myriad of bottom picks by options barriers and goldman sachs’ prediction, would have suggested rangebound or retrace to anyone. Seems all the big guns just felt like proving them wrong =p