Trade Closed: 2011-03-16 22:50 ET
It looks like the potential support-turned-resistance area was the jump off point for Euro bears to pounce on the pair. My short order was triggered at 1.3965 and I got the downward move I was looking for. The pair even broke below 1.3900 and came within 6 pips of hitting my profit target at 1.3860.
After the end of the US session, I decided to close my day trade out at 1.3911 for a respectable 54 pips.
Total: +0.41% gain
The real market mover is the Japanese Yen on the continuing crisis in Japan. My heart goes to those affected by natural and nuclear disasters and if you wish to help, please check out some of the following organizations to donate if you can give:
Trade Idea: 2011-03-16 8:25 ET
First it was Spain and now it’s Portugal getting cut by Moody’s to A3–only four steps from junk status! The ratings agency’s outlook remains negative due to “subdued growth prospects” and that the government’s plan to reduce deficits won’t be implemented. Statements like these tend to have a negative affect on currencies, so I looked to EUR/USD for a potential intraday short play.
Zooming into the 15m chart above, we can see that the week open (WO) drew plenty of orders during the Asia session, holding up the pair until the European trading session opened up. With so much interest, that level could draw in more orders during the US session and turn that broken support into resistance for the day.
Besides the fresh news on Portugal, we just got weaker-than-expected housing data from the US (Building Permits 520k vs. 570k and Housing starts 480k vs. 570k), and stronger than expected PPI data (1.6% vs 0.6%). This could be short term Dollar positive, or at least bring in extra volatility to the Euro/US overlap.
So, I have decided to short at the WO, with a stop above the major 1.40 level that has held strongly this week. My target is the PDL (1.3856). This gives me around a 2:1 potential R:R on this trade. Here’s what I am going to do:
Actually, because this is a day trade, I am only risking 0.50% on this trade. Stay tuned for updates and adjustments!