Trade Closed: 2009-12-15 17:50
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
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!